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Facebook’s Kustomer Takeover Gets In-Depth EU Investigation

Facebook Inc.’s bid for Kustomer will get an in-depth European Union probe after regulators said it could reduce competition for customer-service software.

The European Commission set a Dec. 22 deadline to rule on the social network’s plan to buy a company that manages online customer queries, according to an emailed statement on Monday. Although the deal doesn’t meet the EU’s usual revenue limits for a review, regulators used a new procedures to examine it.

Facebook has fallen foul of a regulatory crackdown on big tech takeovers of smaller firms, partly prompted by game-changing deals such as Facebook’s acquisition of Instagram that escaped lengthy scrutiny.

It is important to closely review potentially problematic acquisitions by companies that are already dominant in certain markets,” Margrethe Vestager, the EU’s antitrust chief, said in the statement. The probe will ensure “that any data that Facebook gets access to does not distort competition.”

Regulators are concerned that the deal could allow Facebook to block rival customer-service software providers’ access to its services such as Instagram, WhatsApp or Messenger. They’ll also look at online display advertising and examine how the deal might increase Facebook’s “data advantage” in gathering information to improve personalized ads.

Facebook ”will continue to fully cooperate with the European Commission’s review,” a spokesperson said in an emailed statement. “The transaction is pro-competitive and will bring more innovation to businesses and consumers.”

Facebook made the deal, valued at more than $1 billion, to bolster efforts to monetize its messaging business, which is expanding to customer-service products that help companies interact with people via instant chat apps. WhatsApp currently makes money by charging large businesses to message customers on the platform.

While a longer EU probe raises the risk of a veto, companies can win approval by explaining their case or by changing business behavior or selling off overlapping operations.

The U.K.’s Competition and Markets Authority is also probing the deal with a Sept. 27 deadline set for a decision. In an unusual move, Germany’s Federal Cartel Office says it’s also considering an investigation after its chief was critical of the EU grabbing deals outside of its normal thresholds. The U.S. is also giving the deal a full review .

Source: Bloomberg