EU is investigating Facebook's Kustomer buyout over data concern

Last year Facebook announced its purchase of Kustomer, a five-year-old company that specialises in helping businesses interact with customers online.

The acquisition of Kustomer raised red flags, coming as Facebook continues a major push to link e-commerce services to its platforms, particularly its WhatsApp and Messenger messaging services. (REUTERS)

The European Commission has launched an investigation into Facebook's buyout of a US startup, over concerns that the social media giant could misuse personal data.

Last year Facebook announced its purchase of Kustomer, a five-year-old company that specialises in helping businesses interact with customers online.

The commission, which runs the EU's powerful antitrust authority, said 10 national authorities requested an investigation, with Austria making the original demand.

The deal is below the EU's usual financial threshold for merger investigations, but Europeans have become extra vigilant over Big Tech's appetite for startups and how it could harm competition.

After coming under similar scrutiny for its purchase of wearables company Fitbit, Google was forced to make assurances on data use in order to win the green light from Brussels.

In a short statement on May 12, the EU said Facebook will now have to formally notify the deal to the EU and that the firm "cannot implement the transaction before notifying and obtaining clearance from the Commission".

The commission said it will look at whether the transaction will have a negative effect on the market for customer management software as well as online display advertising services.

In response, Facebook said: "We look forward to demonstrating to regulators that Facebook and Kustomer would offer more choices and better services through this pro-competitive deal."

The acquisition of Kustomer raised red flags, coming as Facebook continues a major push to link e-commerce services to its platforms, particularly its WhatsApp and Messenger messaging services.

Of particular concern is Kustomer's popular "chat bot" technology, a customer dialogue channel used by banks, medical offices and airlines where users pump in sensitive information.

Critics, including the Council for Civil Liberties in Ireland, where Facebook's EU headquarters are based, want assurances on how this data will be handled by Facebook.

The subject is a pressing one, with a German regulator last week slapping a three-month ban on Facebook collecting user data from WhatsApp accounts, part of the company's effort to increase its effectiveness for businesses.

According to Facebook, more than 175 million people contact businesses via WhatsApp daily, and the number is growing.