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IN THE COMPETITION TRIBUNAL
HELD IN PRETORIA
Case no. IR165Nov20
In the matter between: GOVCHAT PROPRIETARY LIMITED
First Applicant
HASHTAG LETSTALK PROPRIETARY LIMITED Second Applicant
and
FACEBOOK INC. First Respondent WHATSAPP INC. Second
Respondent
RESPONDENTS’ HEADS OF ARGUMENT
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TABLE OF CONTENTS
INTRODUCTION
........................................................................................................
3
REQUIREMENTS FOR INTERIM RELIEF
..............................................................
10
FACTUAL BACKGROUND RELEVANT TO THIS
APPLICATION......................... 19
The trial nature of GovChat’s early access through Praekelt
......................... 20
GovChat’s current use of the WhatsApp Business API
.................................. 23
The consistency of WhatsApp’s terms and their enforcement
....................... 28
GovChat’s commercial access to the WhatsApp Business API via
#LetsTalk
..............................................................................................................................
34
THE APPLICANTS ARE NOT ENTITLED TO INTERIM RELIEF
........................... 38
The first factor: evidence relating to the alleged prohibited
practices .......... 40
The second factor: preventing serious or irreparable damage to
the
applicant
..............................................................................................................
62
The third factor: the balance of convenience
................................................... 64
APPROPRIATE RELIEF
..........................................................................................
65
CONCLUSION
.........................................................................................................
67
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INTRODUCTION
1 At its core, this case concerns the right and ability of
WhatsApp Inc. (“WhatsApp”)
to enforce the contractual terms that govern the use of its paid
business
messaging platform, the WhatsApp Business API.1 The applicants
are blatantly
breaching these terms of use in pursuit of their narrow
commercial interests, and
seek interim relief from the Tribunal under section 49C of the
Competition Act 89
of 1998 (“the Act”) permitting them to continue doing so.
2 The applicants seek to justify this extraordinary relief on
purported competition
law grounds, but the dispute between the parties is in truth
simply a commercial
one which does not raise any legitimate competition law
considerations. In short,
there is no basis under the Act for the applicants to be
permitted to continue
using the WhatsApp Business API in clear violation of the
contractual terms of
use applicable thereto simply because that suits their chosen
business model.
3 To be able to use WhatsApp’s paid business messaging platform,
a business
end-user (“a user”) must, amongst other things, have –
3.1 either –
3.1.1 installed and managed the WhatsApp Business API on its
own
infrastructure (“direct integration”); or
1 API stands for application programming interface
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3.1.2 contracted with an authorised service provider, known as
a
Business Solution Provider (“BSP”), “that has entered into a
contractual relationship with WhatsApp and is authorised by
WhatsApp to deploy the WhatsApp Business Solution as a
service provider on behalf of its clients”;2 and
3.2 created a WhatsApp Business Account (“WAB account”) in its
own
name.3
4 The direct integration route has been undertaken by a
relatively small number of
businesses, owing to the considerable internal resources that
are required.
WhatsApp is currently not taking on any new direct-hosting
business customers.
The majority of business users wishing to use the WhatsApp
Business API have
instead contracted with an authorised BSP.4 In South Africa,
business users
may contract with one of four authorised BSPs in the country,5
or with any other
authorised BSP that services the region.6
5 During the development of this new product, and prior to its
commercial launch,
WhatsApp had provided access to a limited number of partners on
a trial basis.7
It was through one of these partners, Praekelt Consulting (Pty)
Ltd (“Praekelt”),
that GovChat first came to make use – without charge – of what
was then referred
2 Answering affidavit, paras 35 – 36, p 523 3 Answering
affidavit, para 11, p 517, para 68, p 530 and para 70 p 531 4
Answering affidavit, paras 35 – 36, p 523 5 The four authorised
BSPs in South Africa are InfoBip, Clickatell, Imimobile, and
Praekelt. Answering affidavit, para 37, p 523 6 Answering
affidavit, para 37, p 523 7 Answering affidavit, para 56, pp 527 –
528
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to as the “enterprise API”,8 and which eventually became known
as the
WhatsApp Business Solution or the WhatsApp Business API.
6 WhatsApp never approved GovChat’s trial use.9 In November
2018, following
the public commercial launch of the WhatsApp Business API,
Praekelt informed
GovChat that this access would end.10
7 In 2019, WhatsApp initiated a government programme to gain
insights into how
government entities could best use the WhatsApp Business API, a
product which
had been designed with the business user in mind.
8 Any government entity that wishes to make use of the WhatsApp
Business API
is required to comply with all the standard terms and
conditions, including the
requirement to establish a WAB account in its own name.11
9 In this regard, a government entity is treated no differently
from any other user.
That said, the government programme imposes additional
restrictions for
government entities, including an additional layer of review for
the specific
proposed use (“use-case”).
8 Answering affidavit, paras 56 – 58, pp 527 – 528 9 Answering
affidavit, para 61, pp 528 – 529 10 Answering affidavit, para 61,
pp 528 – 529; replying affidavit, annexure “RA4” p 755– 757 email
from Praekelt’s Morgan Collett dated 23 November 2018 (sent at
09h19) 11 Answering affidavit, para 68, p 530 and para 70 p 531
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10 On two occasions after the closure of its test account at
Praekelt, GovChat
applied unsuccessfully with a different BSP to open a new WAB
account in its
own name.12 As explained in the answering affidavit:13
“These attempts were turned down because the Government
programme had
been suspended and for the reason that GovChat was not the
intended user of
the account but that the Government entities in question would
be. I also note
that the limited onboarding which initiated in early 2020
related to COVID-19,
and WhatsApp was only onboarding health-related Government
entities during
these times.”
11 GovChat subsequently applied through a third BSP to open a
WAB account
under the name of #LetsTalk, its wholly-owned subsidiary, and
did not disclose
that the purpose was to provide messaging for government
entities.14 This meant
that the application evaded the requisite review by WhatsApp’s
government
programme team.
12 In March 2020, GovChat – through #LetsTalk – launched the
messaging services
at issue in this application, on behalf of national government
entities, such as the
national Department of Health (“the NDoH”).15
13 There is a dispute as to whether GovChat, in seeking to
secure access to the
WhatsApp Business API by way of #LetsTalk, sought to deceive
WhatsApp. The
respondents allege that GovChat chose to hide behind a corporate
entity with no
12 For further detail on these unsuccessful attempts, see
answering affidavit, paras 75 – 78, p 532 13 Answering affidavit,
para 74, p 532 14 Answering affidavit, para 80, p 533 15 Answering
affidavit, annexure “BES20”, p 608 – 613; founding affidavit,
annexure “FA13”, p 126 – 130
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easily discernible links to the government entities in question;
the applicants say
“[t]here was nothing untoward about the creation of #LetsTalk,
and GovChat
never attempted to conceal its existence, or GovChat’s ties to
the company”.16
14 Nothing turns on this dispute. What matters for purposes of
this application is
that, at the time #LetsTalk opened its WAB account, WhatsApp was
unaware of
#LetsTalk’s link to GovChat. This is made clear in email
correspondence in early
June 2020 between WhatsApp’s Mr Gareth Bray and InfoBip’s Ms
Katerina
Parimon. We return to this correspondence later when dealing
with the factual
background to this application.17
15 Moreover, the allegation that “GovChat’s connection with
#LetsTalk was ... made
plain at the outset”, which is based on the two entities being
“named parties to
the agreement with InfoBip”,18 does not mean that WhatsApp was
made aware
of that arrangement (to which it was not a party). It was not.
The applicants
appear to accept this, going no further than to assert that “it
was reasonable for
GovChat to infer that Facebook had seen – and approved – a draft
of the InfoBip
agreement”.19
16 Having made use of the WhatsApp Business API in violation of
the relevant terms
of use, #LetsTalk was informed in July 2020 that its WAB account
would be
16 Replying affidavit, para 76, p 714 17 See para 87 below 18
Replying affidavit, para 76, p 714 19 Replying affidavit, para
76.1.2, p 715. As the answering affidavit repeatedly makes clear,
it is WhatsApp – and not Facebook – that approves any user’s
request to be onboarded to the WhatsApp Business API.
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deactivated on 6 August 2020.20 This deadline was subsequently
extended on a
number of occasions, to enable GovChat’s government clients to
engage the
services of an authorised BSP directly in order to open their
own WAB accounts,
as the WhatsApp Business API terms of use require.
17 By early November 2020, some three months later, these steps
had not yet been
taken. This resulted in a final deadline of 16 November 2020
being set.21 But just
one business day before that deadline, the applicants approached
this Tribunal,
on an urgent basis, seeking interim relief in terms of section
49C of the Act.
18 In their papers in this application, the applicants included
a draft complaint to the
Competition Commission,22 which effectively alleges that the
enforcement of
WhatsApp’s terms of use constitutes anti-competitive conduct. In
particular, the
draft complaint alleges that this conduct amounts to an abuse of
dominance in
contravention of sections 8(1)(b), 8(1)(c) and/or 8(1)(d)(ii) of
the Act.23
19 By way of relief, the applicants seek an order interdicting
the respondents from
“off-boarding” them from the WhatsApp business platform, either
pending the
outcome of their contemplated complaint, or for a period of six
months, whichever
occurs first.24 In short, they seek an order permitting them to
continue using
WhatsApp’s proprietary software in a manner that violates its
terms of use.
20 Answering affidavit, para 95, p 537 21 Answering affidavit,
para 113 p 542 22 A complaint was allegedly filed with the
Commission after the present application was instituted We deal
with the implications of this sequence of events at paras 23 –27
below 23 The draft complaint incorrectly refers to sections 8(b),
8(c) and 8(d)(ii) 24 Prayer 2, notice of motion, pp 2 – 3
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20 This matter has nothing to do with competition law, let alone
anti-competitive
practices; GovChat does not compete with WhatsApp, WhatsApp does
not
compete with GovChat, and there is no market from which WhatsApp
seeks to
exclude GovChat. Instead, the dispute between the parties is
purely contractual,
concerning the applicants’ demand to use the WhatsApp Business
API in a
manner that suits GovChat’s chosen business model,
notwithstanding that this
is fundamentally inconsistent with WhatsApp’s terms of use.
21 Recently, in Africa People Mover (Pty) Ltd v Passenger Rail
Agency of South
Africa and Others, this Tribunal warned against it “being used
for ulterior motives
by parties who want to avoid their contractual obligations to
third parties”.25 We
submit that this is precisely what the applicants have sought to
do in bringing this
application for interim relief.
22 In what follows, we deal with the following four topics in
turn:
22.1 the requirements for interim relief in terms of section 49C
of the Act;
22.2 a summary of the factual background relevant to this
application;
22.3 why the applicants have failed to make out a case for the
grant of interim
relief; and
25 Case no. IR028May19 at para 35
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22.4 what would constitute appropriate relief should this
Tribunal come to the
conclusion that some form of interim relief is required.
REQUIREMENTS FOR INTERIM RELIEF
23 A jurisdictional prerequisite for the grant of interim relief
is that an applicant must
already have filed a complaint with the Commission. As the
Tribunal explained
in Papercor CC v Finwood Papers (Pty) Ltd and Others:26
“We find that the submission of a complaint in the manner
prescribed by the
Commission Rules is a prerequisite for an application for
interim relief. ... The
fact that subsequent to the institution of these proceedings the
applicant had
submitted its complaint does not help validate what already is a
nullity. This is
not mere formalism. A remedy cannot be “interim” if the very
procedure to
which it is ancillary has not yet been invoked.”
24 At the time these proceedings were initiated, the applicants’
complaint had yet to
be filed with the Commission. All that is said by the
applicants, in reply, is that
“the applicants have submitted a complaint to the Competition
Commission.”27
Significantly, we are not told when the complaint was filed, or
to what extent – if
any – it differs from the draft complaint attached to the
founding affidavit.
25 Because a copy of the filed complaint is not part of the
record in this application,
this Tribunal cannot be certain that the alleged practice in
respect of which
interim relief is sought is indeed the very same practice that
forms the subject of
26 Case no. 51/IR/Apr00; [2000] ZACT 44 (20 October 2000) at
para 7. See also, Nqobion Arts Business Enterprise CC and Business
Place Joburg & BeEntrepreneuring, case no: 80/IR/Aug05 [2006]
ZACT 24 (22 March 2006) at para 16 (our emphasis) 27 Replying
affidavit, para 99, p 724
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the complaint. Given the manner in, and extent to which, the
applicants’ case
has morphed over time, this is a justifiable concern.
26 Either way, however, the fundamental point is that the
applicants did not submit
a complaint to the Commission before filing their interim relief
application under
section 49C.
27 As this Tribunal correctly observed in Papercor, it has “no
inherent jurisdiction to
hear an application for interim relief that does not conform to
the strictures of [the
Act]”.28 Accordingly, the applicants’ failure to comply with the
relevant
requirement in section 49C means that this Tribunal has no
jurisdiction even to
entertain this application, which should accordingly be
dismissed with costs.
28 Nevertheless, for the sake of completeness, and in order to
prevent any attempt
by the applicants to reinstitute their application (and any
consequent delay), we
proceed to address the merits of the application below. As we
demonstrate, even
if the Tribunal were to consider the merits of the application,
it is misconceived,
and there is no basis for the relief sought by the
applicants.
29 Because the grant of interim relief in competition
proceedings is an extraordinary
remedy,29 this Tribunal has expressed its extreme reluctance to
grant such relief
in the absence of evidence of restrictive practices:30
28 See above fn 26 at para 23 29 Schering (Pty) Ltd v New United
Pharmaceutical Distributors (Pty) Ltd case no. 11/CAC/Aug01 at p 9
30 Nuco Chrome (Pty) Ltd v Xstrata South Africa (Pty) Ltd [2004] 2
CPLR 341 (CT) at p 347
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“[W]e would, as we have observed elsewhere, be extremely
reluctant to
uphold an application for interim relief in the absence of
evidence confirming
the restrictive practice alleged”.
30 This cautious approach has been endorsed by the Competition
Appeal Court
(“the CAC”), in National Association of Pharmaceutical
Wholesalers v Glaxo
Wellcome (Pty) Ltd, in which it held as follows:31
“An interim interdict is by its very nature a temporary and
exceptional remedy
which is granted by a court before the rights of the parties are
fully determined.
Due caution has to be exercised in the grant of the relief.
Relief should only
be granted if a proper case is made out.”
31 This Tribunal has further held that it “will not grant
interim relief lightly”, and that
interim relief “must be approached with care”, given that the
evidence in
applications for interim relief is necessarily limited, whilst
antitrust adjudication
is “enormously influenced by the facts particular to each
case”.32 This is
especially so when, as in all section 49C cases, the proceedings
are conducted
on the papers before the Tribunal, without the benefit of oral
evidence.
32 What is of particular concern in this matter is that, instead
of concentrating on
the facts of this case, the applicants seek to place reliance on
untested
allegations contained in ongoing matters relating to separate
conduct in other
jurisdictions. Included amongst these is a complaint filed
against Facebook by
31 National Association of Pharmaceutical Wholesalers and Others
v Glaxo Wellcome (Pty) Ltd and Others [2005] 1 CPLR 102 (CAC), at
para 8 32 DW Integrators CC v SAS Institute (Pty) Ltd [1999–2000]
CPLR 191 (CT) at paras 16 – 17
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the US Federal Trade Commission (“FTC”) on 9 December 2020, more
than
three weeks after the filing of the applicants’ interim relief
application.
33 Treating the allegations contained in the FTC complaint as
fact, the applicants
leap to the following conclusion:33
“The only reasonable conclusion which GovChat can reach in the
current
circumstances is that Facebook is employing tried and tested
methods in
South Africa in order to exclude GovChat.”
34 While the debate on the admissibility of similar fact
evidence is far from settled,34
what the applicants would have this Tribunal do is to place
direct reliance on
untested and unrelated allegations made in respect of Facebook –
and not
findings of fact – to reach conclusions relating to separate
conduct by WhatsApp
in respect of two South African companies. There is simply no
basis in law, or in
fact, for such an approach.
35 The Tribunal has also made it clear that “[c]aution is
particularly well-advised
when dealing with the interface between anti-trust and
intellectual property.”35
We submit that the circumstances of this case, dealing with
access to a platform
in respect of which WhatsApp has proprietary rights, call for
considerable
caution. Accordingly, the Tribunal should be loath to intervene
in a contractual
relationship of this type which relates directly to “the
interface between anti-trust
and intellectual property”.
33 Replying affidavit, para 115, p 731 34 See Savoi and Others v
National Director of Public Prosecutions and Another 2014 (5) SA
317 (CC) at paras 50 – 59 35 DW Integrators at para 18
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36 An applicant seeking interim relief in terms of section 49C
of the Act must show
that the relief it seeks is “reasonable and just”, having regard
to three factors:36
36.1 the evidence relating to the alleged prohibited
practice;
36.2 the need to prevent “serious or irreparable damage” to the
applicant;
and
36.3 the balance of convenience.
37 In terms of section 49C(3) of the Act, the standard of proof
in interim relief
proceedings is the same as in applications for interim
interdicts brought under
the common law in the High Court. In York Timbers Ltd v SA
Forestry Company
Ltd,37 this was interpreted as referring to the well-known test
of a prima facie
right though open to some doubt. Applying this to section 49C
proceedings, the
Tribunal set out the following two-stage approach:38
“[W]e must first establish if there is evidence of a prohibited
practice, which is
the Act’s analogue of a prima facie right. We do this by taking
the facts alleged
by the applicant, together with the facts alleged by the
respondent that the
applicant cannot dispute, and consider whether having regard to
the inherent
probabilities, the applicant should on those facts establish the
existence of a
prohibited practice at the hearing of the complaint
referral.
36 Section 49C(2)(b) 37 Case no. 15/IR/Feb01; [2001–2002] CPLR
408 (CT) at para 62 38 York Timbers at paras 64-65 (our emphasis).
See also Nkosinauth Ronald Msomi t/a Minnie Cigarette Wholesalers v
British American Tobacco South Africa (Pty) Ltd [2001–2002] CPLR
383 (CT) at para 12
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If the applicant has succeeded in doing so we then consider the
‘doubt’ leg of
the enquiry. Do the facts set out by the respondent in
contradiction of the
applicant’s case raise serious doubt or do they constitute mere
contradiction
or an unconvincing explanation? If they do raise serious doubt
the applicant
cannot succeed.”
38 However, unlike the position at common law, “[a]n interim
relief order under the
Act does not provide a remedy to permit a person claiming a
right to enjoy the
exercise of that right until the right is finally determined.”
As Unterhalter AJA
explained in Business Connexion (Pty) Ltd v Vexall (Pty)
Ltd:39
“Rather, the Tribunal is empowered to regulate how competition
in the market
is to take place for a six or twelve month period. That is a
different competence
to that of a court adjudicating a dispute of right; it is a
regulatory competence
to decide whether the state of competition in the market must
endure,
notwithstanding the evidence that a prohibited practice is
taking place, or
whether the Tribunal should order a change.”
39 As regards the second and third factors in section 49C(2),
these are not looked
at in isolation, but are to be taken in conjunction with one
another when the
Tribunal exercises its overall discretion whether to grant the
relief sought.40 In
this regard, the Tribunal has referred with approval to the
dictum of Holmes JA
in Eriksen Motors (Welkom) Ltd v Protea Motors Warrenton,41 that
the three
factors –
“are not individually decisive, but are interrelated, for
example, the stronger
the applicant’s prospect of success the less the need to rely on
prejudice to
39 Business Connexion (Pty) Ltd v Vexall (Pty) Ltd and Another
case no. 182/CAC/Mar20; [2020] ZACAC 4 (15 July 2020) at para 18 40
York Timbers at para 66 41 1973 (3) SA 685 (A) at 691F
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himself. Conversely, the more the element of ‘some doubt’, the
greater the
need for the other factors to favour him.”42
40 That said, as noted above, the Tribunal has held that it
“would be extremely
reluctant to grant interim relief in the face of unconvincing
evidence of a
restrictive practice.”43 Thus if an applicant does not make out
a prima facie case
of a restrictive practice on the part of a respondent, it would
ordinarily be
unnecessary for the Tribunal even to consider the remaining
requirements.44
41 However, insofar as it may be necessary to have regard to the
requirement of
serious or irreparable damage, the applicable test formulated by
this Tribunal is
as follows:45
“In order to establish serious or irreparable damage the
evidence must
demonstrate that, on the face of it, absent a granting of
interim relief, the ability
of the applicants to remain as viable competitors within the
market is
“seriously” or “irreparably” threatened. In such circumstances,
the material
content of the applicants’ right to move to the final stage of
adjudication is
called into question because, even if relief was granted at that
stage, it may
nevertheless not assist the applicants in their attempt to
remain viable
competitors.”
42 See Natal Wholesale Chemists (Pty) Ltd v Astra Pharmaceutical
Distributors (Pty) Ltd [2001–2002] CPLR 363 (CT) at para 34;
Nedschroef Johannesburg (Pty) Ltd v Teamcor Ltd and Others [2006] 1
CPLR 98 (CT) at para 23; The Bulb Man (SA) Pty Ltd v Hadeco (Pty)
Ltd [2006] 2 CPLR 559 (CT) at para 33 43 National Association of
Pharmaceutical Wholesalers and Others v Glaxo Wellcome (Pty) Ltd
and Others [2003] 2 CPLR 402 (CT); Nuco Chrome (Pty) Ltd and
Xstrata South Africa (Pty) Ltd, Rand York Minerals [2004] 2 CPLR
341 (CT) at p 347; York Timbers at para 101 44 See, for example,
Msomi at para 13; and The Bulb Man at para 35 45 National
Association of Pharmaceutical Wholesalers at para 147 (our
emphasis)
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42 In this regard, the CAC noted in Business Connexion that
“here too the analogue
of interim interdicts as an equitable remedy at common law must
be approached
with care”:46
“The common law remedy asks what well-grounded apprehension
of
irreparable harm will be suffered by the applicant if interim
relief is not granted
and the applicant succeeds in proving the right, now prima facie
established.
This concerns an interference with an applicant’s rights and the
harm that may
be suffered by an applicant as a result of such interference
until the court can
finally determine the question of rights. Interim relief under
s49C requires an
enquiry that is similarly structured, but distinct in a number
of respects. The
need for intervention is a function of the probability of
serious or irreparable
damage occurring, if no intervention is ordered by the Tribunal
before it can
make a final determination as to whether the alleged prohibited
practice has
taken place. It is the damage to the competitive position of the
applicant that
the prohibited practice may cause that marks out this enquiry.
Other forms of
damage to the applicant are not relevant because the Act’s
purpose is to
maintain and promote competition in the market.”
43 Put simply, commercial harm to an applicant will not
suffice.47 Furthermore, the
assessment of serious or irreparable harm, as contemplated by
the Act, refers
to competition harm in the markets in which the applicants
operate, and not
prejudice or other forms of harm to third parties.
44 Insofar as the balance of convenience in section 49C is
concerned, the CAC
has made it clear that this “is a direct borrowing from the
common law.” Under
the common law, “the broader public interest, and not only the
interests of the
litigating parties, must be placed in the scales when weighing
where the balance
46 Business Connexion at para 21 (our emphasis) 47 See also
Malefo v Street Pole Ads (SA) (Pty) Ltd case no. 35/IR/May05 at
para 38
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of convenience lies.”48 In the context of applications for
interim relief brought in
terms of section 49C of the Act, the balance of convenience is
ordinarily
determined in the following manner:49
“It weighs the prejudice the applicant will suffer if the
interim interdict is not
granted against the prejudice to the respondent if it is
granted. This requires
an equitable reckoning as to who bears the greater burden of
error. If the
interim order is granted and no case is ultimately established
to prove the
alleged prohibited practice, what prejudice will have been
suffered by the
respondent, and how might that prejudice be mitigated? So too,
if the interim
order is refused and the prohibited practice is ultimately
proven, what prejudice
will the applicant suffer in the interim. Here too, the currency
of prejudice is
reckoned by recourse to the consequences for the competitive
positioning of
the parties in the market. A respondent that is required to
desist from conduct
that gives it a legitimate competitive advantage suffers
prejudice. An applicant
that is required to endure an unlawful competitive disadvantage
also suffers
prejudice. How to weigh prejudice in the balance is a difficult
task. Hence the
warranted caution with which the Tribunal and this court have
approached the
exercise of the power to grant an interim interdict.”
45 That is not necessarily the end of the enquiry. Even if the
Tribunal finds that an
applicant has met all of the stipulated requirements in section
49C, it may still,
in the exercise of its discretion, refuse to grant interim
relief if such relief would
not be “reasonable and just” in the circumstances.50 As the CAC
noted in
National Association of Pharmaceutical Wholesalers:51
48 Cipla Medpro (Pty) Ltd v Aventis Pharma SA and Related Appeal
2013 (4) SA 579 (SCA) at para 46, read with para 52 49 Business
Connexion at para 22 50 Nedschroef at paras 25-26; Replication
Technology Group (Pty) Ltd v Gallo Africa Ltd [2008] 1 CPLR 77 (CT)
at para 17 51 National Association of Pharmaceutical Wholesalers at
para 8
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“The above requirements are however not determinative and even
where all
these requirements are present a court has discretion to refuse
an interim
interdict.”
46 As we explain in more detail below, the applicants have not
met any of the above
requirements for interim relief in the present proceedings.
FACTUAL BACKGROUND RELEVANT TO THIS APPLICATION
47 The relevant factual background is set out in some detail in
the answering
affidavit.52 It deals with the nature and development of the
WhatsApp Business
API, as well as the creation of WhatsApp’s government programme,
and the
repurposing of that programme to support governments globally
with their
responses to the COVID-19 pandemic. In addition, it explains
WhatsApp’s terms
of use, the applicants’ refusal to comply with those terms, and
the efforts made
by WhatsApp to regularise the applicants’ non-compliant
conduct.
48 In what follows below, we focus on the following four
issues:
48.1 the trial nature of GovChat’s early access through
Praekelt;
48.2 GovChat’s current use of the WhatsApp Business API, which
violates
fundamental elements of WhatsApp’s business terms and
policies;
48.3 the consistency of WhatsApp’s terms and their enforcement;
and
52 Answering affidavit, paras 33 – 122, pp 522 – 544
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48.4 GovChat’s commercial access to the WhatsApp Business API
via
#LetsTalk.
The trial nature of GovChat’s early access through Praekelt
49 The WhatsApp Business API was launched commercially in August
2018.53
Prior to that, during the “alpha-phase” of development,
“WhatsApp sought input
from a limited number of entities who agreed to test the product
and provide
feedback.”54 It was as part of this product development process
that Praekelt
was given access to the early version of the WhatsApp Business
API (“the
enterprise API”), to provide messaging services to the NDoH in
respect of a
handful of health-related programmes.55 The answering affidavit
explains:56
“At the time that Praekelt agreed to provide the NDoH access to
the alpha
version of the enterprise API, WhatsApp was in the early
experimentation
stages of the enterprise API product and had not yet adopted the
current BSP
configuration for accessing the WhatsApp Business API nor had it
fully
developed the policies regarding onboarding. For this reason,
when Praekelt
set up the NDoH account, it created an account for the NDoH
under its own
Facebook Business Manager account. Given that Praekelt’s account
was
already ‘verified’, it could open the WAB Account without
further verification of
the business identity.”
53 Answering affidavit, para 35, p 523 54 Answering affidavit,
paras 55 – 56, pp 527 – 528 55 Answering affidavit, para 56, pp 527
– 528 56 Answering affidavit, para 57, p 528
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50 Significantly, WhatsApp had not yet made commercial terms
publicly available,
and no one was charged for using this early enterprise
API:57
“Praekelt’s testing mode ... enabled these entities to engage in
limited
messaging using WhatsApp’s enterprise API (during the
alpha-phase). These
participants were not required to pay for access to the
experimental enterprise
API, and they were only able to send a limited number of
messages.”
51 The answering affidavit also sets out how Praekelt expanded
the reach of its
use of the enterprise API to include four for-profit entities
“that were interested
in using the enterprise API for social impact projects.” Like
the NDoH’s account,
each of these accounts was opened under Praekelt’s Business
Manager
account number, and was thus not subject to WhatsApp’s business
verification
process.58
52 GovChat was one of these commercial entities. At the time,
GovChat’s use of
the platform was extremely limited, both in terms of end-user
traffic, as well as
use-case.59
53 As this permitted use of the platform via Praekelt was purely
for testing
purposes, it ultimately came to an end, in connection with the
commercial launch
57 Answering affidavit, para 59, p 528 (our emphasis) 58
Answering affidavit, paras 11 and 57 , pp 517 and 528 – 59
Answering affidavit, paras 57 – 60, p 528
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of the WhatsApp Business API in August 2018. Again, the
answering affidavit
explains:60
“WhatsApp never gave approval for GovChat or the other
commercial entities
which had a test WhatsApp account with Praekelt to ‘go live’
with the enterprise
API. Instead, WhatsApp informed Praekelt that any for-profit
entity then hosted
by Praekelt would need to be removed from the platform. In
November 2018,
Praekelt confirmed with GovChat that the GovChat test number
opened under
Praekelt’s Business Manager account would be closed. Praekelt
suggested
that GovChat apply to open a WAB Account with a different BSP,
which might
have the necessary approval from WhatsApp to connect for-profit
entities.”
54 In reply, the applicants devote significant attention to what
they refer to as
GovChat as an alleged ‘test’ case for the use of the WhatsApp
Business API,
denying “that GovChat was on-boarded as part of a ‘test phase’
of the WhatsApp
Business API.”61 Yet the applicants’ own evidence, introduced in
the replying
affidavit, undermines this claim:
54.1 One annexure, presented as evidence of the allegedly “live”
WhatsApp
Business API account at Praekelt, and titled “GovChat Demo”,
clearly
describes a trial account, replete with unfinished software and
broken
links.62
54.2 Another annexure is a transcript of a promotional video,
allegedly
“posted” (without further clarification or context) on 2 October
2018. This
video appears to be addressing aspiration and was prepared
long
60 At para 61, pp 528 – 529 61 Replying affidavit, para 17, p
687 62 Replying affidavit, annexure “RA6”, pp 765 – 779
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before any of the GovChat services at issue in this application
were
launched.63
54.3 The third and final annexure purporting to establish that
GovChat went
live with Praekelt establishes the very opposite: that WhatsApp
services
were ultimately excluded from the GovChat-Praekelt partnership,
which
focused instead on email, USSD, and web access.64
55 Furthermore, the applicants fail to adduce any evidence that
contradicts
WhatsApp’s central point: that GovChat had stopped using the
platform, which
it had first accessed via Praekelt, and only regained access
(earlier last year)
via a new entity (#LetsTalk), a new BSP, and a new WhatsApp
account number,
for an entirely new use-case.
GovChat’s current use of the WhatsApp Business API
56 As noted above, access to the WhatsApp Business API requires
each user to
open a separate WAB account, in its own name, through an
authorised BSP.
This applies to commercial and government entities alike:65
“One requirement of WhatsApp’s terms of service is that any
entity that applies
for a WAB Account complete the process for business
verification, as well as
undergoing screening for compliance with economic sanctions and
the
WhatsApp Business and Commerce Policies .... While
WhatsApp’s
63 Replying affidavit, annexure “RA1”, p 747 64 Replying
affidavit, annexure “RA3”, pp752 – 754. For high scaled messaging
over the WhatsApp Business API, GovChat was to seek access via a
different BSP (identified as Nexmo), a proposal which apparently
never came to fruition. 65 Answering affidavit, para 44, p 525
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requirements and policies with respect to the use by Governments
and
Government entities of the WhatsApp Business API are under
continuous
review, this fundamental requirement applies to Government
entities as it does
to any business or organisation seeking to open a WAB
Account.”
57 WhatsApp’s Business Terms of Service explicitly prohibit a
business user from
“impersonat[ing] or register[ing] on behalf of any person or
entity or otherwise
misrepresent[ing] your affiliation with a person or entity.”66
In addition, when
creating a WAB account, a business user must submit a “display
name” for use
in messaging that conforms to the business entity’s verified
identity.67
58 This requirement exists for good reason. If the WAB account
could be held by a
third party, WhatsApp would not be able to determine whether
that party was
facilitating access to the platform for a business and/or
government entity that
would be ineligible – had it applied in its own name – to open a
WAB account.68
In addition, WhatsApp users could be confused or misled as to
the true identity
of the entity with whom they were communicating, and with whom
they might be
sharing sensitive information about their finances, health
status, or political
views. As the holder of proprietary rights in the WhatsApp
Business API,
WhatsApp is entitled to insist on these protections for itself
and for its users.69
59 Moreover, WhatsApp’s terms do not permit any entity to use
one WAB account
to service multiple business users.70 In order to comply with US
laws relating to
66 Answering affidavit, annexure “BES5” at 6.(d) (“Acceptable
Use”) p 566 – 574 67 Answering affidavit, para 82, p 533 68
Answering affidavit, para 70, p 531 69 Answering affidavit, para
51, p 526 70 Answering affidavit, para 52, p 527, annexure “BES39”
p 654 – 656
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economic sanctions,71 WhatsApp must screen all business users to
ensure that
it is not providing access to sanctioned entities.72 WhatsApp
would not be able
to screen businesses if they are grouped together under a master
WAB account.
60 Aggregation of messaging on behalf of multiple entities into
a single WAB
account, as is GovChat’s practice, gives rise to additional
violations of
WhatsApp’s terms. Aggregation of different businesses under one
WAB account
creates a situation in which two or more businesses’ data
(including any
consumer data that they collect) may be commingled in the same
storage.
61 WhatsApp’s Business Solutions Terms prohibit business users
from sharing,
selling, or distributing data obtained from using the WhatsApp
Business API with
any other customer or other third party, or from combining this
data with other
third-party sources of data.73
62 The WhatsApp Business Terms of Service further require that
any service
provider use any and all data derived from use of the WhatsApp
Business API
solely for the benefit of each client.74 These privacy
safeguards are seriously
undermined where, as is the case with GovChat, an entity
commingles message
data and customer contacts for multiple clients within a single
WAB account.
63 Entities whose messaging is aggregated would also confront
serious obstacles
should they choose to end their relationships with GovChat.
WhatsApp’s terms
71 These are applicable because WhatsApp receives payment for
use of the WhatsApp Business API. 72 Answering affidavit, para 44,
p 525 73 Answering affidavit, para 47, p 525 –526 74 Answering
affidavit, “BES5” p 568 – 574
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state that if a business (or government entity) requests to
assume control of its
WAB account, the relevant BSP “must reasonably and in a timely
manner …
assist … to transfer the WABA account and all related data”, and
“promptly
delete any WABA data and information from [its] own system”.75
Yet where, as
with GovChat, the service provider has aggregated different
entities, compliance
with these requirements risks transferring (or deleting) the
data of numerous
entities should a single client choose to end its relationship
with GovChat.
64 It is through the process of establishing a WAB account that
the user accepts
and is bound by the WhatsApp business terms of use. This is key
for
enforcement purposes, enabling WhatsApp to have recourse if a
user, for
example, starts sending promotional advertising, spam, illegal
or any other
prohibited message content, or otherwise violate the terms of
use or policies.
This requirement is essential to ensure the integrity of the
platform, as well as
to protect WhatsApp users.
65 Like all business users, government entities are also
required to submit to the
verification and review processes:76
“As is true with regard to any entity, WhatsApp’s verification
and review
processes with respect to Government entities and their
particular use-cases
would be inhibited if a WhatsApp Business API user were to open,
as the
applicants seek to do, a WAB Account in its own name and then
resell or
distribute the WhatsApp Business API to Government users in
respect of which
WhatsApp would have no visibility. Moreover, enabling Government
entities to
obtain access through [an] unauthorised channel deprives
WhatsApp of the
75 Answering affidavit, annexure “BES3” p 560 – 566 76 Answering
affidavit, para 70, p 531
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opportunity to understand and review the proposed use-case(s)
and assess
compliance with WhatsApp’s policies, the requirements of the
global
Government programme, and economic or trade sanctions
screening
requirements under applicable laws.”
66 Moreover, government entities (unlike commercial entities)
are required to
submit to an additional review by the WhatsApp government
programme team
of the actual purpose for which the entity in question seeks to
use the WhatsApp
Business API – the “use-case”. This requirement applies solely
to government
entities. The answering affidavit explains why this is
necessary:77
“This vetting process is necessary both to ensure that the
intended use-case
complies with our policy restrictions and can be well supported
by the product
in its current (still beta, as explained above) stage, and also
so that the team
can use this early learning phase effectively to understand the
particular and
potentially novel ways that Governments may seek to use the
WhatsApp
Business API.”
67 The rapid global expansion of WhatsApp’s government
programme, a direct
consequence of the COVID-19 pandemic, has placed a huge burden
on the
government programme team’s limited resources. Given this
reality, as well as
the urgency of the COVID-19 health emergency, WhatsApp decided
to focus
the programme exclusively on supporting government entities
charged with the
COVID-19 response, and to suspend further access for any new
government
use-case that does not fall within the narrowed focus of the
programme. In such
circumstances, the verification and review processes take on
even greater
significance.78
77 Answering affidavit, para 68, p 530 78 Answering affidavit,
paras 71 – 72, p 531
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68 As matters stand, WhatsApp continues to limit its government
programme to
focus on the response to the COVID-19 pandemic.79
“With the advent of COVID-19, WhatsApp decided to expand its
Government
pilot programme to support those Government entities with
jurisdiction to
manage the response to the evolving pandemic. Thus, in January
and
February of [2020], the WhatsApp Government programme became
the
‘Government COVID programme’ and turned its focus to assisting
global
health authorities (such as the World Health Organization) and
national health
ministries to set up WAB Accounts to provide ‘Health-Alert’
lines or similar
COVID-19 chatbots. Over the following months, WhatsApp extended
the
programme to entertain requests from other impacted national
ministries and
from regional Governments, based on the express direction of the
national
health ministries, and then to support Government entities
managing other
aspects of the COVID-19 response (in areas such as public
education,
economic recovery and social welfare). The Government COVID
programme
has continued to expand in order to assist Governments around
the world and
their evolving response to this health emergency.”
69 It is within this context that WhatsApp’s actions relating to
#LetsTalk’s use of the
WhatsApp Business API must be understood.
The consistency of WhatsApp’s terms and their enforcement
70 In reply, the applicants have sought to muddy the waters by
disputing a wide
range of allegations that, even if decided in their favour,
would not tip the scales.
We have already addressed some of them. Two additional issues
deserve
79 Answering affidavit, paras 71 – 72, p 531
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attention: the claim that WhatsApp’s terms have changed
repeatedly; and the
allegation that WhatsApp applies its terms inconsistently.
71 The two examples the applicants rely upon as alleged evidence
of WhatsApp’s
“convoluted, complex and chameleonic terms” are (a) the change
from no terms
(prior to the development and launch of the WhatsApp Business
API) to the
published commercial terms; and (b) the recent introduction of
an internet
service vendor (“ISV”) amnesty programme, with terms applicable
only to those
entities. The first barely requires a response; the second
reveals the applicants’
misunderstanding of the ISV programme. Neither supports their
case.
72 The irrelevance of the first example is self-evident. The
allegation that the terms
of use changed “after GovChat had started to use the WhatsApp
platform”80 is
disingenuous, because GovChat first accessed the platform (via
Praekelt) prior
to its commercial launch. Having lost access to the platform in
this way, GovChat
only returned – via #LetsTalk – in 2020. There is no allegation,
nor could there
be, that the material terms have changed since then.
73 With regard to the second example, the applicants have
clearly misunderstood
both the WhatsApp ISV programme, as well as the document on
which they rely
– the “WHATSAPP BSP ISV FAQ” (“the FAQ”).81 Far from
illustrating any unfair
changes to terms, WhatsApp’s treatment of unauthorised ISVs
highlights its
80 Replying affidavit, para 48, p 702 81 Replying affidavit,
annexure “RA5”, pp 758 – 764
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commitment to the neutral, even-handed, and reasonable
enforcement of its
terms of use.
74 As the FAQ explains, an ISV is the shorthand used to describe
a third-party
software vendor who (a) does not have a direct agreement with
WhatsApp;
and/or (b) has access to unencrypted message content; and/or (c)
may have
been representing itself as a reseller of the WhatsApp Business
API and using
WhatsApp trademarks.
75 ISVs are thus entities that have accessed the WhatsApp
Business API in
violation of WhatsApp’s terms of use in order to provide
messaging support
services to users or end-clients. Although GovChat falls within
this definition,
GovChat’s additional breaches of, and inconsistency with,
WhatsApp terms and
its redistribution to government entities means that it would
not qualify for the
programme.
76 The ISV programme did not change WhatsApp’s terms of use, nor
did it add any
new terms that would have affected lawful users of the WhatsApp
Business API.
Instead, it put in place a separate set of terms to address a
serious concern that
WhatsApp had observed – entities that were not authorised BSPs
themselves
were onboarding end-clients to the WhatsApp Business API
(through authorised
BSPs), and managing or supporting their messaging, in violation
of WhatsApp’s
terms.
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77 The terms of the ISV programme reflect WhatsApp’s concerns
that BSPs may
have permitted these intermediaries to obtain access to
unencrypted messages
intended for the user or end-client. As the FAQ explains:82
“What are the upcoming changes, and why is WhatsApp making
these
changes?
We have determined that some BSPs have granted access to
WhatsApp
Business Services (including messages) to third-party businesses
who are not
end business customers (these entities will be referred to as
‘ISVs.’) This is a
violation of our Business Terms of Service.
...
“We are making this change to require our BSPs to be transparent
about their
practices of onboarding ISVs and to ensure that the activities
of BSPs/ISVs
are in compliance with our policies.”
78 Requiring BSPs to identify the ISVs they had onboarded, and
to enter into formal
contractual arrangements, enabled WhatsApp to maintain
visibility into end-
client users and establish contractual privity with these
previously undisclosed
ISVs in order to facilitate effective enforcement of WhatsApp’s
terms of use, and
in so doing, to maintain the quality and integrity of the
WhatsApp service.
79 With regard to the applicants’ complaint that WhatsApp’s
enforcement is
selective and inconsistent, it is instructive to consider how
the FAQ addresses
the question: “What kind of activity can a BSP continue to
engage in with their
ISVs?”. Having regard to the parameters set out immediately
below, it is clear
82 Replying affidavit, annexure “RA5”, p 758 (our emphasis)
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that WhatsApp does not permit any entities to engage in the type
of conduct that
GovChat claims as its right in this application. Here are a few
of the terms that
WhatsApp enforces against all ISVs – all terms that GovChat
violates:83
79.1 “Must not resell the WhatsApp Business Solution or give any
End
Clients or third parties access to the WhatsApp Business
Solution other
than the End Client for whom the ISV’s services have been
engaged
(i.e., ISVs cannot onboard new clients)”;
79.2 “Must not retain a third party as its service
provider”;84
79.3 “Must agree to restrictions on use of any data the ISV
obtains by using
the WhatsApp Business Solution (including using data to track
build, or
augment profiles on individual WhatsApp users and sharing that
data
with third parties)”; and
79.4 “Must not use and/or access the WhatsApp Business Solution
if it is a
governmental entity or for a Client that is a governmental
entity.”
80 The last-mentioned item reflects WhatsApp’s cautious approach
to onboarding
government entities. Ensuring that government entities work with
a BSP, instead
of an ISV, provides greater assurance that government use-cases
will be
83 Replying affidavit, annexure “RA5”, p 760 (our emphasis) 84
Replying affidavit, annexure “RA5”, p 760 #LetsTalk and GovChat
retain Synthesis as their service provider. See answering
affidavit, para 14, p 518. This arrangement would violate the terms
of the ISV programme.
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33
appropriately flagged and presented to the government programme
team for
review, to ensure compliance with the restrictions applicable to
government use.
81 Finally, it is worth noting that the ISV terms include
specific prohibitions against
the sharing of client data, or any use of the data by the ISV
“for its own
purposes”, as well as against disclosure of one client’s data
“to any other third
parties.” These terms mirror the terms applicable to authorised
BSPs.85
82 The remaining isolated examples of other users who are
alleged to have
violated WhatsApp’s terms are speculative and/or irrelevant.
None of these
users are engaged in the unauthorised resale of WhatsApp
Business Services
to multiple government entities that they aggregate in a single
WAB account
under their own name; and none of the alleged violations even
come close to
the level of complete disregard that GovChat has shown for
WhatsApp’s terms.
83 Finally, we note that the applicants waited until their
replying affidavit to allege
that WhatsApp has enforced its terms of use selectively, despite
much
information on which they now rely being included (but not
expressly identified)
in their founding papers.86 As Broome J held in Poseidon Ships
Agencies, “it is
essential for [an] applicant to make out a prima facie case in
its founding
affidavit.” 87
85 Replying affidavit, annexure “RA5”, p 763 86 See replying
affidavit, para 64, p 710 87 Poseidon Ships Agencies (Pty) Ltd v
African Coaling and Exporting Co (Durban) (Pty) Ltd and Another
1980 (1) SA 313 (D) at 316A. See also, NK v KM 2019 (3) SA 571 (GJ)
at para 22, in which Molahlehi J, relying on Poseidon Ships
Agencies, stated that “an applicant in motion proceedings has to
make out his or her case in the founding affidavit unless there are
special circumstances why that has not been done”. No such special
circumstances apply here.
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GovChat’s commercial access to the WhatsApp Business API via
#LetsTalk
84 GovChat ultimately succeeded in securing access to the
WhatsApp Business
API via #LetsTalk, its wholly-owned subsidiary. In its
application to open a WAB
account through InfoBip, an authorised BSP, #LetsTalk provided
the following
description of its proposed use-case:88
“Hashtag-LetsTalk will provide customers the ability to
communicate with
various corporate[s] to provide feedback on services rendered as
well as the
ability to provide a mechanism to collect complaints/compliments
in respect of
services. The communication will be initiated by the end user
(customers) and
there is no plan to initiate communications from
Hashtag-LetsTalk side.”
85 Unlike the name “GovChat”, which indicates some type of
relationship with the
state, “#LetsTalk” provides no such indication. Importantly, the
application for a
WAB account could only have been reviewed on the basis of the
information
submitted by #LetsTalk. On this basis, it was understood that
the #LetsTalk
WAB Account would be used for a commercial or business use-case
– as “a
customer engagement platform”.89
86 No mention was made in #LetsTalk’s application of any kind of
government-
related work, or of any connection between #LetsTalk and
GovChat,90 let alone
its relationship (via GovChat) to government entities. It was
simply “submitted
in the ordinary course ... for a business (not as part of the
Government
88 Answering affidavit, annexure “BES12”, p 592 89 Answering
affidavit, paras 81 and 83, p 533 90 Answering affidavit, para 81,
p 533
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programme)”.91 This meant that it was not subjected to the type
of vetting that
would have been conducted had it accurately disclosed the
use-case.
87 The #LetsTalk account attracted attention at the beginning of
June 2020, when
WhatsApp’s Mr Gareth Bray “noted significant spikes and drops in
message
volume associated with the #LetsTalk account.”92 In email
correspondence with
InfoBip’s Ms Katerina Parimon, he raised a concern relating to
the apparent
relationship between #LetsTalk and GovChat, based on an
advertisement
promoting the service provided by the former as being performed
by the latter,
which had been rejected for onboarding on a number of
occasions.93
88 As mentioned above, this correspondence makes clear that
WhatsApp had
been unaware of the relationship between GovChat and #LetsTalk
at the time
#LetsTalk opened its WAB account. Ms Parimon’s responses are
also wholly
consistent with InfoBip not having disclosed the existence of
this relationship to
WhatsApp any earlier.
89 Having conducted a quick investigation, Mr Bray took the
matter up with InfoBip,
which – in turn – raised some of WhatsApp’s concerns with
#LetsTalk.94 Further
concerns arose when WhatsApp’s Mr Benjamin Supple had the
opportunity to
review screenshots of the chatbot menu that #LetsTalk was
offering at the time,
which indicated that the account was providing messaging
services to
91 Answering affidavit, para 83, p 533 92 Answering affidavit,
para 85, p 534 93 Answering affidavit, annexure “BES13” (email sent
at 11h29 on 2 June 2020), pp 594 – 597 94 Answering affidavit,
paras 87 – 90, pp 534 – 535
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government entities, and, it appeared, servicing multiple
different entities by
means of a single WhatsApp account.95
90 Moreover, “[t]he chatbot menu also appeared to request
sensitive health
information ... and to offer contact tracing”, a use which
WhatsApp has not
permitted on the WhatsApp Business API.96 These concerns, while
important,
were subordinate to the fundamental problem that GovChat had
accessed the
platform under an assumed name and was redistributing WhatsApp
services to
government entities, in clear violation of the terms of
service.97
91 The matter remained unresolved. In an email dated 31 July
2020, InfoBip’s Mr
Dharsan Naidoo informed GovChat’s Mr Eldrid Jordaan that the
#LetsTalk WAB
account would be offboarded from the WhatsApp Business API on 6
August
2020. Mr. Jordaan responded with the first of several lengthy
letters, which led
to a cycle of email exchanges and meetings in which –
91.1 WhatsApp repeatedly made clear that GovChat’s business
model
violates the terms of use, and that each government entity needs
to
establish its own WAB account;
91.2 Mr. Jordaan would indicate a willingness to respond to
these concerns;
91.3 Mr. Jordaan would request additional time; and
95 Answering affidavit, para 91, pp 535 – 536 96 Answering
affidavit, paras 91 – 92, p 535 – 536 97 Answering affidavit,
annexures “BES24” pp 621 – 622 and “BES29”, pp 632 – 633.
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91.4 WhatsApp would agree to postpone the termination date to
allow for an
orderly transition to a compliant structure.
92 The end result of these fruitless interactions was simply to
delay the termination
of #LetsTalk’s WAB account for over three months, which was
evidently the very
objective of Mr Jordaan’s strategy.98
93 What is of particular importance was Mr Jordaan’s
confirmation, during a video
call held on 6 October 2020, “that steps would be taken to
transition the
[relevant] Government entities to their own WAB accounts.”99
Over the next four
weeks, WhatsApp formed the view “that the applicants were,
notwithstanding
their commitments to the contrary, obfuscating and delaying
taking any steps to
transition the WAB Accounts to the relevant Government
entities.”100
94 Although this allegation of dilatory conduct is vehemently
denied by the
applicants in reply,101 they nevertheless make it clear that
they currently have
no intention of transitioning their government clients to their
own WAB accounts,
because of their apprehension that to do so would mean that
“there would be
no role left for GovChat to play.”102 It would be fanciful to
suggest that Mr
Jordaan did not hold this view on 6 October 2020, just weeks
before he deposed
98 Answering affidavit, paras 95 – 116, pp 537 – 542 99
Answering affidavit, para 111, p 541 100 Answering affidavit, para
113, p 542 101 Replying affidavit, paras 38 – 62, pp 696 – 708 102
Replying affidavit, para 61, p 708
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to the founding affidavit supporting this application, despite
his undertakings to
the contrary on that date.
95 On 4 November 2020, WhatsApp informed Mr Jordaan that the
contemplated
offboarding would take place on 16 November 2020. In a video
call held on 11
November 2020, a full week later, “it was confirmed that GovChat
had not yet
transitioned any of its Government clients to their own WAB
Accounts.” Having
given the applicants a total of over five months to address
their non-compliance,
“WhatsApp declined to afford GovChat any additional extension of
time to do
so.”103 The present application was launched just two days
later.
THE APPLICANTS ARE NOT ENTITLED TO INTERIM RELIEF
96 In their founding papers, the applicants claim that
“Facebook’s conduct in
unilaterally terminating GovChat’s use of WhatsApp in the
circumstances likely
amounts to an anti-competitive abuse of dominance, in
contravention of sections
8(b), 8(c) and/or 8(d)(ii) of the Competition Act.”104 Before
dealing with the
substance of these allegations, it is important to clarify that
–
96.1 it was WhatsApp – and not Facebook – that took the decision
to
terminate #LetsTalk’s WAB account; and
103 Answering affidavit, para 116, p 542 104 Founding affidavit,
para 81, p 42
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96.2 the key relationship at issue in this application, however
so defined, is
between #LetsTalk, on the one hand, and WhatsApp, on the
other.
97 Central to the applicants’ claim is that the relationship
between GovChat and
Facebook entitles the former to certain rights, such as access
to an essential
facility. Characterising the claim as one that sees GovChat as
the victim of
alleged anti-competitive practices, when the impugned conduct
was directed at
#LetsTalk (with whom WhatsApp is in a contractual relationship,
and to whom
WhatsApp’s terms of use apply) only makes sense if #LetsTalk is
seen for what
it really is: nothing more than a front for GovChat.
98 Be that as it may, the essence of the complaint is clear:
GovChat claims it should
be entitled – through its wholly-owned subsidiary #LetsTalk – to
make use of the
WhatsApp Business API to service its (GovChat’s) government
clients, and that
any attempt by WhatsApp and/or Facebook to stop such use
constitutes anti-
competitive conduct. Importantly, GovChat’s business model is
presented as a
given; no consideration is given to it conducting business in
any other way.
99 As we have already explained, an applicant seeking relief in
terms of section 49C
of the Act must show that the relief sought is “reasonable and
just”, having regard
to the evidence relating to the alleged prohibited practice, the
need to prevent
serious or irreparable damage to the applicant, and the balance
of convenience.
While all three factors must be considered, interim relief is
seldom granted “in
the face of unconvincing evidence of a restrictive
practice.”105
105 See above fn 43
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40
The first factor: evidence relating to the alleged prohibited
practices
100 We have already addressed the two-stage York Timbers test: a
first stage, which
– in the main – considers “the facts alleged by the applicant,
together with the
facts alleged by the respondent that the applicant cannot
dispute”; and a second
stage, which considers whether “the facts set out by the
respondent in
contradiction of the applicant’s case raise serious
doubt”.106
101 We submit that the applicants fail at the very first stage.
But even if this Tribunal
were to hold that they do not, the evidence on which the
respondents rely makes
it plain that at every potential hurdle, be it market
definition, proof of dominance,
or establishing the various elements particular to each alleged
form of abuse of
dominance, there is (at the very least) serious doubt that the
applicants will
succeed.
102 Given the number of hurdles that the applicants have to
overcome, there can be
no doubt that the possibility of them accurately threading the
needle, overcoming
each of these many hurdles in turn, is particularly slim. In
such circumstances,
we submit that there will be no need for this Tribunal even to
consider the other
two factors relevant to determining whether interim relief ought
to be granted.
106 See above para 37
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41
Defining the market and establishing dominance
103 In DW Integrators, this Tribunal considered the particular
challenge of identifying
the relevant market in interim relief proceedings:107
“In interim relief proceedings where, without the benefit of the
Commission’s
investigation, the views of the parties are all that the
Tribunal has to rely upon,
the effect of the inability of the parties to establish the
relevant market is
particularly debilitating.”
104 More recently, in Africa People Mover, this Tribunal
considered what is required
of an applicant in interim relief proceedings insofar as market
definition and
dominance are concerned.108
“In Chitando we noted that the prohibition against the abuse of
a dominant
position does not apply to all firms. A firm must be dominant in
a market for a
prohibition to find application.”
“We also stated that to establish an abuse of dominance, the
applicant must
first establish that each respondent is dominant. In order to do
that the applicant
must identify the relevant market. Without a definition of the
market there is no
way to measure a firm’s ability to lessen or prevent
competition.”
“In Chitando, the applicant had not attempted to engage in a
proper market
definition exercise and had not provided evidence to support his
definition of
the market as the market for shipping law briefs. He could not
provide details
of the size of the relevant market, what percentage of that
market he considers
the respondents to have or what facts and circumstances warrant
the
conclusion that the respondents enjoy market power within the
defined market.”
107 Above fn 32 at para 23 108 Above fn 25 at paras 66 – 68
(footnotes omitted)
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42
105 In reply, the applicants allege that “[t]he respondents
accept, however, that for
purposes of interim relief proceedings before the Tribunal ‘it
is not necessary to
conclude on a precise market definition’.”109 The phrase is
quoted out of context.
Understood properly, the quote makes it plain that this Tribunal
need not decide
on any precise market definition because “even if one were to
consider [the
applicants’] narrow definition ... WhatsApp would still not be
dominant”.110
106 In line with this unfounded allegation, the applicants
submit that – in interim relief
proceedings – they bear no onus to define the relevant market
with reasonable
precision.111 Indeed, they acknowledge that they have given
little attention to
defining the relevant market in any detail.112 But as Africa
People Mover and
Chitando makes clear, this is incorrect; an applicant for
interim relief must
“engage in a proper market definition exercise”.113
107 Thus without any proper basis, the applicants assert that
the “primary relevant
market” is the “market for OTT messaging apps through
smartphones in South
Africa”.114 OTT stands for Over-the-Top, and refers to a
messaging app “linked
to a smartphone device and mobile number”.115 This is in
contrast to text
messaging services such as SMS, which “do not rely on internet
connections or
data availability and so are universally accessible to all
mobile device users.”116
109 Replying affidavit, para 95, p 722 110 Answering affidavit,
para 132, p 545 111 Replying affidavit, para 97, p 723 112 Founding
affidavit, para 82.2, p 43 113 Chitando v Fitzgerald and Others,
Chitando v Webber Wentzel and Others (016550, 016568) [2013] ZACT
93 (19 September 2013) at para 40 114 Founding affidavit, para
82.2, p 43 115 Founding affidavit, para 82.2, p 43 116 Answering
affidavit, para 134, p 546
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43
108 The applicants provide no explanation as to why the market
ought to be defined
in this manner. At the very least, it would be necessary for the
applicants to show
why other technical solutions to text-based communication needs,
including but
not limited to those that are smartphone-based, are not adequate
substitutes for
OTT messaging. As the answering affidavit explains:117
“The applicants fail to take into account the wide array of
alternative messaging
channels including SMS, MMS, web messaging, push notifications,
in-app-
messaging, email, and other technical solutions, such as USSD (a
technical
solution used for messaging in Sub-Saharan Africa). WhatsApp
competes with
each of these different forms of messaging.”
109 This failure on the part of the applicants is inexcusable. A
particular transcript on
which they rely (in reply) makes it plain that GovChat can
indeed operate on a
range of other OTT and non-OTT platforms:118
“GovChat was designed and built to be available to every single
South African,
no matter what type of device or how they want to communicate.
That means
we are available over SMS, over USSD, over IVR, over apps and
also, most
excitingly, over WhatsApp. Why we are so excited about WhatsApp
as a
channel for GovChat, is because it allows us to communicate with
our end-
users completely securely no matter what the message, whether it
is an audio
file or a text or an image, we will encrypt every single message
and those
messages cannot be intercepted by a third party.”
110 Given the applicants’ focus on the most vulnerable groups
within South Africa,
including in particular those who qualify to apply for the
Special COVID-19 Social
Relief of Distress Grant (“the COVID grant”), it was incumbent
upon them to
117 Answering affidavit, para 131, p 545. See also, answering
affidavit, para 134, p 546 118 Replying affidavit, annexure “RA1”,
p 747
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44
perform, at the very least, an analysis of the use of
smartphones by (potential)
beneficiaries, as well as smartphone use in the population as a
whole. As the
economic report prepared by RBB Economics (“the RBB report”)
explains:119
“The Applicants state that WhatsApp’s penetration amongst mobile
phone
owners in South Africa is 58%. This means that other methods
of
communication universally accessible to all mobile phone owners
(e.g., SMS,
voice calls or USSD Protocol) are likely to be used by
businesses and
Government agencies as a primary method of engagement with a
wider set of
consumers. In this regard, the Independent Communications
Authority of South
Africa has stated that ‘Traditional voice and SMS services are
therefore the
main means of reaching a substantial proportion of consumers in
South Africa,
and this is likely to be the case in the short to medium
term.’”
111 It was also incumbent on the applicant to consider the
various ways in which
eligible persons are entitled to apply for the COVID grant: by
WhatsApp, using
“[t]he USSD or SMS Line”, or via email,120 and the different
proportions of
applicants making use of these different technical
solutions.
112 If, as GovChat claims, the market affected by WhatsApp’s
impugned conduct is
the “market for government messaging services in South Africa”,
then the
relevant market for purposes of determining dominance must be
the market for
platforms that provide the technical means for delivering such
messaging
services and engaging with end-users.
113 However, without any explanation, the applicants have
ignored a range of
platforms available to all mobile phone users, including those
(such as SMS) on
119 Answering affidavit, Appendix 1, section 3.1, p 666
(footnotes omitted) 120 Supplementary founding affidavit, annexure
“SFA7”, p 314
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45
which GovChat’s government clients already rely for
communicating with
members of the public. On its own, this failure casts
significant doubt on the
market definition for which the applicants contend. This in
itself is fatal to the
applicants’ complaint against the respondents.
114 In short, the applicants have failed to make out any case
for their definition of the
“primary relevant market”. Without any evidential basis, they
have simply relied
on a market which appears to have been “artificially crafted so
as to portray
WhatsApp as having a position of strength”.121
115 As with their proposed market definition, the evidence put
up by the applicants
in respect of WhatsApp’s alleged dominance in the market for
which they
contend is also remarkably thin. The applicants allege that
–
115.1 89% of all internet users in the country aged 16 to 64
“have used the
WhatsApp messaging app in the previous month”;122
115.2 “the next largest messenger app is Facebook’s own FB
Messenger app
with 61% usage, and competitor messenger apps such as WeChat
having only 15% usage”;123 and
115.3 “58% of all South African mobile phone owners [are] using
the app as of
February 2020.”124
121 Answering affidavit, para 131, p 545 122 Founding affidavit,
para 85.2, p 45 123 Founding affidavit, para 85.2, p 45 124
Founding affidavit, para 85.3, p 45
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46
116 On its own, this information indicates very little of
significance. Non-OTT
platforms, such as SMS and USSD, are accessible to a much larger
proportion
of South Africans with mobile phones than is WhatsApp. As the
RBB report
notes:125
“[T]he reported rate of Internet penetration in South Africa is
62%. Accordingly,
WhatsApp merely provides an additional option for engagement
with a subset
of mobile phone owners (who are themselves a subset of all
consumers or
citizens) that have the WhatsApp application on their
handsets.”
117 Further, as the RBB report also explains:126
“[W]e note that user penetration as cited by the Applicants is
not the equivalent
of market share, since it does not account for the existence of
alternative
communication methods and the significant degree of multi-homing
in South
Africa .... Indeed, the fact that one communication method has a
high
penetration rate does not exclude the possibility that other
communication
methods might have a similar or even the same penetration rate.
Moreover,
user penetration simply provides a snapshot of historical usage
and is not
indicative of market power in the context of a dynamic and
rapidly evolving
sector, such as the market for consumer communication
applications, that is
characterised by constant innovation and frequent market entry.
...
There are a number of other players that provide consumer
communications
applications in competition with WhatsApp in South Africa and
worldwide.
These competitors include integrated companies that are also
active in the
provision of smartphone hardware and operating systems, such as
Apple with
FaceTime and iMessage, Google with Duo and Hangouts, and
Microsoft with
Skype and Microsoft Teams. Other non-integrated providers of
consumer
communications applications include WeChat, LINE, SnapChat,
Telegram,
125 Answering affidavit, Appendix 1, section 3.1, p 666
(footnote omitted) 126 Answering affidavit, Appendix 1, section
3.2, p 667
1038
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47
Hike, Zoom, Viber Signal and Houseparty. In these market
conditions, any
market position amongst consumer communication applications,
regardless of
the size of its network, is unlikely to be incontestable, and
WhatsApp
continuously faces the threats of innovation and expansion by
existing and new
players.”
118 Regarding the applicants’ allegations that there are
significant market barriers to
entry and expansion for WhatsApp’s competitors, and high
switching costs for
customers, the RBB report observes that such allegations are
contradicted by
the available evidence:127
“The time and cost of launching and operating a new mobile
consumer
communications application is relatively low, with the main cost
being server
capacity which increases with scale. The relatively low barriers
to entry and
expansion that are applicable to consumer communication
applications were
acknowledged by the European Commission. This is also
demonstrated by the
numerous examples of successful entry of competing consumer
communication applications such as WeChat, SnapChat, Telegram,
Zoom,
Microsoft Teams and, most recently, Signal.
In relation to consumer switching costs, the available evidence
indicates that
the market for consumer communication applications in South
Africa features
a significant degree of ‘multi-homing’ with an average Internet
user in South
Africa having 8.2 social media accounts and several consumer
communication
applications having a relatively high reported incidence of
usage. Furthermore,
consumers do not face significant costs in switching between
different
consumer communication applications, as many consumer
communication
applications are offered for free, are easily downloadable and
can coexist on
the same device.”
127 Answering affidavit, Appendix 1, section 3.2, pp 667 – 668
(footnote omitted)
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48
119 On the issue of alleged dominance, the RBB report concludes
that “there is no
robust evidence that WhatsApp has a dominant position under any
plausible
definition of the relevant market in this case.”128
120 For all the above reasons, the applicants have failed to
explain properly the basis
upon which they have determined the market definition on which
they rely, and
have not provided the requisite evidence to establish that
WhatsApp is dominant
in that particular market, or indeed any other market. On this
basis alone, we
submit that all of the applicants’ complaints under section 8 of
the Act are
unsubstantiated and fall to be dismissed.
The section 8(1)(b) claim
121 Even if WhatsApp were to be regarded as a dominant firm, the
applicants’
complaint under section 8(1)(b) is misconceived on a number of
grounds.
122 Section 8(1)(b) states that a dominant firm is prohibited
from “refus[ing] to give a
competitor access to an essential facility when it is
economically feasible to do
so”.
123 Section 1 of the Act defines an “essential facility” as “an
infrastructure or resource
that cannot reasonably be duplicated, and without access to
which competitors
cannot reasonably provide goods or services to their
customers”.
128 Answering affidavit, Appendix 1, section 3.2, p 668
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49
124 In Glaxo Wellcome (Pty) Ltd v National Association of
Pharmaceutical
Wholesalers, the CAC set out the five requirements to be met for
a successful
complaint under section 8(1)(b):129
124.1 the dominant firm involved must refuse to give the
complainant access
to an infrastructure or resource;
124.2 the complainant and the dominant firm must be
competitors;
124.3 the infrastructure or resource concerned must not
reasonably be capable
of being duplicated;
124.4 the complainant must not be able reasonably to provide
goods or
services to its customers without access to the infrastructure
or resource;
and
124.5 it must be economically feasible for the dominant firm to
provide its
competitors with access to the infrastructure or resource.
125 WhatsApp has not refused to give #LetsTalk (and therefore
GovChat) access to
the WhatsApp Business API. Instead, what has been refused by
WhatsApp is to
allow #LetsTalk to remain on the platform whilst violating the
terms of use of the
API, an action which is wholly consistent with the grant to
#LetsTalk of “a limited,
129 Glaxo Wellcome (Pty) Ltd and Others v National Association
of Pharmaceutical Wholesalers and Others 15/CAC/Feb02 at para
57
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50
revocable, non-exclusive, non-sublicensable, and
non-transferable licence” to
use the platform subject to compliance with WhatsApp’s terms of
use.130
126 The barrier to GovChat making effective use of the platform
is, therefore, its
unreasonable demand to continue providing services to its
government clients in
terms of a seemingly inflexible business model that is at odds
with the platform’s
terms of use. GovChat is thus the architect of its own
misfortune.
127 Relying on Magill TV Guide,131 the European Court of Justice
(“ECJ”) – in Oscar
Bronner v Mediaprint – made clear that three criteria must be
fulfilled to meet the
threshold of having refused access to an essential
facility:132
127.1 First, the refusal must be likely to eliminate “all
competition” on the
downstream market on the part of the person requesting access to
the
facility at issue;
127.2 Second, that refusal must be incapable of being
objectively justified; and
127.3 Third, the facility must be “indispensable to carrying on
that person’s
business, inasmuch as there is no actual or potential substitute
in
existence”.
130 Answering affidavit, para 51, p 526 131 P RTE & ITP v
Commission & Magill TV Guide Joined Cases C-241/91 P &
C-242/91, [1995] 1995 ECR I-743 132 Oscar Bronner GmbH & Co. KG
v Mediaprint Zeitungs- und Zeitschriftenverlag GmbH & Co. KG
[1994] Case C-7/97 ECR 1998 I-07791 at para 41
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128 Even if WhatsApp had refused access to the WhatsApp Business
API, any such
refusal would have come nowhere near to meeting these
thresholds, as (a) it
would not have removed GovChat’s ability to continue to compete
on the market;
(b) it is objectively justified, given that the WhatsApp terms
of use in question are
designed to protect both WhatsApp and its users;133 and (c)
there are a number
of actual or potential substitutes for WhatsApp upon which
GovChat could rely.
129 Insofar as the allegation of being a competitor is concerned
– the second
requirement under section 8(1)(b) – the applicants allege that
the relevant
competitor of Facebook and/or WhatsApp is GovChat.134 This
alleged
competition is said to take two forms:135
129.1 competition for GovChat’s customers; and
129.2 potential competition, at some unknown point in the
future, in providing
revenue-generating services that neither GovChat nor WhatsApp
are
currently providing in South Africa.
130 The first form of alleged competition is based on WhatsApp’s
requirement that
government entities, like all other users of the WhatsApp
Business API, open
WAB accounts in their own names. In this regard, Mr Jordaan
alleges that
133 In this regard, under the US law on refusals to deal by
monopolists, upon which the essential facilit