While investors are waiting for Meta’s quarterly reports next week to learn the company´s plans for the metaverse — or in other words, how much money it is going to invest in this new venture — Thursday (Jan. 27), was another day with new regulatory developments for the company in Europe.
The good news for the company is that it obtained a merger clearance for its acquisition of Kustomer, a fast-growing player in the customer service and support customer relationship management (CRM) software market. Yet, despite the relatively small size of Kustomer, European Union regulators were wary of the potential anticompetitive effects of the merger if Meta were to decide to foreclose Kustomer’s rivals and new entrants. For instance, by denying or degrading access to the application programming interfaces (APIs) for Meta’s messaging channels. No other concerns were found in the online advertising business.
Thus, in order to get the approval, Meta had to offer commitments to regulators. Meta offered non-discriminatory access without charge to its publicly available APIs for its messaging channels to competing consumer services CRM software providers and new entrants for 10 years. Meta also offered future improvements or updates available to Kustomer´s consumers to be available to Kustomer´s rivals and new entrants.
This is a small but important approval for Meta, as getting a merger nod in Europe is harder and harder for the company. U.K. regulators’ recent decision to unwind the firm’s acquisition of Giphy is good evidence of the level of scrutiny the company faces in each transaction.
However, Meta didn’t have much time to enjoy this victory, as the same day, it received a letter from the European Commission, this time addressed to WhatsApp, to question how it processes personal data and whether it meets EU consumer protection requirements.
The letter comes after several complaints made against the company last year for pressuring consumers with pop-ups to accept its new terms without explaining how the data would be processed and threating consumers to lose access to the service if consent was not provided.
“WhatsApp must ensure that users understand what they agree to and how their personal data is used, in particular where it is shared with business partners,” said Justice Commissioner Didier Reynders. “I expect from WhatsApp to fully comply with EU rules that protect consumers and their privacy.”
The European Commission couldn’t have chosen a more symbolic day to send this letter to WhatsApp. The same day that WhatsApp received this letter, commissioners Věra Jourová, vice-president for values and transparency, and Reynders issued a statement to commemorate Data Protection Day, which in fact is on Jan. 28.
“The processing of personal data should be designed to serve society and respect individuals’ rights. The year 2021 has seen a ramping up of enforcement actions, with several high-profile cases resulting in significant fines. It is important that this approach is pursued and amplified in the coming months and years,” said the commissioners in the statement.
European Union regulators may be trying to better understand how WhatsApp is sharing personal data with its parent company Meta, as well as other third parties. Data-sharing arrangements between WhatsApp and Meta (formerly Facebook) have raised concerns among EU regulators since 2014 when the two companies merged. These concerns ended up with a EUR110 million fine for providing misleading information during the takeover.
For the moment, the letter is an invitation to WhatsApp to provide information by the end of February. But if the Commission considers that the explanations are insufficient or that the practice in which the company engaged was too aggressive, it could initiate formal procedures under EU consumer law.
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