EU Says Facebook’s Kustomer Deal May Hurt Competition

Facebook’s acquisition of US customer service startup Kustomer may hurt competition and boost its market power in online advertising, European Union antitrust regulators warned on Monday, August 2, as they opened a full-scale investigation into the deal.

The move by the European Commission comes amid regulatory concerns on both sides of the Atlantic that a buying spree of startups by big firms, which normally don’t trigger competition scrutiny because of the low value of the deal, may be so-called killer acquisitions aimed at closing down nascent rivals.

Facebook, the world’s largest social network, announced the purchase of Kustomer to scale up its instant messaging app WhatsApp in November last year.

The EU executive, which acts as the bloc’s competition enforcer, said the deal may result in Facebook blocking rivals’ access to its units WhatsApp, Messenger, or Instagram, which are key to customer relationship management (CRM) software.

Kustomer sells CRM software to businesses so they can communicate with consumers by phone, email, text messages, WhatsApp, Instagram, and other channels.

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