Facebook to win EU approval for $19 billion WhatsApp bid: sources
(Reuters) - Facebook (FB.O), the world's leading social network, will win unconditional EU approval for its $19 billion offer for mobile messaging startup WhatsApp in a deal pitting it against telecoms operators, two people familiar with the matter said on Thursday.
Context & Ripple Effects
Facebook moved the transaction to Brussels in May to avoid a patchwork of national reviews, then faced a July process in which the EU questioned rivals about its competitive effects. The acquisition has been framed as a way for Facebook to secure a must-have mobile app position without its own phone operating system, while related coverage connected WhatsApp to its Internet.org connectivity ambitions.
First-order effects
- An unconditional EU decision would remove the principal regional antitrust hurdle to Facebook completing its $19 billion acquisition of WhatsApp.
- Facebook would gain control of a major mobile-messaging service, strengthening its reach beyond the social-network product; telecom operators are the directly named counterparty group in the competitive dispute.
Second-order effects
- Telecom operators would face a better-resourced messaging rival as consumer communications continue to move through internet-based services rather than operator-controlled channels.
- The deal would give Facebook another user-facing endpoint for the connectivity strategy associated with Internet.org, linking network-access initiatives more closely to a messaging product.
Third-order effects
- A centralized, unconditional EU review would reinforce Brussels as the decisive venue for cross-border technology acquisitions that might otherwise face multiple national examinations.
- If large platforms continue to buy high-engagement mobile services, competition scrutiny will increasingly focus on control of user distribution rather than ownership of a phone operating system.
The trend: Major internet platforms are using acquisitions of mobile communication services to build distribution beyond their original products and operating-system dependencies.