Privacy Concerns May Hamper FB-WhatsApp Deal

by CXOtoday News Desk    Mar 10, 2014

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Facebook’s recent acquisition of WhatsApp is in deep trouble. Concerns are already being raised in certain quarters about privacy issues post the $19 billion deal.  In India, it is on Competition Commission of India’s (CCI) radar and the government agency is likely to investigate the deal considering both players have significant presence in the country. 

Read: What Makes Facebook-WhatsApp A Win-win deal?

Not only in India, the Facebook-WhatsApp deal may have to wait in order to get the approval from various regulatory bodies around the world. Last week, some US-based privacy groups asked the Federal Trade Commission (FTC) to review, and put the deal on hold and probe how the social media giant plans to use subscriber data. US-based Electronic Privacy Information Center (EPIC) and the Center for Digital Democracy (CDD) have asked FTC to investigate WhatsApp’s “unfair and deceptive data collection practices” for any future changes to its privacy policy, according to the report.

“During the course of an FTC investigation, we would like to see Facebook or WhatsApp or both institute some form of binding mechanism that insulates WhatsApp users’ data from Facebook,” Julia Horwitz, consumer protection counsel at EPIC, said in an interview with E-commerce Times.

Some in the industry state that the privacy concerns raised by EPIC and the CDD are valid, but there will be shareholder pressure on Facebook to explain the payout. WhatsApp has a strong commitment to privacy, which it reiterated after the deal was announced. Facebook on the other hand collects and stores virtually all user data with or without users’ consent, and routinely incorporates data from companies it acquires - something many WhatsApp users object to the purchase.

WhatsApp cofounder Jan Koum also mentioned in a blog post: “There would have been no partnership between our two companies if we had to compromise on the core principles that will always define our company, our vision and our product.”

Despite this, some in the industry believes that Facebook may grab WhatsApp users’ data as it has a history of treating users’ data as its own proprietary property to be commercially leveraged in any way the company finds it suitable. One possibility they point out is WhatsApp may will become the Facebook default messenger, and then they can use that data which again is not desirable as users will have to pay a higher annual subscription fee and may drop out.

Read: Will WhatsApp Acquisition Help FB Expand In India?

Facebook, the world’s largest social networking site, has around 1.2 billion members globally while messaging platform WhatsApp is estimated to have 450 million users worldwide. India alone has nearly 93 million Facebook users, the count of people using the popular WhatsApp service is around 40 million in the country.  If privacy issues continue to remain a concern, and is not addressed by the companies, a significant number of people in the emerging countries like India, Brazil and China may migrate to competing platforms like Viber and others.