Facebook interdicted in fight with South Africa's GovChat - TechCentral

Facebook interdicted in fight with South Africa’s GovChat

Facebook has been interdicted and restrained by the Competition Tribunal from removing GovChat, a communications service used by the South African government, from its WhatsApp instant messaging platform.

The tribunal said on Thursday that Facebook, WhatsApp and Facebook South Africa may not remove GovChat on an interim basis pending further investigation. Facebook owns the WhatsApp messaging platform, which is dominant in South Africa and many other markets around the world.

GovChat and its associate business, Hashtag LetsTalk, or #LetsTalk, brought an application for interim relief after Facebook threatened to remove GovChat from WhatsApp due to alleged non-compliance with the instant messaging app’s terms of service. The US social media giant is said to be keen to secure direct government business of its own.

“The applicants asked the tribunal to prevent the respondents (Facebook and WhatsApp) from removing or ‘offboarding’ them from WhatsApp’s paid business messaging platform, pending the outcome of their complaint against Facebook to the Competition Commission…,” the tribunal said in a statement announcing its decision.

Facebook and WhatsApp may not offboard the applicants from their WhatsApp Business account pending the conclusion of a hearing into the applicants’ complaint lodged with the commission, or for six months, whichever is the earlier date.

Prima facie case

They may also not engage in any conduct that directly or indirectly undermines GovChat’s and #LetsTalk’s relationships with its clients for purposes of achieving the same outcome as offboarding them. However, the applicants may also not onboard any new clients or users to the WhatsApp Business account. Also, they may not launch, expand or sell any new “use cases” to these clients.

“It is not our function, in interim relief proceedings, to arrive at a definitive finding of a contravention. A successful applicant is only required to make out a prima facie case, not to establish its case on a balance of probabilities,” the tribunal said.

“The applicants have established a prima facie case of prohibited conduct on the part of the respondents in that the respondents’ selective application of its rules against the applicants amounts to an effective refusal to deal… The applicants have (thus) also made out a prima facie case of exclusionary conduct and anticompetitive effects… The respondents, on the other hand, have not provided any evidence of pro-competitive gains to off-set the prima facie anticompetitive effects.”

The tribunal emphasised that it has not decided whether WhatsApp and Facebook have contravened the Competition Act. Rather, it has found only that there is sufficient evidence that GovChat and #LetsTalk have a prima facie case that they should be granted interim relief while their complaint against is being investigated by the Competition Commission.

If the commission’s investigation ultimately finds that there is a case, it will then refer the matter to the tribunal for prosecution. Only after a hearing into that referral will the tribunal make a finding on whether or not there has been a contravention.

“The tribunal accordingly finds that the applicants have succeeded in proving that WhatsApp is, at least, prima facie dominant in the market for ‘over-the-top’ (OTT) messaging applications via smartphones in South Africa. In addition, the tribunal notes that the applicants are both customers and competitors of the dominant firm in the secondary market for government messaging services. It is in this market that the tribunal understands part of the applicants’ complaint to arise: Its complaint is that WhatsApp is using its dominance in the OTT messaging market to act to the exclusion of competitors in the government messaging services market when it perceives a competitive threat in that market,” the tribunal said.

GovChat currently assists the department of health with Covid-19-related education, symptom tracking and testing. It also assists the department of social development and the South African Social Security Agency in allowing citizens to apply for distress grants.

“Members of the public who rely on GovChat’s platform for assistance pertaining to distress grants and Covid-related information will be deprived of access to these critical services during the pandemic if it was offboarded from the WhatsApp platform, pending the outcome of the complaint lodged with the commission…,” the tribunal said.

‘Irreparable harm’

“The tribunal finds that the balance of convenience favours the granting of interim relief to the applicants who provide an invaluable service to both government departments and citizens alike. The applicants will suffer irreparable harm if offboarded, which will ultimately also negatively impact the public interest in a very critical time of the Covid-19 pandemic. We cannot conceive of any real prejudice which the respondents will suffer during the period of our order, pending the outcome of the commission’s investigation.”

Facebook has argued previously that the dispute is purely commercial in nature and does not raise any anticompetitive concerns under South African law.

Facebook has accused GovChat of violating the contractual terms of use of the WhatsApp Business API, or application programming interface, which connects and integrates third parties to the platform.

GovChat and #LetsTalk have argued to the tribunal that they have invested over R50-million of donor money in developing the technology behind the platform. If Facebook is allowed to offboard GovChat, not only will it be forced to exit the market, but it will leave millions of people who rely on the service unable to access it at the peak of the second wave of Covid-19 infections in South Africa, the applicants said in papers filed with the tribunal.

Now read: Facebook is trying to muscle us out of the market, GovChat alleges

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