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The European Commission Authorizes Facebook, Inc. and WatsApp Inc, Merger

October 11, 2014 by Sabin Piso

The European Commission has authorized, under the EU Merger Regulation, the proposed acquisition of WhatsApp Inc. by Facebook, Inc.

Facebook through Facebook Messenger and WhatsApp are very popular online programs. Both offer applications for smartphones which allow consumers to communicate through text, photo, voice and video messages.

The European Commission has found that Facebook Messenger and WhatsApp are not close competitors. Being so means that consumers would still be able to have a wide choice of apps that they can choose from after the transaction. The investigation also showed that the resulting company will continue to face sufficient competition after the merger.

Commission Vice President in charge of competition policy, Joaquín Almunia, said: “Consumer communications apps keep European citizens connected and are becoming increasingly popular. While Facebook Messenger and WhatsApp are two of the most popular apps, most people use more than one communications app. We have carefully reviewed this proposed acquisition and come to the conclusion that it would not hamper competition in this dynamic and growing market. Consumers will continue to have a wide choice of consumer communications apps.”

The Commission found that Facebook Messenger and WhatsApp are not close competitors. Facebook Messenger is a standalone app, the user experience is specific with the Facebook social network. WhatsApp users on the other hand provide consumer access to the service through phone numbers. Facebook Messenger requires users to have a Facebook profile. Furthermore the Commission also assessed that there is a very dynamic market with several competing apps available for consumers like Line, Viber, iMessage, Telegram, WeChat and Google Hangouts.

When it comes to social networking services, the Commission’s market investigation showed that there is a continuous evolution in the two companies’ services. Some third parties mentioned that WhatsApp is deemed as a social network and thus competes with Facebook. The Commission however found that Facebook and WhatsApp are distant competitors in this area, in particular given a “substantially richer experience” offered by Facebook.

It was also noted that there is a large number of alternative service providers, which includes other consumer communications apps, such as Line and WeChat. In the event of integration between WhatsApp and Facebook, Facebook’s position in social networking services could be strengthened because of the transaction. The net gain, when it comes to increasing new members of the social network would be limited, since user base of WhatsApp overlaps to a significant extent with that of Facebook.

WhatsApp is not active in online advertising, however the Commission examined whether the transaction could improve Facebook’s position in that market and affect the competition. The Commission examined the possibility that Facebook could cause the following:

(i) introduce advertising on WhatsApp, and/or

(ii) use WhatsApp as a potential source of user data for improving the targeting of Facebook’s advertisements. The Commission concluded that, regardless of whether Facebook would introduce advertising on WhatsApp and/or start collecting WhatsApp user data, the transaction would not raise competition concerns. This is because after the merger, there will continue to be a sufficient number of alternative providers to Facebook for the supply of targeted advertising, and a large amount of internet user data that are valuable for advertising purposes are not within Facebook’s exclusive control.

The Commission analysed potential data concentration issues only to the extent that it could hamper competition in the online advertising market. Privacy-related concerns resulting from the increased concentration of data within the control of Facebook due to the transaction do not fall within the scope of EU competition law.

And therefore the Commission concluded that the transaction would raise no competition concerns. The transaction was notified to the Commission on 29 August 2014.

Original text available at Europa.eu Press Releases Database.

A.L. Mijares

About Facebook

Facebook provides social network online platforms offering a range of social services, including consumer communications and photo / video sharing functionalities to consumers and advertisers. Facebook offers the social networking platform “Facebook”, the consumer communications app “Facebook Messenger” and the photo and video-sharing platform “Instagram”.

These may be accessed by members through the internet on PCs and via specific apps on mobile devices. Facebook also provides online advertising space. Facebook therefore collects data regarding the users of its social networking platforms and analyses them in order to serve advertisements on behalf of advertisers. Facebook ads are “targeted” at each particular user of its social networking platforms. Facebook’s social networking platform has 1.3 billion users worldwide, 300 million of which are also users of the Facebook Messenger app. Facebook stock market evolution:

http://www.nasdaq.com/symbol/fb

About WhatsApp

WhatsApp is the provider of a messaging app enabling users to exchange multimedia instant messages. WhatsApp is currently available only on mobile computing devices or smart phones and it does not engage in any advertising service. WhatsApp has 600 million users worldwide.

Titan Aerospace finally bought by Google, not Facebook!

April 15, 2014 by Sabin Piso

Titan Aerospace was finally bought by Google, not Facebook … what a surprise. Google confirmed the transaction but did not mention the value. This is an effort to connect some areas from some countries that do not have Internet access at this point. Of course, these new areas will be a very good engine for growth in the following years.

Some models produced by Titan are able to fly continuously for up to five years without landing. Initial reports were indicating that Facebook will buy this company but in the end they had to settle for another drone maker, Ascenta.

This is a race that is trying to connect around 2 thirds of the world population, population that is not currently connected to the internet in any way.

Oculus VR opens pockets to receive $2 Billion from Facebook

March 26, 2014 by Sabin Piso

Facebook will buy Oculus VR, the company that makes virtual reality headsets. The deal is in the range of $2 billion. Oculus is tho’ a company that is in a start-up mode and that didn’t make a consumer product until now.

It’s headsets (Oculus Rift) are mainly used right now by video game developers to help them to change the way video games are being played.

As this will be a hot gaming thing in the next years, Sony is about to launch a VR headset as well for the PS4 console.

The future of Oculus after the Facebook acquisition? Here are some pointers :

enjoying a game by being there on the field and sit in your virtual chair
talk to a doctor face2face
studying in an international classroom with students and teachers from all over the world

Also, Mark Zuckerberg believes that virtual reality will be the next thing after mobile devices.

Deal mathematics : $400 million in cash and 23.1 million shares of Facebook common stock (valued at around $1.6 billion). The agreement also provides for an additional$300 million earn-out in cash and stock based on the achievement of certain milestones.

Titan Aerospace might sell the business to Facebook Inc

March 4, 2014 by Sabin Piso

Titan Aerospace might sell their drone business to Facebook for around $ 60 mil. Facebook is interested about the wireless internet facility that these drones can have to be able to offer internet access to clients in countries where the telecom infrastructure is not developed yet. TechCrunch blogged about this on Monday.

Facebook and Titan declined to comment.

The effort would help advance Facebook’s Internet.org effort, aimed at connecting billions of people who do not currently have Internet access in places such as Africa and Asia.

Titan is developing a variety of solar-powered drone according to their website, with initial commercial operations slated for 2015. The drones, which fly at an altitude of 65,000 feet (20 km) and can remain aloft for up to five years.

Facebook is interested in having Titan build 11,000 of its Solara 60 model drones for its Internet.org project, according to the TechCrunch report.