Facebook's proposed $19 billion purchase of WhatsApp cleared an important regulatory hurdle Thursday, a victory tempered by the delivery of a stern privacy warning.
In a statement Thursday, Facebook said the Federal Trade Commission had already approved its purchase of WhatsApp, though the agency declined to comment specifically on the matter. The company still requires an OK from international regulators before the acquisition can go forward.
"We're pleased the FTC has completed its review and cleared our acquisition of WhatsApp," a company spokeswoman said. "Naturally, both companies will continue to comply with all applicable laws after the transaction closes."
But the social-media giant must honor the prior "privacy obligations" that WhatsApp, a mobile chat client, had promised to its hundreds of millions of users before the deal was announced, the FTC notified both companies Thursday.
Some privacy groups have expressed concern that Facebook, which relies heavily on collecting user data and selling it to advertisers, would breach assumed privacy protections that WhatsApp adopters believed they would be given when signing up with the internationally popular messaging platform. The Electronic Privacy Information Center and the Center for Digital Democracy filed a complaint with FTC last month objecting to the purchase on these grounds.
"The FTC is to be commended for sending a very strong signal that they will hold Facebook and WhatsApp accountable for their promises," Jeff Chester, the executive director of CDD, said in a statement responding to Thursday's announcement. "The commission's action has likely spoiled, for now, the plans Facebook has developed to turn its $19 billion into even more digital gold for themselves."
If Facebook wishes to use WhatsApp data in a way that extends beyond the existing privacy agreement, it must first earn "affirmative consent" from individual users before doing so.
This isn't the first time that Facebook has tangled with FTC over privacy issues. In 2011, the company settled government charges that it had deceived its consumers and violated privacy agreements by changing privacy settings before obtaining consent.
"We want to make clear that, regardless of the acquisition, WhatsApp must continue to honor these promises to consumers," the letter continues. "Further, if the acquisition is completed and WhatsApp fails to honor these promises, both companies could be in violation of Section 5 of the Federal Trade Commission Act and, potentially, the FTC's order against Facebook."
Facebook announced it had purchased the five-year-old WhatsApp, which boasts 450 million users and soaring growth rate of a million more each day, in February for a humongous price tag of $19 billion that shocked most observers, some of whom were unfamiliar with a messaging service that is far more popular overseas than it is in the United States.
This article appears in the April 11, 2014 edition of NJ Daily.