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E.U. Fines Facebook $122 Million Over Disclosures in WhatsApp Deal
By MARK SCOTTMAY 18, 2017
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Jim Wilson/The New York Times
Europe’s love affair with Facebook may be coming to an end.
On Thursday, the European Union’s powerful antitrust chief fined the social network 110 million euros, or about $122 million, for giving misleading statements during the company’s $19 billion acquisition of the internet messaging service WhatsApp in 2014.
The fine — one of the largest regulatory penalties against Facebook — comes days after Dutch and French privacy watchdogs ruled that the company had broken strict data protection rules. Other European countries, notably Germany, are clamping down on social media companies, including issuing potentially hefty penalties for failing to sufficiently police hate speech and misinformation.
The European Union’s antitrust chief, Margrethe Vestager, said that Facebook had told the European Commission, the executive arm of the European Union, that the social network would not combine the company’s data with that of WhatsApp, which has more than one billion users.
Yet last August, Facebook announced that it would begin sharing WhatsApp data with the rest of the company. That could allow it to gain an unfair advantage over rivals, by giving it access to greater amounts of data to help support its online advertising business.
“Today’s decision sends a clear signal to companies that they must comply with all aspects of E.U. merger rules,” Ms. Vestager said in a statement. “And it imposes a proportionate and deterrent fine on Facebook. The commission must be able to take decisions about mergers’ effects on competition in full knowledge of accurate facts.”
In response, Facebook said that it had acted in good faith in its deliberations with Europe’s antitrust officials, and that it would not appeal the financial penalty.
“The errors we made in our 2014 filings were not intentional,” Facebook said in a statement. “The commission has confirmed that they did not impact the outcome of the merger review.”
The overall penalty amounted to a slap on the wrist — it pales in comparison with the tens of billions of dollars the company earns in online advertising every year, and Europe’s antitrust officials stopped short of voiding the deal completely.
But the fine signals that European officials are increasing their scrutiny of Facebook just as it becomes one of the largest technology companies on the planet.
Increased oversight has become something of a rite of passage for American technology companies operating in Europe.
During the past two decades, Amazon, Apple, Google and Microsoft, among others, have become targets of long antitrust investigations by the European authorities. That has often led to claims by tech executives that the region has an anti-American bias, accusations that European policy makers deny.
Facebook, experts say, is only the latest in a long line of Silicon Valley companies to face European regulatory anger, though this time, the focus is likely to be on the reams of online data gathered, including information that Facebook collects on both its users and nonusers through third-party websites.
On Tuesday, French officials fined the social network €150,000 — another relatively small penalty — for failing to give the company’s users in that country sufficient control over how their data is collected and used. Dutch regulators also ruled that the company had broken privacy rules, but so far they have not imposed a fine.
While Facebook started in the United States and has expanded aggressively across the developing world, its actions in Europe — and the response to those acts by local officials — are likely to have implications on its global operations.
The company’s international headquarters are in Dublin. Though that is mostly for tax purposes, it gives European data protection and antitrust officials wide scope to monitor and police Facebook activities involving its more than 1.5 billion users outside North America.
In the past, for instance, Facebook has been forced to alter its privacy settings for all of its users worldwide after European privacy campaigners brought legal challenges to how the social network collected and used people’s data.
The changes come as policy makers worldwide vie for influence over how people use digital services, including potentially putting limits on how companies like Facebook operate so as to exert some control over the internet.
“It was inevitable that there would be this type of struggle,” Jimmy Wales, the founder of Wikipedia, said in an interview last year. “The internet is not used to national borders.”
On Tuesday, Thailand pressured Facebook to remove dozens of pages from its servers that broke the country’s laws about disparaging the monarchy. In Vietnam, Facebook agreed last month to take down some local content, including misleading articles and false accounts about senior government officials. Countries like Indonesia and the Philippines have also made demands against the company’s role in spreading potential misinformation.
While Facebook has come under scrutiny in the United States for allowing so-called fake news to spread on its network, including before the American presidential election in November, federal lawmakers and policy makers have so far used a relatively light touch with the social network.
After Facebook announced last year that it would use WhatsApp data to bolster its wider advertising business, American privacy campaigners filed complaints with the Federal Trade Commission, putting forward similar arguments to those made against the partnership in Europe.
But whereas European privacy regulators forced Facebook to stop collecting WhatsApp data for its wider purposes just a few months after the agreement was made public, American privacy campaigners say that they have yet to receive an answer from the Federal Trade Commission about their concerns. Facebook continues to collect and use WhatsApp data from people in the United States who use the service.
“U.S. antitrust law has failed to keep up with the digital economy and the emergence of monopoly services,” Marc Rotenberg, president of the Electronic Privacy Information Center, an advocacy group in Washington, said in an email. “There is far too much ‘lock in’ with a dominant provider, and far too much consolidation of personal data.”
Follow Mark Scott @markscott82 on Twitter
A version of this article appears in print on May 19, 2017, on Page B2 of the New York edition with the headline: E.U. Fines Facebook $122 Million Over Disclosures in WhatsApp Deal. Order Reprints Today’s PaperSubscribe