CCI introduces Leniency “Plus” regime in India- Will it suffice?
CCI vide its recent order dated June 01, 2017 has closed an allegation of abuse of dominant position against popular message service WhatsApp. The complaint against WhatsApp was filed by an individual Vinod Kumar Gupta on behalf of a NGO “Fight for Transparency Society”.
As per the complainant, WhatsApp was acquired by Facebook Inc. (“Facebook”) in February 2014 and thereafter WhatsApp introduced changes in its privacy policy in August 2016 whereby the users of WhatsApp have been forced to share their account details and other information with Facebook in order to continue availing the services of WhatsApp. As per the complaint, this enabled Facebook to use the customers’ data for targeted advertisement in a highly deceptive manner. It was stated that almost the entire community of users of WhatsApp in India are not equipped to read or comprehend the consequences of the changed terms and conditions of privacy policy of WhatsApp and the use of the customers’ mobile database and information including vital information of the user such as contacts etc. were used for commercial benefits by Facebook in violation of the Information Technology Act, 2000 besides being an unfair condition constituting an abuse of dominant position under section 4 of the Competition Act, 2002 (“the Act”). The complaint also alleged that by offering a free service since January 2016, WhatsApp was indulging in the practice of predatory pricing in violation of section 4 of the Act.
CCI heard both the complainant and the counsels for WhatsApp in a preliminary conference in order to arrive at a prima facie view.
CCI concluded, on the basis of various studies reports that WhatsApp was in a dominant position in the relevant market for “instant messaging services using consumer communication apps through smartphones in India” being the most popular messaging service with 97% of the smartphone users in India having been installed on 96% of the devices and has more daily active users than any other communication app in India. As per the study report WhatsApp is installed in 2.3 times more devices than home grown messaging apps like Hike .
However regarding the allegation of abuse of dominance, CCI noted that WhatsApp provides the option to its users to “opt out” of sharing user information with Facebook within 30 days of agreeing to the updated terms of service and privacy policy. CCI also agreed with the submission made by WhatsApp that its uses safeguards by protecting WhatsApp calls by end to end encryption so that third parties and WhatsApp itself cannot read them and also that the message can only be decrypted only by the recipient. Further, CCI agreed with the submission of WhatsApp that nothing that a user shares on WhatsApp including his messages, photos and account information will be shared on to Facebook or any other apps of “Facebook family of companies” for any third party to use.
Regarding the allegation that the conduct of WhatsApp making its users sign its new private policy is in breach of the IT Act, 2000 and the right of privacy, the Commission noted that this issue was already sub-judice in an appeal pending before the Hon’ble Supreme Court arising out of a writ petition earlier filed in Delhi High Court (W.P.(C) 7663/2016) wherein similar allegations were raised by the petitioners, who were users of WhatsApp. This issue was therefore, outside the purview of the CCI being not a competition issue under the Act.
As regard the allegation that WhatsApp was indulging in predatory pricing by offering free services, CCI noted that there are several other applications available in the relevant market such as Hike, Messenger and Viber, which were also offering free services. It appears to be standard practice in the industry / business and therefore WhatsApp alone cannot be accused of indulging in predatory pricing since it was following the revenue model like that of other players in the market. Moreover, CCI noted that there are no significant cost preventing the users to switch from WhatsApp to other apps since all such communication apps are easily downloadable on smartphones and can co -exist on the same handset (also called “multi-homing”).
Based on the above, CCI found that there was no prima facie case to investigate the alleged conduct of WhatsApp even though it was found to be in a dominant position
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