As investors await quarterly reports from Meta next week to find out the company’s plans for the Metaverse – or in other words, how much money it will invest in this new venture – on Thursday (January 27), was another day with new regulatory developments for the company in Europe.
The good news for the company is that it has received merger clearance for its acquisition of Kustomer, a growing player in the customer relationship management (CRM) software market for customer service and support. Yet despite Kustomer’s relatively small size, European Union regulators were wary of the merger’s potential anti-competitive effects if Meta decided to exclude Kustomer’s competitors and new entrants. For example, by denying or degrading access to application programming interfaces (APIs) for Meta’s messaging channels. No other concerns were identified in the area of online advertising.
So, in order to get approval, Meta had to offer commitments to regulators. Meta has offered non-discriminatory and free access to its publicly available APIs for its messaging channels to competing consumer services CRM software vendors and new entrants for 10 years. Meta also offered future enhancements or updates available to Kustomer consumers to be available to Kustomer competitors and new entrants.
This is a small but important endorsement for Meta, as securing a merger deal in Europe is increasingly difficult for the company. The recent decision by UK regulators to cancel the company’s acquisition of Giphy is good evidence of the level of scrutiny the company faces in every transaction.
However, Meta did not have much time to take advantage of this victory, because on the same day she received a letter from the European Commission, this time addressed to WhatsApp, asking how it treats personal data and whether it meets EU consumer protection requirements.
The letter follows several complaints filed against the company last year for pressuring consumers with pop-ups to accept its new terms without explaining how the data would be handled and threatening consumers with losing the access to the service if consent was not provided.
“WhatsApp must ensure users understand what they are agreeing to and how their personal data is used, especially when shared with business partners,” Justice Commissioner Didier Reynders said. “I expect WhatsApp to fully comply with EU rules that protect consumers and their privacy.”
The European Commission could not have chosen a more symbolic day to send this letter to WhatsApp. On the same day WhatsApp received this letter, Commissioners Věra Jourová, Vice President for Values and Transparency, and Reynders released a statement to commemorate Data Privacy Day, which is actually January 28.
“The processing of personal data must be designed to serve society and respect the rights of individuals. 2021 has seen an intensification of enforcement action, with several high-profile cases resulting in significant fines. It is important that this approach is continued and amplified in the months and years to come,” the commissioners said in the statement.
European Union regulators may be trying to better understand how WhatsApp shares personal data with its parent company Meta, as well as with other third parties. Data-sharing agreements between WhatsApp and Meta (formerly Facebook) have raised concerns among EU regulators since 2014, when the two companies merged. Those concerns resulted in a €110m fine for providing misleading information during the takeover.
For now, 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 proceedings under Community consumer law.
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