WhatsApp with Facebook? The Competition Angle
In February, Facebook announced that it had agreed to purchase WhatsApp, an instant messaging business, for (a paltry) $19bn. Facebook is the world renowned social network with over 1.2 billion users. WhatsApp allows unlimited free text-messaging and picture sending between users and is among the most popular globally downloaded mobile apps. It has over 450 million users, and is estimated to grow by 1m users per day.
It was recently reported that although Facebook has not officially notified the deal to the Commission, the regulator under the EU Merger Regulations will conduct a single review of the transaction rather than Facebook face the possibility of separate reviews in a number of EU countries.
The Commission will likely assess how closely Facebook and WhatsApp compete in a number of markets and whether there is overlap. For example, Facebook Messenger is a specific Facebook messaging service in contrast to the standalone WhatsApp application. Much may depend on how the Commission characterises the 'social network' market and whether consumer communications on a range of platforms (tablet, mobile, laptop, PC etc) are part of one broader market. The ease by which new entrants can enter the market which may include products like Skype, Facetime, iMessage, and Viber will go some way to assess the effect of the transaction on competition.
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