updated 06:59 pm EDT, Wed May 28, 2014
Company uses provision in merger law to ask for single review process
Even though Facebook already has approval from the United States Federal Trade Commission for the $16 billion purchase of Whatsapp, the company is looking to get ahead of the game in Europe. Facebook has asked regulators that are part of the European Commission to review the acquisition deal ahead of possible antitrust concerns.
The move is interesting as Facebook is looking to have one hearing over concerns rather than be forced into individual reviews in separate countries. In the report from the Wall Street Journal, experts said that by going to the commission, Facebook may see "a more neutral approach than national authorities, which would face vigorous lobbying from local interest groups such as national telecom companies."
It is possible that Facebook is trying to seek out a channel for approval that may have less of a risk involved with it by asking for the review. The company was able to trigger the review due to a provision in merger law that would allow it to ask for a single probe instead of three or more independent ones. By issuing the request under the provision, authorities at the national level have only 15 days to respond to the request before the European Commission considers the probe reviewable under their terms.
Reasons for antitrust issues could come from telecommunication companies believing messaging services like Whatsapp have cut into their SMS services. A number of companies in Europe have seen a drop in SMS use since messaging services have gained popularity. The deal could be seen as giving Facebook a large percentage of the messaging market share.
It is also a concern to Facebook that companies and governments could use the acquisition to look into the privacy concerns of not only Whatsapp, but Facebook itself. Governments could also use the merger to trigger an investigation into the tax issues for US corporations in foreign countries.