Rival Says Facebook's WhatsApp Purchase Is 'Like AT&T Merging with Verizon'

Jul 09, 2014 05:12 PM EDT | Jordan Ecarma

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Facebook is the subject of a European Union antitrust inquiry as officials look into the social network's $19 billion acquisition of messaging service WhatsApp.

The company has already received a stern warning from the U.S. Federal Trade Commission about maintaining user privacy following the deal, which puts WhatsApp and its half a billion users under Facebook's care.

In preparation for a formal review, EU officials have been questioning Facebook's competitors about the WhatsApp acquisition, the Wall Street Journal reported. The case could set a precedent for future antitrust actions.

"This is a bit of a toe in the water for the commission," said one Brussels-based antitrust lawyer, as quoted by WSJ. "It's the first time they'll look at social media seriously in terms of market power issues."

For the inquiry, detailed questionnaires have been sent to several major technology and online-messaging firms, people familiar with the matter said. The questionnaires ask how the Facebook-WhatsApp merger will affect competition in the app market as well as how users' personal data is stored.

The review is somewhat unexpected since WhatsApp's messaging service doesn't generate enough revenue in the EU to fall under merger law; however, Facebook requested in May that the EU conduct one review to cover a bloc of 28 nations when it faced separate cases in at least three countries.

In the U.K., one of the countries where Facebook could have gone through a merger review, the social network holds a large market share. Almost 75 percent of all Android users used the Facebook app in April, and more than half of them used WhatsApp, while only 16 percent used Skype and 12 percent used WhatsApp rival Viber, according to Nielsen data.

Some worry that Facebook and WhatsApp will edge out all competitors, one person familiar with the matter describing the merger with "It's like AT&T merging with Verizon."

Spokespeople for both Facebook and the European Commission declined to comment to WSJ.

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