The Competition Commission South Africa (Commission), through its prosecution authority, the Competition Tribunal, issued a statement on 14 March 2022 announcing intentions to prosecute social networking giant Meta Inc (Facebook) for exclusionary activities that violate section 8 (1)(d)(ii), section 8 (1)(c) and section 8 (1)(b) of the Competitions Acts of 1998. This is with regards to how Facebook wanted to offboard GovChat, a citizen engagement platform by a South African company of the same name.
In 2018, the South African government contracted GovChat to use its platform which allows citizens to communicate with all levels of government, national, provincial, and municipal, to report a wide range of concerns such as pothole location and other service delivery requirements.
GovChat further enables the government to transmit vital information to the public in bulk, such as tracking, testing, and immunization information for the Covid-19 system. The impoverished may now apply for social relief and hardship funds using GovChat. GovChat has given the government unprecedented real-time insight into service delivery challenges, allowing the government to effectively provide targeted remedies.
Abuse of market dominance
The WhatsApp Business Application Programming Interface (API), owned by Facebook, is used to integrate GovChat services. Thus GovChat is dependent on access to WhatsApp Business API to fulfill its services.
GovChat (complainant) filed a complaint with the Commission on 20 November 2020, stating, among other things, that Facebook threatened to cancel their access to the WhatsApp Business API owing to purported terms and conditions violations. In support of the case, the Commission filed its own complaint against Facebook on 8 October 2021, saying that certain terms and restrictions imposed by the social media giant on market players using the WhatsApp Business API value chain result in anti-competitive behavior.
WhatsApp provides increasingly essential channels for users to communicate and for businesses and government to access customers and citizens respectively. WhatsApp provides these services using data over the internet which goes over-the-top of normal telecommunication services (OTT). It allows users on different mobile network operators, handset operating systems, and devices, to interact seamlessly on one platform that is essentially free outside of any data costs.
On 14 November 2020 GovChat applied to the Competition Tribunal for interim relief in terms of section 49C of the Competition Act. On 11 March 2021 the Competition Tribunal granted the interim order in favor of GovChat interdicting Facebook from offboarding GovChat from the WhatsApp Business API pending the Commission’s investigation of the GovChat complaint. The interim order lapsed on 11 March 20022, and on the same date, the Commission filed its referral against Facebook.
Jurisdictional barriers
The doctrine of effectiveness is a common law principle in South Africa that states that a court, in this case, a tribunal, has jurisdiction over a matter if it can provide an effective ruling. The authority of the court to enforce compliance with its order over the respondent is characterized as effective judgment.
In this matter, the chances of an effective judgment are quite slim.
Facebook Ireland Ltd receives all revenue from Facebook South Africa activities, not the South African firm. Facebook SA is primarily a cost center that hires employees, manages regulatory issues, and implements social well-being programs. It's difficult to see how relief sort by the Commission, to impose a 10% penalty on revenue turnover from all Meta activities in South Africa would be implemented.
Healthy competition
The Commission has further requested the Tribunal to interdict Facebook from off-boarding GovChat from the WhatsApp Business API and to declare void certain exclusionary terms and conditions for access to the WhatsApp Business API.
The Competition Commission's objective to halt Facebook's market dominance abuse is at risk of becoming a futile exercise because of these jurisdictional constraints. Facebook's revenue from South Africa must be collected and processed within the republic's jurisdiction to achieve an effective judgment.
— By Bataung Qhotsokoane
