New Delhi: Social media giant WhatsApp may have hit another hurdle in its plans to roll out a payments service in India.
News agency Reuters has reported, on the basis of information from three unnamed sources, that the Competition Commission of India (CCI) is looking into allegations that WhatsApp may be abusing its dominant social media position to gain an edge in the payments domain.
As the antitrust regulator, the CCI seeks to ensure fair competition in India.
India is the largest market for Facebook-owned WhatsApp, with around 40 crore users. The complainant, who wasn’t identified in the Reuters news story, has reportedly taken exception to the fact that WhatsApp is building the payments app into its existing chat portal.
Since 2018, WhatsApp has been beta-testing its payments app among 1 million users.
WhatsApp’s payment service, dubbed ‘WhatsApp Pay’ in the media, will allow inter-bank fund transfers. The service will compete with Paytm, which has 14 crore monthly active users and Google Pay, which has 6.7 crore monthly active users.
The report of a new complaint comes on the back of concerns about the app with regard to India’s data-localisation norms, which have also been raised in the Supreme Court. However, WhatsApp told the court this month that will comply with Indian laws before it carries out a wider rollout.
In 2019, the chairman of the National Payments Corporation of India (NPCI), a non-profit formed by the RBI and the Indian Banks Association to oversee the retail payments and settlement systems in India, was quoted as saying that WhatsApp was close to meeting data localisation norms.
The Reuters report said it had approached WhatsApp, Facebook, and CCI for comment but didn’t receive a response.
‘Abuse of market dominance’
According to the Reuters report, two of the sources said the complaint was filed by a lawyer in mid-March. The lawyer has reportedly alleged WhatsApp is “bundling” its payment feature with its chat app, which already has a dominant position in the market. This “abuse” of the chat app’s market dominance, the complainant is said to have alleged, will help WhatsApp further penetrate India’s fast-growing online payments sector.
This could “harm competition” and go against India’s anti-trust laws, one of the sources said, explaining the complaint.
In addition, the complaint reportedly alleges that WhatApp is “forcing” the payment service on users by adding it to the existing app.
However, the Reuters report quotes one of the sources as saying that the case is in the “initial stages”. “The CCI can order its investigations arm to conduct a wider probe into the allegations, or throw out the case if it finds no merit in it,” it states.
One of the sources said WhatsApp may not face a “wider investigation” because the scale of any “market abuse” will only be clearer when the company “fully launches” its payment service.
News of the CCI probe comes less than a month after Facebook announced it had made a “$5.7 billion, or INR 43,574 crore, investment in Jio Platforms Limited, part of Reliance Industries Limited” to become its largest minority shareholder”.
The deal pairs WhatsApp with Jio Platforms, which includes the telecom venture Reliance Jio Infocomm, and is expected to fuel the growth of the Reliance e-commerce portal JioMart, through which the company aims to empower the neighbourhood grocery stores.
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