The European Commission announced on Monday the opening of an in-depth investigation into the proposed takeover by Facebook of the American start-up Kustomer, specializing in customer relationship management, because it fears a reduction in competition.
The Menlo Park company “occupies a leading position, both in the online display advertising market” and in the messaging market such as WhatsApp, Messenger or Instagram, underlined the vice-president in charge of competition policy, Margrethe Vestager, cited in press release.
The Commission opened a preliminary investigation into the project on May 18 and the results justified the in-depth investigation, Vestager said.
Ten national authorities – including Austria, at the origin of the initiative – had asked the European executive to investigate the operation, which does not reach the financial thresholds provided by the EU.
But anxious to preserve competition, Europeans have become very vigilant about the appetite of large companies for start-ups.
“We are eager to demonstrate to regulators that Facebook and Kustomer would offer more choice and better services through this transaction,” Facebook said at the time.
Besides a reduction in competition in the market for the supply of customer relationship management software, the Commission is concerned about a strengthening of Facebook “in the online display advertising market, increasing the quantity already important data that Facebook already has to personalize the ads it displays, “said the press release.
“Our investigation aims to ensure that the transaction will not harm businesses or consumers, and that the data to which Facebook has access does not distort competition,” Vestager said.
The preliminary investigation “suggests that Facebook may have the ability, as well as a potential economic incentive, to engage in foreclosure strategies against Kustomer’s competitors, for example by preventing these companies from using the Facebook messaging channels or degrading the conditions of use or access to these channels, “the statement said.
Such strategies “are likely to reduce competition in the market for the provision of customer relationship management software and in the market for the provision of customer service and support software for customer relationship management. “, believes the Commission. A situation that would lead to “higher prices, lower quality and lower innovation for professional customers, which can in turn be passed on to consumers,” she worries.
Recalling that the project was notified on June 25, the Commission specifies that it has until December 22, 2021 to take a decision.
Facebook doubled its profits in the second quarter with net income to $ 10.4 billion on revenue of $ 29 billion.
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