WhatsApp pay controversy in CCI

This article was written by Nandini Tripathy, a student of Symbiosis Law School.

The Unified Payments Interface (UPI) has been India’s finest achievement in the virtual bill’s region to date. It is no secret that the demonetization of banknotes introduced through the Union Government on 8th November 2016 acted as a brilliant catalyst in promoting virtual bills throughout the country. While large Peer-to-Peer (P2P) wallet providers which include Paytm, Freecharge, and Mobikwik were forced to introduce UPI to their existing infrastructure thanks to scalability and simplicity of use, others consisting of Phonepe and Google Pay went on to construct their fee offerings entirely on the UPI platform.

Seeing this as a superb possibility, Facebook Inc. Owned messaging large WhatsApp too joined the bandwagon and proven its intent to foray into the virtual bill’s marketplace. On sixteenth February 2018 the National Payments Corporation of India (NPCI) which spearheaded the UPI granted an in-principle popularity of WhatsApp’s pilot challenge.  According to the consent, WhatsApp ought to roll out UPI for a limited userbase of one million and with a stipulated in keeping with transaction restrict. However in July, 2018 a felony assume tank named Centre for Accountability and Systemic Change (CASC) filed a PIL before the Hon’ble Supreme Court declaring that WhatsApp had did not comply with the records localization guidelines notified by way of the RBI thereby violating the privateness of residents. WhatsApp’s reluctance to conform eventually got here to a keep when the Supreme Court ordered RBI and NPCI to publish reviews of compliance thereafter which WhatsApp confident the Court that they might comply to the statistics localization guidelines before rolling out their complete-fledged payments characteristic. The present day order explicitly mentions – “It is made clear that there may be no live of the lawsuits with appreciate to the software of respondent (i.E. WhatsApp) by the Government, which will be processed according with regulation” indicating NPCI and RBI to go in advance with its regulatory approvals if situations are met. Subsequently, it has been reported that the Competition Commission of India (CCI) has been reviewing antitrust complaints in opposition to WhatsApp Pay. Therefore, a query arises as to whether or not the CCI might now knock the doorways of WhatsApp?

The Competition Commission of India (CCI) has dismissed a case towards WhatsApp that alleged the messaging platform abused its marketplace dominance to release WhatsApp Pay in India. The antitrust watchdog said WhatsApp Pay was available to “less than 1%” of WhatsApp customers in India in its beta model, and that it is sincerely “yet to happen within the marketplace”. The case towards WhatsApp was brought by way of attorney Harshita Chawla. The ruling clears a hurdle for the Facebook-owned platform’s quest to capitalize on India’s fintech surroundings. Facebook CEO Mark Zuckerberg recently said the firm may want to look to convey bills to different countries after trying out it in India. WhatsApp has more than four hundred million customers in India, making it its biggest market. The CCI case become considered one of two which have been retaining WhatsApp from launching its complete-fledged payments provider in India. The release of WhatsApp Pay has been said to be important for Facebook to capitalize on its affiliation with Mukesh Ambani-led Reliance Jio. Jio’s grocery delivery provider, JioMart, is already permitting customers to make orders thru WhatsApp. With a payments provider, the integration between the two systems could be in addition improved. While it brushed off the antitrust allegation, the regulator did observe that WhatsApp is certainly dominant within the over-the-pinnacle (OTT) messaging area. This might be crucial for destiny antitrust instances and rulings relating the technology area. “CCI stated that at the same time as you may say this area is for person attention, it has its booths. So, you could substitute a Facebook, where you post content material, with a WhatsApp, which is ready stay chats. That may want to make gamers cautious of their behaviour, because they can be dominant of their very small niches, so to speak,” Antitrust watchdog Competition Commission of India (CCI) has disregarded a case towards Facebook’s WhatsApp, announcing the enterprise has no longer abused its dominant function to extend within the use of a’s digital bills market, consistent with an reputable order.

A case in March alleged that WhatsApp was bundling its virtual payment facility – WhatsApp Pay – within its messaging app for which it already has a massive user base. The case alleged WhatsApp changed into abusing its function through forcing its payments characteristic directly to its present users.  In a forty one-page legitimate order made public, the Competition Commission of India (CCI) said it did now not discover any contravention of antitrust laws, adding the organization’s “actual conduct is but to appear in the market” because it has not completely launched the provider yet. “As said through WhatsApp, the variety of customers being served underneath the beta model is limited to much less than 1% of its users in India,” stated the order. The order will come as a alleviation for WhatsApp, that is visible close to a complete release of its bill’s carrier in its largest market through users however one wherein it has for months struggled to get required clearances. The Supreme Court is separately hearing instances tough the enlargement of its fee provider.

The Abuse of Dominance

1. Relevant Product Market

Before delving into the dialogue regarding the feasible abuse of WhatsApp’s dominant position, the relevant market has to ascertained. In the instantaneous case, it has to be mentioned that WhatsApp which is predominantly an immediately messaging application could enter the Digital Payments Market (offering simplest UPI initially) by means of enabling the said feature on its existing application. Thereby, WhatsApp is said to make use of its already present userbase to push its digital bills presence.

Taking under consideration factors which include interchangeability, traits of the product or service, their charges, patron alternatives and meant use as supplied beneath Section 2(t) and Section 19(7) of the Competition Act, 2002 (the Act), two markets emanate for dialogue. Firstly, the ‘Instant Messaging Services’ marketplace. Although the point of interest is on WhatsApp’s payment characteristic, yet it’s far opined that WhatsApp’s number one marketplace, i.e. Immediate messaging, has to be assessed within the immediately case as the UPI characteristic (popularly referred to as as WhatsApp Pay) is being delivered as an extension to its existing utility. The second market this is relevant here is that of ‘Digital Payment Systems’ presenting UPI as a characteristic.

1. WhatsApp’s Scale of Dominance

In the Instant Messaging marketplace, WhatsApp holds 33.37% of worldwide marketplace proportion with greater than 2 billion active users. Of this immense subscriber base, 400 million customers are from India making it the largest marketplace for WhatsApp. A observe indicates that WhatsApp is installed on 95% of Android Devices and 75% of the users use the app on a daily foundation in India. The statistics above sincerely indicates WhatsApp because the marketplace-leader and in a role to dominate. As a ways as the Digital Payment Systems marketplace providing UPI as a characteristic is worried, a main payment gateway issuer’s record suggests that Google Pay holds a market share of over 61% accompanied by PhonePe and PayTM with stocks of 24% and 6% respectively. In phrases of quantity of customers, Google Pay boasts of 67 million energetic monthly customers accompanied via PhonePe with 55 million users. With a mean of 790 million UPI transaction in step with month (as in line with statistics for January, 2019 to September, 2019), the addition of UPI characteristic onto its messaging platform could enable WhatsApp with a four hundred million subscriber base to without delay penetrate into the bills market. Even the slightest translation of immediately messaging customers to the UPI function might dent the opposite gamers in the market. Therefore, elements such as function of strength, operations unbiased of aggressive forces and impact on its competition within the relevant marketplace is opined to be happy within the instant case and for this reason falls squarely inside the ambit of “dominant role” as explained beneath Section 4 of the Act.

1. The Abuse of Dominant Position Charge

It widely known that a market-player’s dominant position is not in step with se prohibited underneath the Act. However, the abuse of a player’s dominant role is against the law. Section 4(2)(e) of the Act expressly states that – There will be an abuse of dominant function if an organisation or a collection “uses its dominant function in a single applicable market to go into, or shield, different relevant marketplace.” In the immediately case, WhatsApp’s dominant function within the Instant Messaging Services market is being applied to enter the charge services marketplace, sincerely violating the said provision.

Similarly, Section 4(2)(c) of the Act categorizes practices ensuing in denial of market get admission to in any way as an abuse of dominant role. It is opined that WhatsApp’s integration of UPI into its present app bureaucracy a market denial exercise since the consumer is incentivized to utilize the UPI characteristic while not having to download extra packages. The mere fact of WhatsApp’s gigantic subscriber base would create a huge network impact thereby affecting the already existing gamers within the marketplace. Although there is no real switching price worried, components including ease of use and comfort have to additionally be taken into consideration. In the case of In Re Biocon Limited v. F. Hoffman-La Roche AG & Ors., the Commission held denial of market get admission to under Section four(2)(c) of the Act want no longer be complete and absolute in nature. Even a partial denial of marketplace gets right of entry to that takes away the freedom of an alternative to compete efficaciously could amount to violation of Section 4(2)(c). Applying the above ratio, WhatsApp’s integration of charge machine into its present app is in clear contravention to Section 4(2)(c).

Furthermore, it is far opined that a distinctive approach is needed to assess abuse in digital markets. For the primary time, the Commission within the case of Matrimony.Com Limited v. Google characterized conventional factors including entry limitations and community impact in the digital context. The majority held that during multi-sided virtual platforms, the network consequences are more said, and new users tended to pick out systems or networks that already had a massive consumer base. Thereby, marketplace entries would turn out to be much less likely and users switch less frequently to other suppliers leading to marketplace strength improving effect and dominance subsequently.

What argument given

It became argued on behalf of the complainant that Facebook and WhatsApp have get admission to each cellular user in India via the Internet-primarily based messaging software. In such a state of affairs, the organisation will try unilaterally to attach those WhatsApp smartphone users with its UPI enabled virtual charge service, with a view to immediately benefit WhatsApp and it’s going to not be properly for the app-based totally digital price market in terms of opposition.

No loss to the market because of the access of WhatsApp pay

The Competition Commission of India (CCI) in its 41-web page order has said that there is no violation of Dhar-4 of the Competition Act on behalf of WhatsApp, which prevents the dominance of any organization inside the market for competition. Monitored the telephone’s messaging app ‘Market for Over-the-Top (OTT) and’ Market for UPI (Unified Payment Interface) enabled digital fee apps to research lawsuits in opposition to WhatsApp. According to the regulator, WhatsApp will use its net dominance to make its manner into the UPI marketplace. But as in keeping with the CCI order, the prevailing UPI enabled participant has already hooked up itself very firmly inside the app-primarily based digital fee market and has mobilized large assets on this route. In the sort of situation, the healthful opposition of the marketplace will stay intact. In this situation, no enterprise will be in a function to take advantage. This selection of CCI will provide superb comfort to WhatsApp. Explain that there is a big person base of WhatsApp in India. This decision of CCI will make the manner for WhatsApp pay access in India and in this sort of scenario, the organization can quickly start its payment carrier in India. However, WhatsApp will ought to await the Supreme Court order. There is likewise a hearing within the Supreme Court regarding this count number.

Supreme Court Judgement

The Supreme Court has permitted texting application like whatsapp to be utilized to serve summons and notification just as through email and fax.

The top court stated, “It has been brought to our notification that it was impractical to visit post workplaces for administrations of notification, request, and pleadings.”  “We, subsequently, think of it as fitting to coordinate that such administrations of all the above might be affected by email, FAX, regularly utilized texting administrations, for example, WhatsApp, Telegram, Signal and so on. Nonetheless, if a gathering plans to impact administration by methods for said texting administrations, we direct that what’s more thereto, the gathering must likewise impact administration of a similar report/records by email, at the same time on the equivalent date, “said the Court.

A seat headed by the Chief Justice SA Bobde, Justice R Subhash Reddy and Justice AS Bopanna said all strategies to be utilized to demonstrate a legitimate assistance on a gathering.  The Supreme Court in a Suo Motu writ request has requested that all times of impediment recommended under the Arbitration and Conciliation Act 1996 will be broadened w.e.f. 15.03.2020 till further requests. In a specific order Attorney General has looked for a minor alteration. From that point, on 10/07/2020, the Supreme Court has altered the said request and stated, ” Section 29A of the Arbitration and Conciliation Act, 1996 doesn’t endorse a time of impediment however fixes an opportunity to do certain demonstrations, for example making an arbitral honor inside an endorsed time. We, as needs be, immediate that the aforementioned orders will likewise apply for expansion of time limit for passing arbitral honor under Section 29A of the said Act. Additionally, Section 23(4) of the Arbitration and Conciliation Act, 1996 accommodates a timeframe of a half year for the finishing of the announcement of guarantee and safeguard. We, likewise, direct that the aforementioned orders will likewise apply for augmentation of as far as possible recommended under Section 23(4) of the said Act.”

Concerning the supplication, that the time of legitimacy of a check be expanded. The Court find that the said period has not been endorsed by any Statute however it is a period recommended by the Reserve Bank of India under Section 35-An of the Banking Regulation Act,1949. “We don’t think of it as suitable to meddle with the period endorsed by the Reserve Bank of India, especially, since the whole financial framework capacities based on the period so recommended,” said the Court.  On the past hearing, “Shri K.K. Venugopal, learned Attorney General and Shri V. Giri, learned senior guidance, showing up for the Reserve Bank of India, look for authorization to record a short note on the different parts of the impediment associated with the issue.”

On the issue of “Pre-Institution Mediation and Settlement under Section 12A of the Commercial Courts Act, 2015.”  The Court coordinated, “Under Section 12A of the Commercial Courts Act, 2015, time is endorsed for finishing the cycle of obligatory pre-prosecution, intervention and settlement. The said time is additionally subject to be broadened. We, likewise, direct that the said time will stand stretched out from when the lockdown is lifted in addition to 45 days from there on. In other words that if the above period, for example the time of lockdown in addition to 45 days has lapsed, no further period will be at risk to be prohibited.”  The Court by its request dated 06/05/2020 had requested that all times of constraint recommended under the Arbitration and Conciliation Act, 1996 and under area 138 of the Negotiable Instruments Act 1881 will be reached out with impact from 15.03.2020 till further requests to be passed by the Court in present issue.

On 23rd March, 2020, the Supreme Court had took Suo Motu insight of the circumstance emerging out of the test looked by the nation because of Covid-19 Virus and resultant troubles that might be looked by disputants the nation over in recording their petitions/applications/suits/claims/all different procedures inside the time of impediment endorsed under the overall law of restriction or under Special Laws (both Central as well as State). To forestall such troubles and to guarantee that legal advisors/disputants don’t need to come genuinely to record such procedures in separate Courts/Tribunals the nation over including this Court, it was requested that a time of constraint in every single such continuing, regardless of the restriction recommended under the overall law or Special Laws whether condonable or not will stand stretched out with impact from fifteenth March 2020 till further request/s to be passed by the Court in present procedures.  The Court while practicing the force under Article 142 read with Article 141 of the Constitution of India proclaimed that this request is a coupling request inside the importance of Article 141 on all Courts/Tribunals and specialists. “This request for Supreme Court might be brought to the notification of all High Courts for being imparted to all subordinate Courts/Tribunals inside their individual ward. Likewise, notice is to be given to all the Registrars General of the High Courts in regard of the equivalent, and it is returnable in about a month from today”, Said Apex Court.

Conclusion

Digital zone’s dynamic nature has of late attracted the attention of opposition and antitrust regulators throughout the globe. Facebook Inc’s acquisition of Instagram and WhatsApp among other deals inside the digital zone, has made regulators realise the lasting impact of such deals and want to nip them in the bud. In India, WhatsApp’s foray into the digital payments sector poses a similar venture to the CCI. Facebook-Instagram-WhatsApp’s combined information electricity is a extreme danger to current virtual fee carrier carriers who’ve over the period of time invested heavily in person onboarding and engagement.  Permitting WhatsApp to roll-out its full-fledged charge function within its current messaging software could force customers away from different players leading to denial of market access and thereby violating Section four of the Act. In order to therefore attain a stage playing area, WhatsApp’s charge function is suggested to be separated from its present messaging application. This would make sure WhatsApp’s price feature is left open for fulfilment based totally on market forces in preference to using its dominant role in the subject of instantaneous messaging programs. The messaging app WhatsApp has been given important comfort with the aid of the Competition Commission of India (CCI). The CCI has disregarded the criticism filed in opposition to WhatsApp, in which WhatsApp changed into accused of bringing virtual price (WhatsApp pay) on its behalf, which could disillusion the marketplace stability. To put it clearly, WhatsApp will completely dominate the UPI enabled app-primarily based virtual fee marketplace.