Zuckerberg, a paella, and the mighty EU questionnaires that would stop Whatsapp acquisition by Facebook?

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It was the end of February and we were walking around the Ramblas in Barcelona, at the eve of Mobile World Congress 2014, where the Sting was the only Brussels media that made it to Catalunya. Seduced by the smell of paella and cinnamon, there was one major thing that all the people wearing the magic MWC badge were whispering about last February. And that was nothing else but the major $19 billion acquisition of Whatsapp by Facebook, that happened only one week before the world’s biggest mobile conference.

I will never forget Mark Zuckerberg’s answer to a question by someone from the public at Fira Barcelona, who asked him: “what is next for you now after the Whatsapp deal?” Mark then replied that after the completion of a $19 billion deal, he rather needs a break. Well, this poor genius definitely deserves that and it seems that it was granted to him in his home country when a couple of months after Barcelona, last April, Mrs Jessica Rich, the director of the Federal Trade Commission (FTC) Bureau of Consumer Protection, ‘approved’ this historic acquisition of the two companies that accommodate together over one billion users. She only pointed how important it is that data privacy rules are rigid in this new ‘company’, as it is in Facebook. “If the acquisition is completed and WhatsApp fails to honor these promises, both companies could be in violation of Section 5 of the FTC Act and, potentially, the FTC’s order against Facebook,” she said.

While Mark was planning his break after this OK by his mother market, Brussels gave him a generous NOK that will certainly put him and his good friend now Jan Koum, founder of Whatsapp, into trouble. So, Facebook, knowing well how tricky it is to do business in the Old Continent, risking disapproval by 28 markets, it decided to ask the EU for a central approval of the Whatsapp acquisition. This happened already last May.

According to a report published this week by The Wall Street Journal, though, the DG Competition has sent out questionnaires to companies that ‘might’ be threatened by this social media deal, asking them how and why they believe this acquisition is harming the market. You see, many Telcos in Europe have been expressing since February their disfavor over this grand deal. Not without a reason of course. Whatsapp, the social app that is using the network of the operator to send messages, files and call free of charge has been a pain in the brain on its own. Then one can imagine why when the operators found out about the marriage of two social networks with 500 million users and 1 billion users respectively, which allow ‘freeloaders’ to communicate without paying ‘royalties’ to the operator, completely freaked out.

And it is true that lobbying in Brussels is worth every euro. All this Telco lobbying bore fruits apparently and now the acquisition will be scrutinized. Sources say that it will not only be checked whether it threatens the market by creating a sort of monopoly of ‘free social interaction’ that will steal revenue from Vodafone and the peer. For the first time in an antitrust case in Europe data privacy will be investigated as well. Wow!

Undeniably this is a great step forward. But how realistic is it? And let’s accept that Whatsapp is relatively new in the business and might have data privacy loopholes. But at least technically speaking it is rather unlikely for Facebook to be so much vulnerable. The social media giant is considered an old fox already in the market and has learned so much from the mistakes and bad experiences of the past. It is highly unlikely that the bureaucrat of the Berlaymont will yell EUREKA on this one, like a modern Archimedes. But, all in all, if it is for the sacred value of data privacy, by any means keep looking guys!

Another point of attention here is whether it is practically possible that this deal is approved in the US market and not in the EU. In a globalized economy like the one we are living can you really stop a butterfly from flying across the Atlantic? And even if you can, can you stop Facebook from accessing Whatsapp European user information now? It is nice to have good antitrust cases to dig it up and keep the market sustainable but in markets like this, the bureaucrat with the thick glasses has first to grasp things for which there is no literature produced yet. Things that were born in a couple of brilliant minds as pieces of code, who also happen to be billionaires to implement them, like our friend Mark here.

All in all, we will follow this antitrust case very closely, but we want it this time to be something more than a result of expensive and heavy Telco lobbying. We would like to have the people at the Commission to comprehend and predict market and data privacy dangers in these high-tech newborn and unmapped markets, rather than sending out open type questionnaires for lobbyists to answer…







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