Facebook-WhatsApp deal may spark probes

Facebook Inc.’s plan to buy WhatsApp Inc. for as much as US$19 billion (N$205.2 billion) risks triggering privacy probes across the European Union as watchdogs seek to know how the mobile-messaging startup’s treasure trove of client data will be used, the European Union’s top privacy regulator said yesterday. The biggest Internet acquisition in more than a decade may spur interest from authorities who so far ignored the emergence of WhatsApp, said Jacob Kohnstamm, who leads a group of EU privacy officials known as the Article 29 Data Protection Working Party as well as the Dutch agency already investigating the 450-million client company. Kohnstamm said in an interview that colleagues in other EU countries “could, having heard about the merger, decide to do research into the product as well” and as such “28 data protection regulators could open an investigation.” The proposed cash-and-stock acquisition would be the biggest by Facebook, the world’s largest social network, and gives WhatsApp roughly the same valuation as Gap Inc. and more than half the market value of microblogging service Twitter Inc. WhatsApp lets users send messages through its service on mobile devices based on different operating systems including Apple Inc.’s iOS, Google Inc.’s Android, Microsoft Corp.’s Windows Phone and BlackBerry Ltd.’s software. Data Collection The main concern for privacy regulators is the collection of data from its users’ address books on their phones when they download the application, Kohnstamm said. The risk with such a database is that “it is tempting to use this data” for a completely different purpose, said Kohnstamm. Facebook Chief Executive Officer Mark Zuckerberg said this week that WhatsApp is “worth more” than US$19 billion. While WhatsApp had low revenues, it would be worth more because of its strategic value, huge business potential to double its users and its fit with Facebook. Facebook has come under intense scrutiny by privacy regulators worldwide in recent years and in Europe was forced in 2012 to delete data collected for its facial recognition programme after a probe by Ireland’s privacy regulator, which oversees the company because its European base is in Dublin. “Facebook is not only buying a popular messaging app, it is also acquiring the addresses and telephone numbers of 450 million users worldwide,” said Wim Nauwelaerts, a lawyer specialising in EU data protection law at Hunton & Williams LLP in Brussels. “Many of these users are already signed up to Facebook, so through this deal Facebook will be able to build complete profiles on users” and “this begs the question to what extent Facebook intends to ‘monetise’ the data.” Jan Koum, WhatsApp’s chief executive officer who co-founded the company with Brian Acton in 2009, has said the company will remain independent from Facebook. LUXEMBOURG BLOOMBERG