The European Commission has authorised, under the EU Merger Regulation, the proposed $19 billion acquisition of WhatsApp by Facebook. Facebook (via Facebook Messenger) and WhatsApp both offer applications for smartphones which allow consumers to communicate by sending text, photo, voice and 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.

The Commission’s investigation focused on three areas: (i) consumer communications services, (ii) social networking services, and (iii) online advertising services.

As regards consumer communications services, the Commission found that Facebook Messenger and WhatsApp are not close competitors. Users seem to use the two apps in different ways and many of them use the two apps simultaneously on the same mobile handset. Furthermore, this is a very dynamic market with several competing apps available on the market, such as Line, Viber, iMessage, Telegram, WeChat and Google Hangouts.

As regards social networking services, the market investigation showed that their boundaries are continuously evolving. Some third parties suggested that WhatsApp is already a social network which competes with Facebook. However, the Commission found that the parties are, if anything, distant competitors in this area, in particular given a substantially richer experience offered by Facebook. Moreover, there is a large number of alternative service providers, including other consumer communications apps, such as Line and WeChat.

Although WhatsApp is not active in online advertising, the Commission examined whether the transaction could strengthen Facebook's position in that market and hamper competition. The Commission concluded that, regardless of whether Facebook would introduce advertising on WhatsApp and/or start collecting WhatsApp user data, the transaction would not raise competition concerns. This is because after the merger, there will continue to be a sufficient number of alternative providers to Facebook for the supply of targeted advertising, and a large amount of internet user data that are valuable for advertising purposes are not within Facebook's exclusive control.