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.
The
landmark acquisition, the largest in Facebook's 10-year history, will give the
company a firm foothold in the fast-growing mobile messaging market.
A
plan by WhatsApp to add free voice-call services for its 450 million customers
later this year, however, makes it a potentially powerful competitor to
companies such as Deutsche Telekom (DTEGn.DE), Telecom Italia (TLIT.MI) and
Telefonica (TEF.MC).
Analysts
said the move is likely to hit
telecoms providers' turnover as the industry
heads into its fifth year of revenue decline. The sector had looked to EU
regulators to extract concessions from Facebook.
Facebook
convinced the Commission that the deal had no anti-competitive effect and,
therefore, concessions were not necessary, the sources said.
"It's
unconditional clearance," one of the people said, declining to be named
because the decision by the European Commission was not yet public.
Commission
spokesman Antoine Colombani declined to comment. The European Union competition
authority has set an Oct. 3 deadline for its decision.
The
deal does not seem to pose any competition problems as far as the Commission is
concerned, said Tobias Caspary, a partner at law firm Fried Frank.
"Both
parties are offering their services for free. It seems unlikely that customers
are locked in with respect to instant messaging, and it would be relatively
easy to switch to alternative offers, for example Skype or Line," he said.
"Also
relevant factors looked at were probably that the entry barriers are relatively
low for the instant messaging market, that this is still a nascent market
characterized by rapid changes and growth, and that there are several recent
entrants."
U.S.
regulators gave the green light for the deal in April, telling WhatsApp to
stick to its current privacy practices after the merger, including not to use
users' personal data for targeted ads.
WhatsApp
and its rivals such as KakaoTalk, China's WeChat and Viber have in recent years
won over telecoms operators' customers with a free text messaging option,
posing a serious threat to the sector's revenues from this business, which
totaled about $120 billion last year, according to market researcher Ovum.
Reuters
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