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Facebook request for EU WhatsApp antitrust review could streamline process

Facebook is reportedly requesting that the European Commission review its pending WhatsApp acquisition, in what is likely an effort to avoid multiple, parallel antitrust scrutiny in several countries.

The European Commission and Facebook declined to comment on the request, after the Wall Street Journal and the Financial Times reported Wednesday that Facebook asked for an antitrust review of the deal. The reports were based on sources familiar with the matter.

Facebook is in the process of acquiring mobile messaging app WhatsApp for US$19 billion. Last month, the U.S. Federal Trade Commission (FTC) cleared a path for the acquisition, calling on both companies to be mindful of privacy policies and to proceed with caution in how they deal with users' data.

The pending deal, however, raised concerns with European telecom companies that are worried that Facebook will get a dominant market position for instant messaging by acquiring WhatsApp, the Wall Street Journal reported.

By requesting an antitrust review on the European level, Facebook could avoid several parallel individual antitrust reviews by member states, said Thomas Graf, a Brussels-based antitrust lawyer for Cleary Gottlieb Steen & Hamilton. "You may not want to have a large number of different procedures before different member states but one centralized procedure," he said.

Filing a request for such a review happens quite often, Graf said. A case like this about online services that are available throughout Europe would probably suit the Commission, he said, adding that he expects the Commission to take the case. The Commission is the EU's executive and regulatory branch.

"It really looks like Facebook went for a pragmatic approach," said Martin Garner, an analyst at CCS Insight, who also thought it makes sense for Facebook to try to avoid antitrust reviews by multiple countries.

The instant messaging arena is dynamic and market share can change quite quickly, Garner said. Facebook Messenger, for instance, went from a very small position to one of the leading players in Europe in about two years, he said, noting that WhatsApp had a similar sort of rise later on. The WhatsApp acquisition was mainly a defensive move by Facebook to remain the biggest player in the market, he said.

How long Facebook can stay on top of the messaging market with WhatsApp is an open question, Garner said. "Over the next few years we could expect for one or more other players to have a big rise and become a very strong player very quickly," Garner said.



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