The European Commission ordered Facebook to pay €110 million (around $122 million) for providing incorrect or misleading information during the acquisition of WhatsApp.
The EC said it found out that contrary to statement made by Facebook in 2014 the technical possibility of matching automatically users' identities between Facebook and WhatsApp existed back in 2014 and the staff at Facebook had been aware of that possibility.
But the Commission said that contrary to Facebook's statements in 2014 saying it wasn't able to link accounts, the US firm was aware that such a possibility existed.
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Facebook claimed it had "acted in good faith" with Vestager's office and had "sought to provide accurate information at every turn".
One of the biggest deals ever, Mark Zuckerberg's company spent $19bn on instant messaging tool WhatsApp, with the latter returning $10.2m in revenues in the full year prior to the deal.
The 2016 update sparked massive resistance from European data protection activists.
Facebook told the Commission at the time that there was no way for it to match a user's Facebook account with their WhatsApp account.
According to the European Union regulations, Facebook could have faced a fine of up to 1 percent of its annual sales of past year, which amounts to some 250 million euros.
The commission said this is the first time a company has been fined for providing incorrect or misleading information since the merger law took effect in 2004.
The EC in December wrote to Facebook detailing its concerns.
The commission could have fined Facebook up to 1 per cent of its turnover, which would have been around $276 million, but said it took into account Facebook's cooperation during the investigation. But the company said it wouldn't allow people to opt out of sharing their phone numbers with Facebook. "Today's announcement brings this matter to a close", it said.
Earlier this week it was fined 150,000 Euros (£128,000) by a French data watchdog for failing to prevent its users' data being accessed by advertisers.
The Commission's fine isn't related to national antitrust inquiries.