Feds Approve Facebook Acquisition of WhatsApp

But the Federal Trade Commission is warning the social-media titan to uphold the privacy promises made to users of the mobile-chat app.

National Journal
Dustin Volz
April 10, 2014, 9:56 a.m.

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.

“What­s­App’s pri­vacy policy clearly states, among oth­er things, that users’ in­form­a­tion will not be used for ad­vert­ising pur­poses or sold to a third party for com­mer­cial or mar­ket­ing use without the users’ con­sent,” states the let­ter from Jes­sica Rich, dir­ect­or of FTC’s con­sumer-pro­tec­tion bur­eau. “Face­book’s pur­chase of What­s­App would not nul­li­fy these prom­ises, and What­s­App and Face­book would con­tin­ue to be bound by them.”

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.

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