Antitrust Law Daily India’s Competition Commission dismissed claims that Facebook acted anticompetitively by linking messaging, payment apps
News
Thursday, August 20, 2020

India’s Competition Commission dismissed claims that Facebook acted anticompetitively by linking messaging, payment apps

By Nicole D. Prysby, J.D.

India’s Competition Commission found that Facebook did not violate the Competition Act by enabling automatic installation of the WhatsApp Payments App in the WhatsApp messaging app.

The Competition Commission of India (CCI) dismissed a case brought under the Competition Act, accusing Facebook and WhatsApp Inc. of anticompetitive behavior by bundling a payment app (WhatsApp Pay) with the popular messaging app, WhatsApp. WhatsApp (acquired by Facebook in 2014) enjoys a dominant position in the internet based instant messaging app market. When a user downloads WhatsApp, the digital payment app WhatsApp Pay is automatically downloaded as well. The CCI found that the behavior did not violation the Competition Act, because the mere existence of an app on a smartphone does not convert into usage. Because users are not blocked from using another digital payment app, the mere integration of WhatsApp and WhatsApp Pay does not contravene the Act.

Allegations. Facebook acquired the messaging app WhatsApp in 2014 and bundled it with a payment option (WhatsApp Pay). WhatsApp enjoys a dominant position in the internet based instant messaging app market, having a pre-existing user base of more than 400 million monthly active users in India. It was alleged that the bundling used the dominance of WhatsApp in the instant messaging market to penetrate into the digital payments app market. In addition, by enabling automatic installation of WhatsApp Payments App in the WhatsApp messaging app, WhatsApp was alleged to be taking advantage of its vast userbase to popularize its newly launched WhatsApp Pay app. United Payments Interface (UPI), launched in India in 2016, is an instant real-time payment system facilitating inter-bank transactions on a mobile platform. Users are not bound to using the app of their own bank, but may use any third-party app to facilitate payments through UPI.

The claimed relevant markets were the market for internet-based messaging applications through smartphones in India and the market for UPI-enabled digital payment applications in India. These are two separate markets, with a sufficient consumer demand for use of these apps separately and independently.

Commission’s analysis. The CCI modified the first proposed market and found that the relevant product market in which WhatsApp operates is the market for Over-The-Top (OTT) messaging apps through smartphones in India. The Commission agreed that the second relevant market was the market for UPI enabled Digital Payments Apps in India. The CCI concluded that the allegations did not raise a competition concern. With regard to abusive conduct, the main allegations stem from the pre-installation of WhatsApp’s payment app on its users’ smartphones embedded within the WhatsApp messenger app. The mere existence of an app on the smartphone does not necessarily convert into usage. To enable WhatsApp payment, the user has to separately register for it, accept terms of the service agreement and privacy policy, and provide additional information to link the user’s bank account. No transaction can be completed without the user taking these necessary voluntary steps. WhatsApp has also categorically ensured, 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 the Act. While WhatsApp Pay is embedded in WhatsApp messenger app when it is downloaded by users, the consumers are free to use WhatsApp Pay or any other UPI enabled digital payments app in India to make instant interbank transfers. Installation of the WhatsApp messenger does not appear to explicitly mandate/coerce the user to use WhatsApp Pay exclusively or to influence the consumer choice implicitly in any other manner, at present. And the number of users being served under the beta version of WhatsApp Pay is limited to less than 1 percent of its users in India. To that extent, the CCI found that the allegations were premature.

Companies: Facebook; WhatsApp Inc.

MainStory: TopStory Antitrust GCNNews

Back to Top

Interested in submitting an article?

Submit your information to us today!

Learn More

Antitrust Law Daily: Breaking legal news at your fingertips

Sign up today for your free trial to this daily reporting service created by attorneys, for attorneys. Stay up to date on antitrust legal matters with same-day coverage of breaking news, court decisions, legislation, and regulatory activity with easy access through email or mobile app.