Facebook and Europe fall out (again) over data issues

The European Commission (hereafter known as the Gaggle of Red-tapers) has started investigations as to whether Facebook gave it misleading information during its acquisition of WhatsApp in 2014.

Jamie Davies

December 20, 2016

4 Min Read
Facebook and Europe fall out (again) over data issues

The European Commission (hereafter known as the Gaggle of Red-tapers) has started investigations as to whether Facebook gave it misleading information during its acquisition of WhatsApp in 2014.

The Statement of Objections sent to Facebook claims the internet giant was directly misleading while navigating the regulatory maze during the $19 billion acquisition. More specifically, the issue seems to be surrounding the data sharing episode which has incensed many data privacy advocates in Europe.

Back in August, WhatsApp changed its terms and conditions which would allow it to share user information with parent company Facebook to improve advertising platforms. Many privacy groups objected to the move on the grounds users had not explicitly given permission for the practise of data sharing, with pressure mounting high enough for the WhatsApp/Facebook combo to announce its had stopped the activities.

The Gaggle of Red-tapers’ primary objection here seems to be around the technical capabilities of matching Facebook IDs of users with the same WhatsApp IDs. During the acquisition process, the Gaggle of Red-tapers claim Facebook said it wasn’t able to establish reliable automated matching between the two companies’ user accounts, though now it believes Facebook engineers were able to do it, but neglected to mention it at the time.

“Companies are obliged to give the Commission accurate information during merger investigations. They must take this obligation seriously,” said Commissioner Margrethe Vestager. “Our timely and effective review of mergers depends on the accuracy of the information provided by the companies involved. In this specific case, the Commission’s preliminary view is that Facebook gave us incorrect or misleading information during the investigation into its acquisition of WhatsApp. Facebook now has the opportunity to respond.”

Facebook now has now until 31 January 2017 to respond to the Statement of Objections, and potentially face a fine of up to 1% of Facebook’s turnover.

To make matters worse, the Article 29 Working Party, a data protection advocacy group, has asked WhatsApp to confirm it has stopped sharing user information with Facebook, after previous evasive statements. Article 29 has asked whether WhatsApp has been using creative language to allow it to continue sharing data with Facebook, despite apparently stating it would stop.

Following the announcement from WhatsApp that it would be sharing user data with parent company Facebook, there were numerous objections to the move. Article 29 was one which called for the practise of sharing information between the two parties to be halted on the grounds users had not provided explicit consent.

The whole saga has proved to be a PR pain point for all involved as there have been claims certain privacy and civil rights of users have been washed over in an effort to increase advertising revenues. This latest development could be another PR headache for the WhatsApp/Facebook combo, as Article 29 indirectly asking whether it has used misleading phrasing.

“The WP29 also notes that WhatsApp confirms that it has refrained from sharing of EU user account information within the Facebook ‘family of companies’ for it to use for the purposes of improving Facebook products and advertising experiences,” the group said in a letter to WhatsApp. “On this point, the WP29 remains concerned that data exchange does still take place between WhatsApp and Facebook, for purposes other than ‘improving Facebook products and advertising experience’.

“The WP29 calls upon WhatsApp to provide precise clarification in this respect and reasserts its concerns regarding the potential impact of the sharing of information between WhatsApp and Facebook for millions of EU data subjects using those services.”

While Article 29 has been very formal in its questioning to the WhatsApp team, it is essentially asking a simple question. Have you actually stopped sharing WhatsApp user information with Facebook? Essentially, WhatsApp has stated it has stopped sharing user information for the purpose of improving Facebook’s advertising platform, but is it still sharing user information for other purposes?

Should the two incidents prove to be true, the entire saga could prove to be damaging for two communications brands which rely on consumer confidence to operate effectively. Data protection and privacy has proved to be a hot topic for consumers in recent months, hence the decision for both WhatsApp and Facebook instant messaging platforms to include end-to-end encryption, however such claims of misleading claims could damage the credibility and consumer trust in the brands.

Despite numerous commentators (sometimes including this correspondent) implying the Gaggle of Red-tapers have a tendency to over-regulate, operate with an analogue mind-set in a digital era, unnecessarily get involved with matters which should be dealt with at a national level and move at a civil-servant pace which is completely counter-productive for the connected economy, you have to give it to them; they aren’t afraid to mix it up with some of the biggest and best legal teams in the world.

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