{"id":3385,"date":"2021-08-20T13:15:16","date_gmt":"2021-08-20T12:15:16","guid":{"rendered":"https:\/\/telecomkh.info\/?p=3385"},"modified":"2021-08-20T13:16:03","modified_gmt":"2021-08-20T12:16:03","slug":"the-european-commission-opens-in-depth-investigation-into-proposed-acquisition-of-kustomer-by-facebook","status":"publish","type":"post","link":"https:\/\/telecomkh.info\/?p=3385","title":{"rendered":"The European Commission opens in-depth investigation into proposed acquisition of Kustomer by Facebook"},"content":{"rendered":"

The European Commission has opened an in-depth investigation to assess the proposed acquisition of Kustomer by Facebook under the EU Merger Regulation. The Commission is concerned that the proposed transaction would reduce competition in the market for the supply of Customer Relationship Management (CRM) software<\/strong><\/p>\n

The Commission 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.
\nExecutive Vice-President Margrethe Vestager, responsible for competition policy, said: \u201cIt 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.\u201d
\nFacebook 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.<\/p>\n

The Commission’s preliminary competition concerns<\/strong>
\nFollowing its preliminary investigation, the Commission has concerns about the impact of the transaction:<\/p>\n

a) On a broader market for the supply of CRM software and a narrower market for the supply of customer service and support CRM software.
\nIn particular, the Commission is concerned that, as a result of its combination with Kustomer, Facebook may foreclose access to its business-to-consumer (\u201cB2C\u201d) over-the-top (\u201cOTT\u201d) 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. The preliminary investigation suggests that Facebook may have the ability, as well as a potential economic incentive, to engage in foreclosure strategies vis-\u00e0-vis Kustomer’s rivals, such as preventing these companies from using Facebook’s messaging channels or degrading access to these channels. Such foreclosure strategies could reduce competition in the market for the supply of CRM software and the market for the supply of customer service and support CRM software, leading to higher prices, lower quality and less innovation for business customers, which may in turn be passed on to consumers.<\/p>\n

b) 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.<\/p>\n

By acquiring Kustomer, Facebook could more easily obtain data from businesses making use of Kustomer’s CRM software, including (i) \u201ccustomer transaction data\u201d which includes customer data such as on gender, order and purchase history, and (ii) \u201cother event data\u201d, such as customer’s website views, adds to wishlist and store visits. The data that businesses store in Kustomer’s CRM software and which they may share with Facebook appears to provide an important advantage in the online display advertising market. By increasing the data advantage of Facebook in its ability to better personalise and target the ads it provides, it would be more difficult for rivals to match Facebook’s online advertising services. Thus, the transaction would raise barriers to entry and expansion for Facebook’s competitors for these services, to the ultimate detriment of advertisers and publishers that would face higher prices and have less choice. The Commission will now carry out an in-depth investigation into the effects of the transaction to determine whether its initial competition concerns are confirmed.
\nThe Commission closely cooperated with competition authorities around the world during the initial investigation, and will continue such cooperation during the in-depth investigation. The Commission is also in close contact with the competition authorities of the Member States.
\nThe proposed transaction was notified to the Commission on 25 June 2021. The Commission now has 90 working days, until 8 December* 2021, to take a decision. The opening of an in-depth inquiry does not prejudge the final result of the investigation.<\/p>\n

Referral request<\/strong>
\nThe proposed transaction did not meet the turnover thresholds of the EU Merger Regulation. However, the transaction was required to be notified to Austria for regulatory clearance. Following such notification, on 2 April 2021, Austria submitted a referral request to the Commission pursuant to Article 22(1) of the EU Merger Regulation. On 12 May 2021, the Commission accepted the request from Austria, which was joined by Belgium, Bulgaria, France, Iceland, Ireland, Italy, the Netherlands, Portugal and Romania. Following this acceptance, the referring Member States will not apply their own national legislation on competition to the transaction. The Commission will assess the impact of the acquisition of Kustomer by Facebook within the territory of these Member States under the EU Merger Regulation.<\/p>\n

Companies and products<\/strong><\/p>\n

Facebook is a US based multinational company which provides various websites and applications for mobile devices offering social networking, consumer communications and photo and video-sharing functionalities. These include Facebook, Messenger, Instagram and WhatsApp. Facebook offers most of its services at no cost to users. Facebook’s primary revenue-generating activity is offering ads space and related services to third parties, which currently accounts for the vast majority of its annual revenues globally.<\/p>\n

Kustomer is a US based company that offers a Software as a Service (\u201cSaaS\u201d) CRM software specialising in customer service. Kustomer displays all interactions that a consumer has had with the business in a single timeline view, including the consumer’s purchase history, refunds, complaints and all other communications. Kustomer’s CRM software integrates with a wide range of B2C communication channels and supports agent communications with consumers through communication channels including phone, email, webchat, SMS, Messenger, WhatsApp, Instagram and Twitter.<\/p>\n

Merger control and procedure<\/strong>
\nThe Commission has the duty to assess mergers and acquisitions involving companies with a turnover above certain thresholds (see Article 1 of the Merger Regulation) and to prevent concentrations that would significantly impede effective competition in the EEA or any substantial part of it.
\nThe vast majority of notified mergers do not pose competition problems and are cleared after a routine review. From the moment a transaction is notified, the Commission generally has 25 working days to decide whether to grant approval (Phase I) or to start an in-depth investigation (Phase II).<\/p>\n

Above, Executive Vice-President Margrethe Vestager, responsible for competition policy \/ Image credited to the EC<\/em><\/span><\/p>\n","protected":false},"excerpt":{"rendered":"

The European Commission has opened an in-depth investigation to assess the proposed acquisition of Kustomer by Facebook under the EU Merger Regulation. The Commission is concerned that the proposed transaction would reduce competition in the market for the supply of Customer Relationship Management (CRM) software The Commission is also concerned that the proposed transaction would … <\/p>\n

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