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Vinod Kumar Gupta v. WhatsApp Inc. - (Competition Commission of India) (01 Jun 2017)

Once consumer communication apps are installed on device, users can pass on from one app to its competitor apps in no-time

MANU/CO/0036/2017

MRTP/ Competition Laws

Present information has been filed by Informant under Section 19(1)(a) of Competition Act, 2002 against WhatsApp Inc. alleging contravention of provisions of Section 4 of Act. Informant has alleged that, by indulging in practice of predatory pricing, OP is abusing its dominant position in relevant market in contravention of provisions of Section 4 of Act. Further, It is alleged that, by mandating users to agree with its terms of service and privacy policy as updated in August, 2016, OP has been sharing information/data of its users with 'Facebook' which in turn is being used by 'Facebook' for targeted advertisements. It is alleged that, manner in which the so-called consent is taken by OP from its users is highly deceptive. Informant has alleged that, new privacy policy of OP is in contravention of provisions of Section 4 of Act. New privacy policy of OP enables it to copy/extract/download mobile's database and information including vital information of users such as contacts, etc. which is then used for commercial benefits of OP in violation of provisions of Information Technology Act, 2000. Informant has prayed Commission to enquire into abusive conduct of OP and pass order accordingly, prohibit OP from sharing users' data with 'Facebook' and direct OP not to discontinue its services to those users who have not agreed to 'opt in' change in its privacy policy.

As per Section 2(f) of Act, 'relevant market' means market which may be determined by Commission with reference to 'relevant product market' or 'relevant geographic market' or with reference to both the markets. In regard to relevant product market, Commission notes that, 'WhatsApp', an instant communication app for smartphones using standard cellular mobile numbers, is a platform for communication through texting, group chats and voice and video calls. 'WhatsApp' is a free to download communication application which does not charge any fee from its users for providing the services and just uses internet connection on the device to send instant messages, connect voice calls etc. Commission is of view that, relevant product market in present case may be considered as 'market for instant messaging services using consumer communication apps through smartphones'.

Functionality provided by consumer communication apps through smartphones is inherently cross-border. Competitive conditions, regulatory architecture and players may vary in different countries/regions. Since in present matter, allegations of Informant pertain to alleged anti-competitive conduct of 'Whatsapp' within geographic boundary of India and conditions of competition in market for instant messaging services using consumer communication apps through smartphones is homogeneous throughout India, Commission is of view that, geographic area of 'India' may be considered as relevant geographic market in instant case. Relevant market in this case may be considered as 'market for instant messaging services using consumer communication apps through smartphones in India''.

In India, a number of other players such as Apple with iMessage, BlackBerry with BBM, Samsung with ChatON, Google with Google Hangouts and Microsoft with Skype are providing consumer communication apps and are also active in the provisions of smartphone hardware and operating systems. Besides, many other consumer communication apps providers such as Hike, Viber, WeChat and Snapchat are also active in market. As per the information available in public domain, globally 'WhatsApp' is having a billion monthly active users and within India, it is having 160 million monthly active users. OP is in a dominant position in relevant market.

Data sharing terms of privacy policy of OP as updated on 25th August, 2016 relate to sharing of users' 'WhatsApp' account information with 'Facebook' to improve online advertisement and products experiences available on user's 'Facebook' page. OP provides option to its users to 'opt out' of sharing user account information with 'Facebook' within 30 days of agreeing to the updated terms of service and privacy policy. Moreover, OP has submitted that, 'Facebook family of companies' will use such information for purpose of improving infrastructure and delivery systems, understanding how their services are used, securing systems, and fighting spam, abuse or infringement activities. Commission also finds force in submission of OP regarding its users safeguards that, all types of 'WhatsApp' messages (including chats, group chats, images, videos, voice messages and files) and 'WhatsApp' calls are protected by end-to-end encryption so that, third parties and 'WhatsApp' cannot read them and also message can only be decrypted by recipient. Further, as stated in key updates summary of OP, nothing a user shares on 'WhatsApp', including his/her messages, photos, and account information, will be shared onto 'Facebook' or any other apps of 'Facebook family of companies' for any third party to see, and nothing a user posts on those apps will be shared by 'WhatsApp' for any third party to see.

Allegations of breach of IT Act, 2000 do not fall within purview of examination under provisions of Act. There are several other applications available in relevant market which does not charge any fee from users for availing their services for instance, Hike, Messenger and Viber are also available for free. It appears to be standard practice in industry/business that, all consumer communication apps are not charging any fee from the users. Commission observes that, ‘WhatsApp' was previously charging subscription fee from its users which was subsequently scrapped. This may be due to presence of many other service providers who are offering services for free of cost. Furthermore, from submissions of OP, Commission notes that, revenue model of OP is like other players in industry/business and it is still evaluating various modes that can be used to earn revenues from its services by providing value to its customers.

There are no significant costs preventing the users to switch from one consumer communication apps to another. Expansion of Hike Messenger to nearly 100 million user base within three years of launching their services into aforesaid market reflects that in this market, there are no significant barriers to entry and consumers appear to be price sensitive. Based on above, Commission is of view that, even though 'WhatsApp' appears to be dominant in relevant market, allegations of predatory pricing have no substance and OP has not contravened any of provisions of Section 4 of Act. Commission finds that, no prima facie case of contravention of provisions of Section 4 of Act is made out against OP in instant matter.

Tags : DOMINANCE   CONTRAVENTION   PROVISIONS  

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