German competition authorities step up pressure on Facebook

German competition authorities step up pressure on Facebook

For ordinary mortals, WhatsApp is probably the preferred application to communicate quickly with family, friends and relatives. For its owner, since 2014, the American computer giant Facebook, it is more than that. In the company of tycoon Mark Zuckerberg, they harbor the desire that WhatsApp transcend and become a bigger business and a more relevant source of income.

“The hope is that companies will one day use WhatsApp like, de facto, its website, allowing consumers to look through their catalogs, make purchases and interact directly with customer service companies through the application “, as explained in the US economic information agency Bloomberg.

This explanation came at the end of last year, when Kustomer’s Facebook purchase was made public. This start-up New York, with just over 200 employees, It must now serve Facebook, helping companies to maintain their conversations with their customers. According to Facebook accounts, cited by the American economic newspaper The Wall Street JournalAs of the end of 2020, no less than 175 million people used WhatsApp for commercial purposes every day.

In this context, know-how Kustomer seems of obvious interest to Facebook. However, Kustomer had a price. At the time, the market research company PitchBook Data, based in Seattle (United States), valued the start-up at 710 million dollars (about 600 million euros). The data of the Facebook purchase that emerged in the press at the end of last year is 1,000 million dollars (about 847 million euros).

That amount is more or less the same as Instagram cost Facebook in 2012. But that amount is also a problem, at least in Germany.

So much so that the Federal Cartel Office, a German body dedicated to preserving the proper functioning of the market, has put Facebook at the center of its interest on account of the purchase of Kustomer. A few days ago, said German authority made it known that it is studying whether Facebook made that purchase properly. Specifically, the question being studied is whether or not Facebook was obliged to comply with the mandatory registration to be completed when an acquisition of this type exceeds 400 million euros.

According to the recent statement issued by the Federal Cartel Office on this initiative against Facebook, “the high purchase price in these acquisition cases is usually a sign of innovative business ideas with a high competitive potential in the market.” “Therefore, as regards the protection of the potential for innovation and competition in innovation in technology markets,” a preventive examination may be required under the merger control legislation, “the statement read. in that text.

In addition, “it is necessary to clarify if the operation has national repercussions and if the company object of the same has a significant activity in Germany”, they maintain in the Federal Office of Cartels.

For all this the German economic newspaper Handelsblatt considers that “the Federal Cartel Office is once again putting Facebook in its crosshairs.” This German authority is now intervening with Facebook, aware that in the digital economy, concentrations have been taking place for some time to this part that must be closely monitored.

“Especially in the digital economy there are many markets that are already highly concentrated. That is why rigorous control is inevitable,” according to the president of the Federal Cartel Office, Andreas Mundt, on account of the purchase of Kustomer by Facebook.

The body chaired by Mundt has another separate case pending against the Internet majors – Google, Amazon, Apple and, of course, Facebook – where it is analyzing whether these firms have an “intersectional market relevance” that could trigger a ban of some business practices of these companies. The purchase of Kustomer, therefore, adds to that thorny question open in Germany.

Now, with the Kustomer theme, it was not only possible to click Facebook in Germany. It turns out that the European Commission is also taking up the case.

As reported last week by the British agency Reuters, the competent authorities in Brussels are currently conducting a preliminary review of the case. They will end next Monday, August 2. This process will be followed by “a 90-day investigation” of community officials, according to Reuters.

Facebook, which at the time did not make public the terms of the Kustomer purchase, also did not respond to questions from the US press about the acquisition when giving an account of it. It remains to be seen if the initiative of the Federal Cartel Office clarifies everything as soon as it was hidden or if it has greater repercussions.

It would not be the first time that Facebook has encountered problems on German soil. At the beginning of 2019, this German body already prohibited Facebook from merging the data of the users of the social network that bears its name, those of Instagram and those of WhatsApp. The American company still struggles to do what it wants against the Teutonic body. It does so in the Court of Justice of the European Union.

With that case still unsolved, the Kustomer purchase is added to the list of issues that Mark Zuckerberg and company have to worry about in Germany.


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