The Competition Commission has dismissed a complaint of alleged unfair business practices by popular messaging platform WhatsApp with respect to the digital payments market in the country.
It was alleged that Facebook-owned WhatsApp has abused its dominance in the 'market for internet-based messaging application through smartphones' to manipulate another segment — 'market for UPI enabled digital payment applications' in its favour. In a 41-page order, the Competition Commission of India (CCI) said there was no violation of Section 4 of the Competition Act. This section pertains to abuse of dominant position.
The complaint was filed by Harshita Chawla (informant), a practising lawyer, against WhatsApp and Facebook. To assess the complaint, the watchdog considered two relevant markets — 'market for Over-The-Top (OTT) messaging apps through smartphones in India' and 'market for UPI (Unified Payment Interface) enabled Digital Payments Apps in India'.
According to the regulator, the informant has contended that WhatsApp will leverage its dominance in the upstream market to have a competitive edge over existing competitors. The informant also seems to be distressed by the fact that while the other existing players spent considerable resources to establish themselves in the UPI-enabled digital payment app market, WhatsApp will get users on its platter without making any efforts, CCI said in the order.
"The apprehensions of the informant, according to Commission, does not really hold much merit… the UPI market is quite established with renowned players competing vigorously. In such a market, it seems implausible that WhatsApp Pay will automatically garner a market share merely on account of its pre-installation," it noted. More so, given the fact that WhatsApp ecosystem does not involve paid services as such for normal users, it seems unlikely that the consumer traffic will be diverted by the company using its strength in the messenger market, as per the order dated August 18.
At the outset, the Commission said Facebook and WhatsApp are group entities and though they may operate in separate relevant markets, their strengths can be attributed to each others' positioning in the respective markets in which they operate. Thus, as per the scheme of Section 4 of the Act, WhatsApp's market position has been assessed keeping in consideration its affiliation to Facebook and several other group entities (example Instagram), it added.
"… the Commission prima facie finds WhatsApp to be dominant in the first relevant market i.e. 'market for OTT messaging apps through smartphones in India'," the order said. According to the regulator, the informant's main allegations stem from the pre-installation of WhatsApp's payment app namely 'WhatsApp Pay' on its users' smartphones embedded within the WhatsApp messenger app.
The regulator noted that incorporating the payment option in the messaging app does not seem to influence a consumer's choice when it comes to exercising their preference in terms of app usage, particularly since there seems to be a strong likelihood of a status quo bias operating in favour of the incumbents, at present. "WhatsApp has also categorically ensured, in its written statement, that the users will continue to have full discretion whether to use WhatsApp Pay app or not, which implies that the users will have an option to use any other payment apps which might already have been downloaded on their smartphones.
"Thus, in the absence of any explicit or implicit imposition which takes away this discretion, the mere integration does not seem to contravene Section 4(2)(a)(i) of the Act," it said. Section 4(2)(a)(i) relates to condition in purchase or sale of goods or services.
The regulator also rejected preliminary objection of WhatsApp and Facebook regarding the locus of the informant. CCI said an informant need not necessarily be an aggrieved party to file a case before it.
Neither the Competition Act specifies any such requirement explicitly, nor the same can be implicitly read into the provisions which clearly point towards the inquisitorial system envisaged by Parliament, the order said. "The informant has also claimed that WhatsApp is in serious non-compliance of critical and mandatory procedural norms pertaining to data localisation and storage. The informant has also raised concerns with data security. These, in the considered view of the Commission, do not seem to raise any competition concern and as such may not need any further scrutiny by it," the order said.
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