Facebook has officially received approval from European Union (EU) regulators for its proposed $19 billion acquisition of popular mobile messaging startup WhatsApp.
The EU clearance for the deal was announced on Friday, Oct. 3. Facebook is the world's largest social network and its massive takeover of WhatsApp would set it against the telecoms industry, giving it a significant presence in the growing and lucrative mobile messaging market. This $19 billion deal marks Facebook's largest acquisition ever.
WhatsApp, meanwhile, plans to add free voice call services this year for its massive customer base of roughly 450 million customers, which could seriously challenge companies such as Deutsche Telekom, Orange, and Telecom Italia. Nevertheless, authorities are not worried that this deal might hurt competition.
"The European Commission has authorised, under the EU Merger Regulation, the proposed acquisition of WhatsApp Inc. by Facebook, Inc., both of the United States. Facebook (via Facebook Messenger) and WhatsApp both offer applications for smartphones (so-called 'apps') which allow consumers to communicate by sending text, photo, voice or video messages. The Commission found that Facebook Messenger and WhatsApp are not close competitors and that consumers would continue to have a wide choice of alternative consumer communications apps after the transaction. Although consumer communications apps are characterised by network effects, the investigation showed that the merged entity would continue to face sufficient competition after the merger," explains the press release.
"Consumer communications apps keep European citizens connected and are becoming increasingly popular. While Facebook Messenger and WhatsApp are two of the most popular apps, most people use more than one communications app. We have carefully reviewed this proposed acquisition and come to the conclusion that it would not hamper competition in this dynamic and growing market. Consumers will continue to have a wide choice of consumer communications apps," said Joaquin Almunia, the European Commission Vice President in charge of competition policy.
U.S. regulators gave Facebook the green light for this acquisition back in April, but the company still needed European Union clearance to go forth with its WhatsApp takeover.
The commission further noted that consumers seem to use both Facebook Messenger and WhatsApp in different ways, and many use the two apps at the same time on the same mobile device. Moreover, a number of rival applications such as Viber, iMessage, WeChat, Telegram, and Google Hangouts are available, so consumers have plenty to choose from. In conclusion, the EU does not believe that Facebook's acquisition of WhatsApp will hurt competition, and has approved the deal.
