There is a prima facie case of “abuse of dominance” against WhatsApp and its parent, Meta Platforms, the Competition Commission has found.
It has referred them to the Competition Tribunal “for prosecution” and has proposed a hefty fine of “10% of [the] collective turnover” of Meta (and its Facebook and WhatsApp subsidiaries) in SA.
Since Facebook (as it was then known) was referred to the competition watchdog in November 2020, the tribunal has twice interdicted it from “offboarding” an SA messaging service run by startup GovChat, called #LetsTalk.
The commission found that the terms and conditions governing access to the WhatsApp Business application programming interface (API) “are designed to shield and insulate Facebook from potential competition, such as [that] presented by GovChat, and [the] enormous data it has been able to harvest which enables it to develop new services and products.”
The commission also found that “the intended offboarding of GovChat from the WhatsApp Business API will harm consumer welfare by removing the efficiency” of GovChat. The GovChat service allows the public to communicate with multiple SA government bodies through a single app.
According to the commission, “the harm to the competitive process [offboarding the app] is clear”, and the “restrictions on the use of data limits innovation and the development of new products and services.”
The commission says in a statement that GovChat facilitates the sending of hundreds of thousands of messages every day.
It says most of these relate to “queries from the public to the department of social development relating to social welfare grants provided for children, disabled and indigent members of society.”
Many also relate to Covid information.
Competition commissioner Tembinkosi Bonakele tells the Financial Mail: “Access to digital markets has now become indispensable and is dependent on access to digital platforms, including, as in this case, access to an important digital communication platform — the WhatsApp Business API.”
He says: “In view of the important services provided … and the benefits to competition presented by its business model, Facebook’s decision to offboard GovChat from the WhatsApp Business API and its exclusionary terms of data usage are untenable.”
Pooja Dela-Cron, a Webber Wentzel litigation partner who acted for GovChat, says it is a “big thing” that the commission has made a referral to the tribunal with prima facie evidence.
“Facebook’s strategy in other emerging-market countries is to get into bed with the government for the monetisation of government services. Facebook saw GovChat as a threat and threatened to offboard it.”
The social media giant originally told GovChat in July 2020 about the “offboarding”, and Webber Wentzel successfully applied for an interdict in November 2020. The six-month interdict was renewed again, and expired this week, when the commission said it had referred Facebook to the tribunal.
Dela-Cron says: “In the past, the tribunal has only granted interim relief in a handful of instances. It is not easy to get that relief.”
This is just one of many anti-competitive cases against Meta around the world, including numerous harsh fines from European watchdog bodies. Several lawsuits have been filed by US attorneys-general and the Federal Trade Commission.
Shawn van der Meulen, a competition partner at Webber Wentzel, says: “The case echoes the US department of justice’s antitrust division’s recent case filed against Meta for its strategies to eliminate emerging competitors who rely on Meta’s platforms and ecosystem, before they are able to become a threat to Meta’s dominance.”
He says the SA case is ground-breaking. “It is one of the few abuse of dominance cases ever prosecuted by the SA Competition Commission, and the first of its kind involving digital platforms and markets.”
“WhatsApp helps to provide people with important information from trusted sources, and we are aware of the role the service plays in connecting SA citizens with their government. That’s why we want to work with GovChat in compliance with internationally recognised regulatory standards to provide this service. However, GovChat has repeatedly refused to comply with our policies, which are designed to protect citizens and their information, preferring to prioritise its own commercial interests of [those of] the public. We will continue to defend WhatsApp from abuse and protect our users.” — WhatsApp spokesperson.