European regulators have approved the $19 billion purchase of WhatsApp by Facebook, marking the final approval needed for Facebook to complete the deal. This acquisition is one of the largest in the tech industry and has been closely watched by both industry insiders and consumers alike.
Facebook applied to the EU Commission for approval of the deal back in May, so it has taken some time for the EU regulators to approve the deal. The lengthy review process underscores the importance of ensuring that such significant mergers do not stifle competition or harm consumer interests.
Details of the EU Commission’s Approval
The European Commission has authorised, under the EU Merger Regulation, the proposed acquisition of WhatsApp Inc. by Facebook, Inc., both of the United States. Facebook (via Facebook Messenger) and WhatsApp both offer applications for smartphones (so-called “apps”) which allow consumers to communicate by sending text, photo, voice and video messages. The Commission found that Facebook Messenger and WhatsApp are not close competitors and that consumers would continue to have a wide choice of alternative consumer communications apps after the transaction. Although consumer communications apps are characterised by network effects, the investigation showed that the merged entity would continue to face sufficient competition after the merger.
The Commission’s investigation revealed that despite both companies offering similar services, they are not direct competitors. Facebook Messenger and WhatsApp serve different user bases and have distinct features that set them apart. For instance, WhatsApp is known for its simplicity and focus on privacy, while Facebook Messenger offers a more integrated experience with Facebook’s social media platform.
Implications for the Market and Consumers
The approval of this deal has significant implications for the market and consumers. One of the primary concerns in such mergers is the potential for reduced competition, which could lead to higher prices or reduced innovation. However, the EU Commission’s investigation concluded that there would still be sufficient competition in the market. Other popular messaging apps like Telegram, Viber, and WeChat continue to provide viable alternatives for consumers.
Moreover, the acquisition could lead to enhanced features and services for users of both platforms. Facebook has the resources to invest in WhatsApp’s infrastructure, potentially improving its reliability and introducing new functionalities. For example, Facebook could integrate WhatsApp with its other services, offering users a more seamless experience across different platforms.
As yet, there are no details on exactly when the $19 billion purchase of WhatsApp by Facebook will be finalized. The finalization process involves various legal and administrative steps, which can take some time. As soon as we get more details, we will let you guys know.
In the broader context, this acquisition is part of Facebook’s strategy to expand its ecosystem and maintain its dominance in the social media and communication space. By acquiring WhatsApp, Facebook not only gains access to its vast user base but also strengthens its position against competitors like Google and Apple, who are also investing heavily in communication technologies.
Source TechCrunch
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