Facebook parent Meta Platforms has been referred by South Africa’s Competition Commission for prosecution for alleged “abuse of dominance” in the country — and the regulator wants a huge fine imposed on the US-listed company.
The commission said on Monday evening that it has referred Meta and subsidiaries WhatsApp and Facebook South Africa for prosecution to the Competition Tribunal. It wants the tribunal to impose a “maximum penalty” against Meta Platforms, WhatsApp and Facebook South Africa equivalent to 10% of their collective revenue.
Asked to clarify whether it wants the fine to be calculated using Meta’s global revenue or only its South African revenue, commission spokesman Sipho Ngwema said the regulator is seeking a fine based only on the South African revenue of the three entities. These revenue figures are not publicly available.
The decision to refer the matter to prosecution stems from a dispute between GovChat and an associated business called Hashtag LetsTalk, or #LetsTalk, which turned to the commission in November 2020 accusing Facebook, as Meta was known then, of abusing its dominance in instant messaging in South Africa to muscle it out of lucrative government business.
GovChat was launched in 2018 with the department of cooperative governance & traditional affairs and offers a “chatbot” on top of WhatsApp that is used by government to engage with citizens. It later morphed into helping government with Covid-19-related education and awareness campaigns, including the provision of disease test results. The platform allows citizens to apply for social relief and distress grants, too.
GovChat accused Facebook South Africa of sending representatives to meet with government officials, allegedly telling them that the GovChat platform would be “offboarded” from WhatsApp while failing to disclose that GovChat was challenging the company’s conduct at the Competition Tribunal.
In its statement Monday evening, the commission said Facebook decided in mid-2020 to “offboard” (remove) GovChat and #LetsTalk from the WhatsApp Business API.
“Facebook has imposed and/or selectively enforced exclusionary terms and conditions regulating access to the WhatsApp Business API, mainly restrictions on the use of data,” the regulator said. “This is in contravention of the Competition Act… [which] prohibits a dominant firm from abusing its dominance by engaging in exclusionary conduct geared at preventing competitors or potential competitors from entering into, participating and expanding in a market.”
GovChat is dependent on its continued access to the WhatsApp Business API, the commission added. “The intended offboarding of GovChat from the WhatsApp Business API will harm consumer welfare by removing the efficiency of GovChat, which allows the public to communicate with multiple government bodies through a single platform. [It] will also deprive government of the current services (and future services such as mobile payment solutions) offered by GovChat.”
The commission said it found that the “harm to the competitive process is also clear”. This is because the “decision to offboard GovChat from the WhatsApp Business API and the exclusionary terms for access to the WhatsApp Business API, including restrictions on the use of data, limits innovation and the development of new products and services”.
It said the terms and conditions governing access to the WhatsApp Business API are “designed to shield and insulate Facebook from potential competition, such as the potential competition presented by GovChat and enormous data it has been able to harvest, which enables it to develop new services and products”.
In addition to the staggering fine that the commission wants the tribunal to impose on Meta Platforms, it has asked the tribunal to interdict the company from offboarding GovChat from the WhatsApp Business API and to declare void “certain exclusionary terms and conditions” for access to the API.
In the statement, competition commissioner Tembinkosi Bonakele said: “Facebook’s decision to offboard GovChat from the WhatsApp Business API and its exclusionary terms of data usage are untenable.
In response to a request for comment from Meta Platforms in South Africa, a spokesman for WhatsApp said: “WhatsApp plays a vital role in providing people with important information from trusted sources, and we are aware of the role the service plays in connecting South African citizens with their government.
“That’s why we want to work with GovChat in compliance with internationally recognised regulatory standards to provide this service.
“However, GovChat has repeatedly refused to comply with our policies, which are designed to protect citizens and their information, preferring to prioritise their own commercial interests over the public. We will continue to defend WhatsApp from abuse and protect our users.”