Earlier this year, social media giant Facebook Inc (NASDAQ:FB) announced plans to purchase WhatsApp for $19 billion. Although the deal is still in the midst of approval, it is reported the social site will win European Union approval for the offer with WhatsApp as a deal to compete against telecoms.
Facebook is a about to win a huge approval
This is a landmark acquisition is actually the largest in Facebook’s decade-long history. This will also give the company a stronger hold in the mobile messaging market which is growing fast. The plan for WhatsApp is to add free voice call services for 450 consumers by the end of this year. This will make it a formidable competitor against companies like Telecom Italia SpA (ADR) (NYSE:TI) (BIT:TIT), Deutsche Telekom AG (ADR) (OTCMKTS:DTEGY) (ETR:DTE), and Telefonica S.A. (ADR) (NYSE:TEF).
Analysts estimate the move will hit telecom providers turnover with the industry leading into the fifth year of decline. The sector also looked into EU regulators to obtain concessions from Facebook. The social giant then convinced commission the deal wasn’t competitive which meant concessions were not necessary. One unnamed person even said it was unconditional clearance. That person declined to be named as the EU Commission hasn’t gone public with its final decision yet.
Facebook and WhatsApp deal could be game changer
Fried Frank law firm partner Tobias Caspary offered, “Both parties are offering their services for free. It seems unlikely that customers are locked in with respect to instant messaging, and it would be relatively easy to switch to alternative offers, for example Skype or Line. Also relevant factors looked at were probably that the entry barriers are relatively low for the instant messaging market, that this is still a nascent market characterized by rapid changes and growth, and that there are several recent entrants.”
Last April, regulators in the US approved the deal in April and told WhatsApp to keep the current privacy practices merger.