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.
In particular, 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.
The 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.
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.”
A full press release is available online.