The Commission, in its clearance decision, stated that it did not considered likely that WhatsApp would become a source of user data valuable for advertising purposes because: i) The ability to do it was doubtful: it would require to change WhatsApp privacy policy and to match each WhatsApp user’s profile with her/his Facebook profile ii) the merged entity will not have incentives to do so due to possible switching by users. Other possible relevant markets such as on-line gaming, e-commerce or data-related markets were not analyzed either. Facebook is the second player in the worldwide online advertising market and could even enjoy a dominant position in hypothetical narrower relevant markets, such as mobile online advertising (where Facebook has around 44% of market share) or online advertising in social networks (where it has around 65% of market share) -reasonable definitions, due to the extraordinary capacity of targeting that online advertising offers in social networks-, but the Commission preferred to leave the market definition open ( and then without any analysis under such definitions). This data concentration in a market with so strong network effects and no regulation to nuance them should have been at least analyzed in depth. As we said two years ago, Facebook position in the online advertising market would be highly reinforced thanks to WhatsApp acquisition, because it allowed Facebook access to approximately 600 million users personal data (around 1 billion today!). These effects need to be revisited today after WhatsApp’s announce of the sharing of its users’ personal data with Facebook (and its group of companies). Telefónica celebrates this initiative of review because, once the reform will be accomplished, there will be a level playing field in EU merger control independently of companies’ business models.Īs for the competitive debates opened by this merger, in our 2014 post, we detailed several anticompetitive effects we could foresee coming from that merger. As far as we know, nowadays the Commission is working on several alternatives (transaction value, users, data, etc.) to propose a review of the merger control thresholds. Facebook/WhatsApp was reviewed by the Commission due to the EU referral system and because it was captured by three national merger control regimes (Cyprus, Spain and UK– which it is important because after Brexit and a current reform in the Cyprus regime it is very likely that similar mergers will not be caught by these national systems anymore and then no possible referral to the Commission will exist). Mergers of digital companies not having high turnovers (due to the provision of free services) are not captured by the EU Merger Control Regulation, whose thresholds are based just on turnover. Indeed, Facebook/WhatsApp case raised the alarm about key cases in the digital ecosystem which could be escaping from Commission’s scrutiny. Phase 1 clearance was also surprising in light of the interesting debates that the merger opened and the need to analyze in depth its effects on competition.Īs for the first aspect, the impact of this merger has meant a highly positive advance in merger control, i.e., the opening of a debate in order to modify the Merger Control Regulation’s thresholds. Our first shock came from the fact that a concentration affecting a combined amount of 1,7 billion users worldwide and 300 million users in Europe could have not even been analyzed by the DGCOMP in our view, this evidenced that new thresholds were needed for an accurate application of competition law to the digital economy, as we had repeatedly stated. Two years ago, we explained how surprising the unconditional clearance in Phase 1 of the WhatsApp acquisition by Facebook was. Outstanding Debentures&Bonds of Telefónica S.A.
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