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SA’s Competition Commission and Meta Platforms (Faceb...

Business Maverick

MONOPOLY ABUSE REFERRAL

SA’s Competition Commission wants max penalty for Meta Platforms (Facebook)

(Photo: Unsplash / Brett Jordan)

South Africa’s competition watchdog wants the Competition Tribunal to impose a ‘maximum penalty’ on Meta Platforms (comprising WhatsApp and Facebook South Africa) equivalent to 10% of collective revenue. The potential penalty will probably be calculated using Meta’s revenue generated from South Africa rather than its global operations.

Meta Platforms (previously known as Facebook) has landed in hot water with the Competition Commission, which is pushing for the technology giant to be prosecuted for alleged “abuse of dominance” in South Africa and slapped with a potentially huge fine.

The commission said on Monday that it has referred Meta and its subsidiaries, WhatsApp and Facebook South Africa, to the Competition Tribunal for prosecution. The competition watchdog wants the tribunal to impose a “maximum penalty” against Meta Platforms (comprising WhatsApp and Facebook South Africa) equivalent to 10% of collective revenue. Meta is listed in the US. 

The Competition Commission will probably calculate the potential penalty based on the revenue generated by Meta and its subsidiaries in South Africa, and not include its global revenue. The revenue generated by Meta in South Africa is not publicly available but will be determined later if the Competition Tribunal finds it guilty of “abuse of dominance”. 

The decision by the commission to refer Meta for prosecution relates to an incident dating back to around July 2020. 

At the time, the South Africa arm of Facebook (before its rebranding into Meta Platforms) removed GovChat and #LetsTalk from the WhatsApp Business Application Programming Interface. This WhatsApp platform allows medium and large companies to communicate with their customers, even in large numbers. WhatsApp charges a fee to business and government clients for contacting customers or citizens. According to the Competition Commission, Facebook decided in mid-2020 to remove GovChat and #LetsTalk from the WhatsApp Business Application Programming Interface. 

GovChat was launched in 2018 with the Department of Cooperative Governance and Traditional Affairs and offers a “chatbot” function on WhatsApp that can be used by all spheres of government to engage with citizens on various initiatives. 

At the start of the Covid-19 pandemic, GovChat was repurposed into helping the government distribute awareness campaigns to the public about the virus, testing and vaccinations. The platform also allows people to apply for the R350 social relief grant. Meanwhile, #LetsTalk is a technology start-up that connects government and citizens, and is a subsidiary of GovChat. Both companies worked together to launch the government’s “chatbot” function on WhatsApp. 

After it was removed from the WhatsApp Business Application Programming Interface, together with GovChat, #LetsTalk complained to the Competition Commission in November 2020. #LetsTalk accused Facebook of abusing its dominance in South Africa’s instant messaging market and pushing it [#LetsTalk] out of lucrative government business.

GovChat accused Facebook South Africa of sending its representatives to meet with government officials, allegedly telling them that the GovChat platform would be “offboarded” (or removed) from WhatsApp, while failing to disclose that GovChat was challenging the company’s conduct at the Competition Tribunal.

Reasons for removal on Whatsapp

The precise reasons GovChat and #LetsTalk were removed from the WhatsApp Business Application Programming Interface are unclear, but Facebook said it took the step because the two companies allegedly violated the contractual terms of use of the WhatsApp platform, adding that the dispute between the parties was commercial in nature.  

Facebook said WhatsApp’s contractual terms of use are “designed to protect users and businesses from fraud and abuse”. And GovChat broke these terms by signing up other organisations to the WhatsApp Business Application Programming Interface without properly going through its on-boarding process. However, the Competition Commission was sympathetic towards GovChat and #LetsTalk, saying they were prejudiced by Facebook’s decision.

“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.

“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,” the Competition Commission said. 

The removal of GovChat from the WhatsApp Business API will harm the welfare of consumers and also deprive the government of discharging its functions/duties to the public, the competition watchdog added. 

“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 AP [Application Programming].”

Meta responds to the Competition Tribunal referral

A spokesperson for WhatsApp said its conduct to date has been “entirely consistent” with the provisions of the Competition Act. It still maintains that GovChat didn’t comply with its terms of use.

“WhatsApp plays a vital role in providing people with important information from trusted sources, and we are aware of the role the service plays in connecting South African 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 their own commercial interests over the public. We will continue to defend WhatsApp from abuse and protect our users.”  

Facebook plans to defend itself at the Competition Tribunal. DM/BM

 

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