Facebook Fined $122 Million for Misleading EU on Takeover of WhatsApp

Facebook has been fined $122 million by European regulators for providing "misleading information" about its acquisition of messaging service WhatsApp.

The European Commission, the European Union's executive arm, announced the fine on Thursday.

"Today's decision sends a clear signal to companies that they must comply with all aspects of EU merger rules, including the obligation to provide correct information. And it imposes a proportionate and deterrent fine on Facebook," EU Commissioner Margrethe Vestager said in a statement.

"The Commission must be able to take decisions about mergers' effects on competition in full knowledge of accurate facts."

What's the Issue?

Facebook bought WhatsApp in 2014 for $19 billion. The Commission's issue centers around Facebook linking its accounts to WhatsApp user identities. In 2014, the Commission said that Facebook told it that there was no possibility to establish "reliable automated matching between Facebook users' accounts and WhatsApp users' accounts."

But in 2016, Facebook released an update to its terms of service that raised the possibility of linking accounts from both platforms.

"By coordinating more with Facebook, we'll be able to do things like track basic metrics about how often people use our services and better fight spam on WhatsApp," the messaging firm said in a blog post at the time.

"And by connecting your phone number with Facebook's systems, Facebook can offer better friend suggestions and show you more relevant ads if you have an account with them."

But the Commission said that contrary to Facebook's statements in 2014 saying it wasn't able to link accounts, the U.S. firm was aware that such a possibility existed.

Facebook said that to the best of its knowledge, the information it provided was correct.

"We've acted in good faith since our very first interactions with the Commission and we've sought to provide accurate information at every turn. The errors we made in our 2014 filings were not intentional and the Commission has confirmed that they did not impact the outcome of the merger review," a Facebook spokesperson told CNBC by email.

"Today's announcement brings this matter to a close."

Facebook's overall revenue was $27.6 billion in 2016.