The European Commission has opened an investigation into the proposed acquisition of Kustomer by social media giant Facebook, according to a press release.
The concern is that the buy would have the effect of cutting down on competition and making Facebook more powerful and dominant overall through boosting the already formidable data Facebook has for personalizing its ads, the release stated.
Kustomer is a U.S.-based company offering Software-as-a-Service (SaaS) for customer relationship management (CRM) solutions, particularly customer service. The company can display every interaction a customer has had with a business in a lone time-frame view, consisting of purchase history, refunds, complaints and more.
“It is important to closely review potentially problematic acquisitions by companies that are already dominant in certain markets,” said EU Executive Vice President Margrethe Vestager in the release. “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.”
The Commission, the release noted, has particular concern that Facebook might foreclose its B2C over-the-top (OTT) messaging channels like WhatsApp and Messenger, which make up a significant amount of the B2C OTT market. That market is important for the supply of CRM software services.
The Commission said in the release Facebook might have the ability to foreclose via cutting off access to Facebook’s messaging services for some of Kustomer’s rivals, leading to less competition, higher prices and lower quality.
PYMNTS previously reported on the Commission’s interest in probing the Kustomer purchase. The deal was initially announced in November as a way to scale up the instant messaging service WhatsApp, which had been seeing more use during the pandemic.
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