BRUSSELS—ITIF's Center for Data Innovation released the following statement from Director Daniel Castro in response to allegations by the European Commission that Facebook misled the Commission in 2014 about the technical possibility of reliably matching WhatsApp user accounts with those of Facebook through automated means:
The Commission can and should investigate companies for failing to properly disclose information. But this review is troubling because it does not concern a failure to disclose factual information about a company. Instead, it is about the accuracy of a company’s predictions about its future capabilities. No company, including Facebook, can predict the future. Just because it is possible now for the two services to link user accounts—following several updates to both services and the operating systems they run on—does not mean that this was so two years ago. By appearing capricious, EU policymakers risk creating a chilling effect on data-driven innovation in Europe.
Facebook’s assertions about reliably matching accounts had nothing to do with the Commission’s approval of Facebook’s acquisition of WhatsApp in 2014. It is strange and disconcerting that the Commission should raise these concerns two years after approving the merger. At the time, the Commission rightly dismissed all concerns about potential data sharing between the two services as irrelevant to competition law. If the Commission had concerns about the possibilities or implications of data-sharing between the two companies, it should have raised them then. Furthermore, the Commission has not published any evidence to support its claim, or explained why it believes Facebook’s statements were untrue at the time. Reversing course like this could discourage the very types of data-driven innovation Europe needs, especially because mergers and acquisitions are one important means by which small firms grow, consumers gain access to digital services, and profits are generated to fund the development of new and beneficial services.
