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EU opens probe into Facebook's acquisition of Kustomer

09 August 2021, 18:22 CET
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EU opens probe into Facebook's acquisition of Kustomer

Margrethe Vestager - Photo © European Union 2021

(BRUSSELS) - The European Commission opened an in-depth investigation Tuesday to assess whether the proposed acquisition of Kustomer by Facebook would distort competition under the EU Merger Regulation.

The Commission's concerns over the proposed transaction are that it would reduce competition in the market for the supply of Customer Relationship Management (CRM) software.

The EU executive is also concerned that the proposed transaction would further strengthen Facebook's market position in the online display advertising market by increasing the already significant amount of data available to Facebook for personalisation of the ads it displays.

"It is important to closely review potentially problematic acquisitions by companies that are already dominant in certain markets," said EC vice-president Margrethe Vestager: "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."

She added that the aim of the investigation was to ensure the transaction would not harm businesses or consumers, "and that any data that Facebook gets access to does not distort competition."

Facebook is a social network, messaging service, and online ads service provider. Facebook's messaging channels include WhatsApp, Messenger and Instagram. Kustomer is a CRM software provider offering businesses to manage communications with consumers across different channels (by phone, email, SMS, WhatsApp, Messenger or Instagram etc.) in a single tool.

The Commission is concerned that, as a result of its combination with Kustomer, Facebook may foreclose access to its business-to-consumer ('B2C') over-the-top ('OTT') messaging channels, namely WhatsApp, Messenger or Instagram.

These channels account for a large portion of the B2C OTT messaging market, which is an important input for the supply of CRM software services.

he Commission is also concerned about the impact of the transaction on the markets for the supply of online display advertising services, or segments thereof, where the Commission, at this stage of the investigation, considers that Facebook may hold a dominant market position in several Member States.

By acquiring Kustomer, Facebook could more easily obtain data from businesses making use of Kustomer's CRM software, including (i) 'customer transaction data' which includes customer data such as on gender, order and purchase history; and (ii) 'other event data', such as customer's website views, adds to wishlist and store visits.

The proposed transaction was notified to the Commission on 25 June 2021. The Commission now has 90 working days, until 22 December 2021, to take a decision. The opening of an in-depth inquiry does not prejudge the final result of the investigation.

More information will be available on the Commission's competition website, in the Commission's public case register under the case number M.10262.


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