Facebook / Meta to be Prosecuted for Abusing its Dominance in South Africa

South Africa’s Competition Commission announced in a statement on Monday that it has referred Meta Platforms and its subsidiaries – WhatsApp and Facebook South Africa (collectively referred to by the Commission as Facebook) – for abuse of dominance in the country.

The Commission alleges that Facebook decided in mid-2020 to off-board Gov Chat and #LetsTalk (which connects government and citizens) from the WhatsApp Business API.

It’s also alleged that Facebook has imposed and/or selectively enforced exclusionary terms and conditions regulating access to the WhatsApp Business API, mainly restrictions on the use of data.

The Commission says this is in contravention of the Competition Act which prohibits a dominant firm from abusing its dominance by engaging in exclusionary conduct geared at preventing competitors or potential competitors from entering into, participating, and expanding in a market.

A WhatsApp spokesperson told Reuters that the actions the Commission is objecting to are intended to protect the platform’s users from abuses of WhatsApp’s terms; and defended WhatsApp’s exclusion of GovChat, alleging that the start-up is not complying with Meta’s terms of service.

“GovChat has repeatedly refused to comply with our policies which are designed to protect citizens and their information, preferring to prioritise their own commercial interests over the public,” a Whatsapp spokesperson said. “We will continue to defend WhatsApp from abuse.”

The GovChat platform was launched in 2018 to allow South Africans to engage with local, provincial and national government and report issues from potholes to service delivery requirements.

It also allows the government to disseminate critical information to the public en masse, such as info related to Covid-19 testing and vaccination.

The Commission said: “GovChat has also enabled the poor to apply on-line for social relief and distress grants. The GovChat has provided government with unprecedented insight into service delivery issues in real time and provides government with the ability to provide targeted solutions more efficiently.

“The GovChat is dependent on its continued access to the WhatsApp Business API. The intended off-boarding of GovChat from the WhatsApp Business API will harm consumer welfare by removing the efficiency of the GovChat which allows the public to communicate with multiple government bodies through a single platform and will also deprive government of the current services (and future services such as mobile payment solutions) offered by the GovChat,” said the Commission.

To illustrate the point, the GovChat messaging traffic comprises of hundreds of thousands of messages daily, the vast majority of which relates 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, and a significant portion of the traffic on the GovChat relate to Covid-19 information.

The Commission said it found that the harm to the competitive process is also clear because the decision to off-board GovChat from the WhatsApp Business API and the exclusionary terms for access to the WhatsApp Business API, including restrictions on the use of data, limits innovation and the development of new products and services.

“This is in a context in which WhatsApp Messenger enjoys significant economies of scale and network effects advantages. Consequently, the Commission also found that the terms and conditions governing access to the WhatsApp Business API are designed to shield and insulate Facebook from potential competition, such as the potential competition presented by the GovChat and enormous data it has been able to harvest which enables it to develop new services and products.

“The Commission has asked the Tribunal to impose a maximum penalty against Meta Platforms, WhatsApp and Facebook South Africa which is 10% of their collective turnover.

“In addition, the Commission has requested the Tribunal to interdict Facebook from off-boarding GovChat from the WhatsApp Business API and to declare void certain exclusionary terms and conditions for access to the WhatsApp Business API.”

The Competition Commissioner, Tembinkosi Bonakele said: “Access to digital markets has now become indispensable. In turn, access to digital markets is dependent on access to digital platforms including, as in this case, access to an important digital communication platform – the WhatsApp Business API.

“Over and above, data is everything in digital platform markets. In view of the important services provided by GovChat, which provides real time interface between government and the public, and the benefits to competition presented by its business model, Facebook’s decision to off-board GovChat from the WhatsApp Business API and its exclusionary terms of data usage are untenable.”