Facebook’s WhatsApp faces antitrust accusation by India

FACEBOOK’S WHATSAPP FACES ANTITRUST ACCUSATION BY INDIA

India’s antitrust watchdog, CCI is looking into allegations that are put on Facebook’s WhatsApp. According to Reuters’ three sources, WhatsApp is abusing its dominant position by offering payment services to its vast base of messaging app users in the country.

India’s Competition Commission (CCI) is investigating a complaint filed in mid-March alleging that WhatsApp was bundling its digital payment facility within its messaging app, and abusing its market position to penetrate India ‘s booming digital payments industry, sources said.

Neither WhatsApp and Facebook nor the CCI immediately respond to the repeated requests for comment.

Two of the sources told Reuters that the complainant was a lawyer in this case, but refused to reveal the person’s name. Also, Reuters was unable to independently determine who filed the case.

WhatsApp is aggressively working to launch its payments platform, WhatsApp pay in India. The complaint comes at a time when WhatsApp Pay has been in beta testing its app with about 1 million users since 2018.

As India is WhatsApp’s biggest market worldwide, with around 400 million-plus users, lack of regulatory clearances will not allow WhatsApp to launch its payments platform for this vast user base.

The CCI may order its investigation branch to conduct a comprehensive investigation into the allegations or pull it out if it has no merit in the case.

“The case is in initial stages … senior members of CCI are reviewing it but a final decision hasn’t been reached,” said the first of the three sources, all of which refused to be identified as the details of the case were private.

The antitrust complaint alleges that the massive user base of WhatsApp made it dominant in the messaging app market, but the company is forcing its payment feature on its existing users.

Detailing the allegations, the second source said – The company’s two products- WhatsApp’s messenger service and its latest payments feature, when bundled could harm competition and violate the country’s antitrust laws.

Payment service from WhatsApp will enable its users to make interbank fund transfers from inside the messaging app. It will be competing with Alphabet Inc’s Google and Softbank-backed Paytm payment applications, which already have tens of millions of users across India.

According to the second source, the antitrust case has been filed against both WhatsApp and Facebook. However, the complainant urged CCI to investigate only WhatsApp.

WhatsApp may have avoided a larger inquiry because the scope of any market abuse would only be clearer when the app is completely released, the source said.

The antitrust complaint is India’s most recent setback for WhatsApp.

Last month, an Indian legal think-tank filed a case in the Supreme Court arguing that WhatsApp would not be allowed to expand its payment service because it violated data storage laws.

According to a court order issued on May 13, WhatsApp told the court that it would comply with the required laws before going forward. The court also asked the Indian regulators to present their views on the case.

In April, Facebook said it would invest $5.7 billion to buy a 9.99 percent stake in Jio Platforms, the digital arm of India’s Reliance Industries. As they aim to carry out grocery and small business services by capitalizing on the extensive reach of WhatsApp.

Now, if the results of the current allegations come in the favor of the complainant, it would be a great loss for WhatsApp as well as Facebook.

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