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  • Writer's pictureRoyzz & Co

CCI dismisses case against WhatsApp Pay, finds no abusive conduct committed by WhatsApp

The Competition Commission of India has dismissed allegations that WhatsApp has abused its dominant position in the market to launch its payments service, WhatsApp Pay. The launch of the Unified Payments Interface (UPI) enabled payment service has been much anticipated by Facebook, as it hopes to reach WhatsApp’s 400 million user base. However, experts fear that the service may also pose a risk to data protection and antitrust laws.

Pursuant to these concerns, a lawyer approached the CCI, alleging that the Facebook-owned instant messaging app was leveraging its dominant position in the market by ‘bundling’ its new payment service with the app. This was argued to be in contravention of Section 4 of the Act, which prohibits abuse by dominant enterprises. In particular, the pre-installation of the payments service was deemed to be an unfair advantage to WhatsApp. The Informant argued WhatsApp’s existing userbase would be compelled to use WhatsApp Pay, therefore ensuring an easy access into the market of ‘UPI-enabled digital payment applications.’ Countering this, WhatsApp challenged the locus standi of the lawyer to file the case, stating that there was no evidence backing the Informant’s allegations. It denied having dominance in the proposed market and even argued for a broader delineation of the relevant market, that is, ‘market for user attention’, which included social networking, messaging, gaming, content viewing and sharing, photo and video sharing and music. The CCI disagreed, finding WhatsApp to be dominant in the ‘market for OTT messaging apps through smartphones.’ Although affirming the Informant’s locus standi in the case, it stated that there was no evidence provided of WhatsApp leveraging its position to enter a second market concerning UPI enabled digital payment apps through WhatsApp Pay. This was because WhatsApp messenger was voluntarily installed by users and there was no compulsion on such users to exclusively make payments through WhatsApp Pay. Users had the freedom to make payments through any UPI enabled apps of their choice. There was no evidence that WhatsApp Pay was actually exerting competitive constraints on other payment services by using WhatsApp’s customer base. According to the CCI, this negated any allegations of WhatsApp ‘bundling’ or ‘tying in’ the two services. The Informant had also argued that Facebook and WhatsApp raised data privacy and security concerns, but the CCI regarded it to be irrelevant for the purposes of a competitive assessment. Nevertheless, it noted that the fact that both Facebook and WhatsApp deal with customer-sensitive data could potentially raise antitrust concerns in the future.

Interestingly, the CCI observed that the complaint was ‘premature’. Less than 1% of WhatsApp users could access the payments feature as of the present and hence, the actual conduct is “yet to manifest in the market”. This is because WhatsApp Pay is still in its beta phase, awaiting approval from the Reserve Bank of India over data localisation compliances.

The order has been welcomed by several tech companies, including Facebook and Google, who have been increasingly brought under the CCI’s radar as it ramps up investigations in the digital market. Although the CCI found no abusive conduct, it highlighted the potential anti-competitive effect that may take place in the future. Therefore, it did not rule out the possibility of abusive conduct in the future, merely that as of the present, the case was premature. The order demonstrates the practical but cautious approach taken by CCI when scrutinizing digital markets.

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