European Commission Press release - Mergers: Commission approves acquisition of WhatsApp by Facebook

European Commission - PRESS RELEASES - Press release - Mergers: Commission approves acquisition of WhatsApp by Facebook: "The Commission’s investigation focused on three areas: (i) consumer communications services, (ii) social networking services, and (iii) online advertising services.

 As regards consumer communications services, the Commission focussed its assessment on apps for smartphones, as WhatsApp is not available for other devices. The Commission found that Facebook Messenger and WhatsApp are not close competitors. Indeed, despite the fact that Facebook Messenger is a standalone app, the user experience is specific given its integration with the Facebook social network. For WhatsApp, access to the service is provided through phone numbers while for Facebook Messenger, a Facebook profile is required. Users seem to use the two apps in different ways and many of them use the two apps simultaneously on the same mobile handset. Furthermore, this is a very dynamic market with several competing apps available on the market, such as Line, Viber, iMessage, Telegram, WeChat and Google Hangouts.

 The consumer communications apps market is characterised by network effects, that is to say the value of the service to its users increases with the number of other users. Network effects may allow the entity which enjoys a large network to keep its competitors out of the market. Given their popularity, both WhatsApp and Facebook Messenger already have large customer bases. However, a number of factors mitigate the network effects in this particular case. Indeed, the Commission found that the consumer communications apps market is fast growing and characterised by short innovation cycles in which market positions are often reshuffled. Moreover, launching a new app is fairly easy and does not require significant time and investment. Finally, customers can and do use multiple apps at the same time and can easily switch from one to another.

 As regards social networking services, the market investigation showed that their boundaries are continuously evolving. Some third parties suggested that WhatsApp is already a social network which competes with Facebook. However, the Commission found that the parties are, if anything, distant competitors in this area, in particular given a substantially richer experience offered by Facebook. Moreover, there is a large number of alternative service providers, including other consumer communications apps, such as Line and WeChat. Further, even in the event of an integration between WhatsApp and Facebook such that Facebook's position in social networking services could be strengthened, the net gain in terms of new members of the social network would be limited, since the user base of WhatsApp already overlaps to a significant extent with that of Facebook. Hence, no matter what the precise boundaries of the market for social networking services are and whether or not WhatsApp is considered a social network, competition is unlikely to be negatively affected by the merger for such services." 'via Blog this'