Facebook Says FTC Cleared WhatsApp Deal

Facebook Inc (NASDAQ:FB) said U.S. regulators have cleared its $19 billion acquisition of mobile messaging service WhatsApp, even as the Federal Trade Commission warned the two Internet companies on Thursday that they must not backtrack on commitments to user privacy.

The FTC's Bureau of Consumer Protection, in a letter to the two companies on Thursday, said WhatsApp must adhere to its current privacy practices after the merger, including a promise not to use WhatsApp users' personal data for targeted ads.

"If the acquisition is completed and WhatsApp fails to honor these promises, both companies could be in violation of Section 5 of the Federal Trade Commission Act and, potentially, the FTC's order against Facebook," the letter from Jessica Rich, director of the consumer bureau, read.

The letter did not address the status of the government's review of the merger on antitrust grounds. FTC spokesman Jay Mayfield said the agency does not comment on investigations.

But a Facebook spokeswoman said that the deal has been approved in the United States, though it has not yet been approved in Europe.

"We're pleased the FTC has completed its review and cleared our acquisition of WhatsApp. Naturally, both companies will continue to comply with all applicable laws after the transaction closes," Facebook said in a statement.

The move brings Facebook, the world's No. 1 online social network, closer to completing the largest deal in its 10-year history, which will give Facebook an important asset in the fast-growing mobile messaging market.

WhatsApp, which allows mobile phone users to send each other messages, has had a longstanding commitment to not collect user data for advertising purposes. WhatsApp stores users' mobile phone numbers, but unlike many online services, it does not collect user names, emails and other contact information.

Some privacy advocacy groups are worried that that commitment could be scrapped after WhatsApp becomes part of Facebook, which generates the majority of its revenue by showing ads that target users by age, gender and other traits.

In the letter to Facebook and WhatsApp, the FTC's Rich said the companies must obtain user consent if they use any of the data collected by WhatsApp in different ways than they presently do.

Facebook is required to get user consent for certain privacy changes as part of a 2011 settlement of federal charges that it deceived consumers and forced them to share more personal information than they intended.

"The FTC staff will continue to monitor the companies' practices to ensure that Facebook and WhatsApp honor the promises they have made to those users," the letter said.

(Reporting by Alexei Oreskovic; Editing by Leslie Adler)