GovChat and Capital Appreciation (Capprec) have welcomed the Competition Commission’s decision to refer social media giant Meta Platforms, previously known as Facebook, and its subsidiaries, WhatsApp and Facebook South Africa, to the Competition Tribunal for prosecution for abuse of dominance.

“The matter is groundbreaking, being one of the few abuse of dominance cases ever to be prosecuted by the South African Competition Commission, and the first of its kind involving digital platforms and marketplaces,” said GovChat CEO Eldrid Jordaan.

“This sets a precedent for South African startups to continue on their mission, regardless of the headwinds.”

The decision relates to a complaint from GovChat in November 2020 when Facebook announced its intention of terminating GovChat’s, and its technology startup that connects government and citizens, #LetsTalk, access to the WhatsApp Business Application Programming Interface (API).

In October 2021, the Competition Commission initiated a further complaint against Facebook, alleging that certain terms and conditions imposed by Facebook on GovChat and others operating on the WhatsApp Business API value chain amounted to anti-competitive conduct.

This followed Facebook’s imposition, and selective enforcement, of exclusionary terms and conditions regulating access to the WhatsApp Business API – mainly restrictions on the use of data – which the Competition Commission said was in contravention of the Competition Act, sections 8(1)(d)(ii), alternatively 8(1)(c) and in the further alternative 8(1)(b).

The Act 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.

“Access to digital markets has now become indispensable. In turn, access to digital markets is dependent on access to digital platforms including, as in this case, access to an important digital communication platform – the WhatsApp Business API,” explained Competition Commissioner Tembinkosi Bonakele.

“Over and above, data is everything in digital platform markets. In view of the important services provided by GovChat, which provides real-time interface between government and the public, and the benefits to competition presented by its business model, Facebook’s decision to off-board GovChat from the WhatsApp Business API and its exclusionary terms of data use are untenable.”

The Competition Commission asked the Competition Tribunal to impose a maximum penalty against Meta Platforms, WhatsApp and Facebook South Africa, which is 10% of their collective turnover.

In addition, the Commission has 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.

Portfolio Committee on Communications chairperson Boyce Maneli said that this development is a positive sign of checks and balances in the digital space.

“No business entity, big or small, should enjoy absolute dominance in the digital space, especially at a time when the country is headed at the direction of digital economy.”

GovChat is dependent on its continued access to the WhatsApp Business API, said Jordaan, noting that the intended offboarding of GovChat from the WhatsApp Business API would harm consumer welfare by removing the efficiency of the GovChat, which allows the public to communicate with multiple government bodies through a single platform, and will also deprive government of the current services, and future services such as mobile payment solutions, offered by the GovChat.

Since 2018, government has engaged GovChat to disseminate critical information to citizens on a mass scale, as it did with Covid-19 symptom tracking, testing and the provision of related critical information, as well as enable citizens to digitally apply for social relief and distress grants.

The GovChat messaging traffic comprises of hundreds of thousands of messages daily, the vast majority of which relates to queries from the public to the Department of Social Development relating to social welfare grants provided for children, disabled and indigent members of society.

GovChat, which has 8.7-million active users, recently processed 13.3-million South African Social Security Agency Social Relief of Distress Grant applications and has processed 582.3-million messages between government and South African citizens.

“It is clear from the engagement statistics that GovChat delivers a vital service to both government and its citizens. It would have been a travesty if such a service was to be terminated through WhatsApp’s intimidatory tactics and anticompetitive behaviour. Capital Appreciation (Capprec) fully supports GovChat in its efforts to fight this restrictive conduct,” said GovChat and Capprec nonexecutive chairperson Michael (Motty) Sacks.

Capprec has a 35% investment interest in GovChat and its specialised platform technology was developed by Capprec subsidiary Synthesis Software Technologies.

“Capprec has today hailed the decision by the Commission as an important step to protect a vital citizen engagement service to the Government which is a huge benefit to the citizens of South Africa, as well as the very important and decisive action by the Commission to promote fair business practices and to ensure improved service delivery and active citizenry.”