WhatsApp cleared of abuse of dominant position charges under Section 4 despite 56% market dominance

The Competition Commission of India dismissed allegations against WhatsApp Inc. for abuse of dominant position under Section 4 of the Competition Act, 2002. While the Commission acknowledged WhatsApp's dominance in India's consumer communication app market, citing 56% daily usage among internet users, it found no prima facie case of predatory pricing or abusive conduct. The Commission noted minimal switching costs between messaging apps due to free availability, easy downloadability, multi-homing capability, simple interfaces, and accessible information about alternatives. Despite WhatsApp's dominant position, the Commission concluded no contravention occurred and closed the matter under Section 26(2).

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Issues Involved:
1. Alleged abuse of dominant position by WhatsApp Inc. (OP) under Section 4 of the Competition Act, 2002.
2. Alleged predatory pricing by WhatsApp Inc.
3. Alleged breach of privacy policy and IT Act, 2000.

Detailed Analysis:

1. Alleged Abuse of Dominant Position by WhatsApp Inc. (OP) under Section 4 of the Competition Act, 2002:
The Informant, a Chartered Accountant representing Fight for Transparency Society, filed information against WhatsApp Inc. (OP) under Section 19(1)(a) of the Competition Act, 2002, alleging contravention of Section 4 of the Act. The Informant claimed that WhatsApp's updated privacy policy forced users to share their account details and other information with Facebook, which was used for targeted advertisements. The Commission observed that the relevant market was "the market for instant messaging services using consumer communication apps through smartphones in India." It was noted that WhatsApp holds a dominant position in this market with a substantial user base in India. However, the Commission found that WhatsApp provides an option to users to opt-out of sharing their account information with Facebook within 30 days of agreeing to the updated terms. Additionally, WhatsApp messages are protected by end-to-end encryption, ensuring third parties cannot read them. Hence, the Commission concluded that no prima facie case of contravention of Section 4 was made out against WhatsApp.

2. Alleged Predatory Pricing by WhatsApp Inc.:
The Informant alleged that WhatsApp engaged in predatory pricing by not charging any subscription fee since January 2016, thereby abusing its dominant position. The Commission noted that several other applications in the relevant market, such as Hike, Messenger, and Viber, also do not charge any fee from users. It was observed that not charging a subscription fee appears to be a standard industry practice. The Commission also highlighted that there are no significant costs preventing users from switching between different consumer communication apps, indicating a competitive market environment. Therefore, the Commission concluded that the allegations of predatory pricing had no substance and WhatsApp had not contravened any provisions of Section 4 of the Act.

3. Alleged Breach of Privacy Policy and IT Act, 2000:
The Informant claimed that WhatsApp's new privacy policy violated the IT Act, 2000, and the right to privacy. The Commission referred to the Delhi High Court's order in the case of Karmanya Singh Sareen and Others vs. Union of India and Others, which addressed similar concerns. The High Court had observed that the issue of the right to privacy was still pending before a larger bench of the Supreme Court. Furthermore, the High Court noted that users have the option to delete their WhatsApp account if they do not want their information shared with Facebook. The Commission concluded that allegations of breach of the IT Act, 2000, do not fall within the purview of examination under the Competition Act, 2002.

Conclusion:
The Commission found no prima facie case of contravention of the provisions of Section 4 of the Competition Act, 2002, against WhatsApp Inc. and accordingly closed the matter under Section 26(2) of the Act. The Secretary was directed to inform all concerned accordingly.

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