Facebook and WhatsApp were abusing their market dominance, tech company GovChat claimed in the Competition Tribunal on Wednesday.
The tech company, currently used by the government to communicate about the Covid-19 pandemic, has asked the tribunal to interdict WhatsApp from “offloading” its messaging platform pending an investigation by the Competition Commission after it laid a complaint of anti-competitive conduct by WhatsApp and its owner, Facebook.
But WhatsApp and Facebook told the tribunal the fight between the two had nothing to do with competition law and was “in truth simply a commercial one, which does not raise any legitimate competition law considerations”.
The two global tech giants said GovChat and its subsidiary #LetsTalk had breached WhatsApp’s terms of use.
The hearing comes as a recent change to WhatsApp’s terms and conditions has led to millions of people across the world reportedly registering with other messaging systems, such as Signal and Telegram. GovChat also said Facebook’s control over the WhatsApp platform was the subject of two “landmark anti-trust enforcement proceedings” in the US, brought in December 2020.
The US cases “cite numerous examples of conduct that is uncannily similar to what the the respondents [WhatsApp and Facebook] have been doing to GovChat, and also refer to threats by Mr Zuckerberg [founder, chairperson and CEO of Facebook] to quash perceived competitors”, said counsel for GovChat, Paul Farlam SC, in his heads of argument.
GovChat’s subsidiary #LetsTalk platform has been used by the government during the Covid-19 pandemic to update South Africans via WhatsApp on the pandemic, to convey people’s Covid test results and to register and verify people for emergency social assistance grants.
GovChat claims WhatsApp initially allowed it “onboard” via a Business Service Provider called Praekelt. When Praekelt told GovChat it could only service nonprofit clients, GovChat and its subsidiary #LetsTalk – which was directed at private companies but also did work in the public sector – contracted with a company called InfoBip to be its Business Service Provider, said GovChat.
GovChat claims the relationship between itself and #LetsTalk was never a secret and that it was stated on the first page of its agreement with InfoBip. It was “reasonable for GovChat to infer” that Facebook was fully aware of the relationship between GovChat and #LetsTalk.
But this is where GovChat and WhatsApp part ways on the facts in the case.
They are pulling out whatever they can and they are waving it at us.
— counsel for GovChat, Paul Farlam SC
WhatsApp says at first it was unaware of the link between GovChat and #LetsTalk and that, under the type of agreement they had providing services to the government, that link was prohibited by its terms and conditions. Government entities that wish to make use of WhatsApp are subject to additional restrictions, said counsel for WhatsApp and Facebook, Jerome Wilson SC, in heads of argument.
“No mention was made in #LetsTalk’s application of any kind of government-related work, or of any connection between #LetsTalk and GovChat, let alone its relationship (via GovChat) to government entities … This meant that it was not subjected to the type of vetting that would have been conducted had it accurately disclosed the use-case.”
However, Farlam said the reasons WhatsApp cited for the breach of its terms kept changing.
“They are pulling out whatever they can and they are waving it at us,” said Farlam during the hearing on Wednesday.
They also had double standards, he said, because other platforms that were communicating on behalf of government were still using WhatsApp.
The real intention was – as was being claimed in the US cases – to prevent GovChat from becoming a potential competitor and “crush competition that existed on its own platform” when it saw GovChat’s potential for growth during the Covid-19 pandemic.
He said WhatsApp and Facebook had not disputed in their affidavits that they had met with government and tried to get it to deal with them directly “after getting rid of GovChat”. Nor had Facebook and WhatsApp disputed that they had ambitions to render payment processing services in the future. It was “inherently likely” that this is what they wanted to do.
But Wilson argued there was no evidence “whatsoever that Facebook and/or WhatsApp provide (or intend to provide) services to GovChat’s government clients that GovChat currently provides”.
The reason WhatsApp wanted a direct link with government was not to give the services that GovChat provided, but “to ensure a contractual nexus between WhatsApp and users for purposes of enforcing the terms of use”.
He said it was of “particular concern” that GovChat was making arguments based on “untested allegations” in the “unrelated” US cases and treating them as fact, when there had been no findings as yet in those cases.
“There is simply no basis in law, or in fact, for such an approach,” he said.
Argument to the tribunal will continue on Monday, January 18. In the meantime the parties were negotiating an interim arrangement pending the outcome of the tribunal’s decision.
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