The regulator said that it has concerns that the proposed deal will further consolidate the market position of Facebook in the online display advertising market
Facebook’s acquisition of Kustomer faces in-depth probe by the European Commission. (Credit: Dimitris Vetsikas from Pixabay)
The European Commission (EC) has launched an in-depth probe into Facebook’s acquisition of Kustomer on grounds that it will distort competition in the market for the supply of customer relationship management (CRM) software.
Kustomer, which provides CRM software, helps businesses to manage communications with consumers across multiple channels such as phone, SMS, email, Messenger, WhatsApp and Instagram in a single tool.
Facebook had reportedly agreed to pay $1bn in consideration for acquiring the CRM software provider.
The EC said that it has 90 working days, until 22 December 2021, for completing the probe and make a decision.
The deal was announced by Facebook in November 2020 and was notified to the EC in June 2021.
Also, the regulator said that it has concerns that the proposed deal will further consolidate the market position of Facebook in the online display advertising market. This is on the basis that the deal will enable the social media giant to increase the already substantial amount of data it has for personalising the ads displayed by it, said the regulator.
The EC said that it is particularly worried that Facebook after acquiring Kustomer could foreclose access to WhatsApp, Instagram, or Messenger, the company’s business-to-consumer (B2C) over-the-top (OTT) messaging channels.
According to the regulator, the channels constitute a large part of the B2C OTT messaging market, which is a major input for the supply of CRM software services.
The EC added that in the future, Kustomer’s rivals could be stopped from using Facebook’s messaging channels or see their access to the messaging channels degraded.
EC executive vice-president Margrethe Vestager, responsible for competition policy, said: “It is important to closely review potentially problematic acquisitions by companies that are already dominant in certain markets.
“This applies in particular to the digital sector, where Facebook enjoys a leading position in both online display advertising and in over-the-top messaging channels, such as WhatsApp, Messenger or Instagram.
“Our investigation aims to ensure that the transaction will not harm businesses or consumers, and that any data that Facebook gets access to does not distort competition.”