WhatsApp Pay and Competition in India: A Cause for Concern?

[By Naga Sai Srikar]

The author is a student at Christ (Deemed to be University), School of Law


The Unified Payments Interface (UPI) has been India’s greatest achievement in the digital payments sector so far. It is no secret that the demonetization of banknotes announced by the Union Government on 8th November, 2016 acted as a great catalyst in promoting digital payments across the country. While large Peer-to-Peer (P2P) wallet providers such as Paytm, Freecharge, and Mobikwik were compelled to introduce UPI to their existing infrastructure owing to scalability and ease of use, others such as Phonepe and Google Pay went on to build their payment services solely on the UPI platform.

Seeing this as a great opportunity, Facebook Inc. owned messaging giant WhatsApp too joined the bandwagon and demonstrated its intent to foray into the digital payments market. On 16th February, 2018 the National Payments Corporation of India (NPCI) which spearheaded the UPI granted an in-principle approval for WhatsApp’s pilot project.[i] According to the consent, WhatsApp could roll out UPI for a limited userbase of 1 million and with a stipulated per transaction limit. However in July, 2018 a legal think tank named Centre for Accountability and Systemic Change (CASC) filed a PIL before the Hon’ble Supreme Court stating that WhatsApp had failed to comply with the data localization rules notified by the RBI thereby violating the privacy of citizens.[ii] WhatsApp’s reluctance to comply finally came to a hold when the Supreme Court ordered RBI and NPCI to submit reports of compliance thereafter which WhatsApp assured the Court that they would comply to the data localization rules before rolling out their full-fledged payments feature.[iii] The latest order explicitly mentions – “It is made clear that there will be no stay of the proceedings with respect to the application of respondent No.3 (i.e. WhatsApp) by the Government, which shall be processed in accordance with law[iv] indicating NPCI and RBI to go ahead with its regulatory approvals if conditions are met. Subsequently, it has been reported that the Competition Commission of India (CCI) has been reviewing antitrust complaints against WhatsApp Pay.[v] Therefore, a question arises as to whether the CCI would now knock the doors of WhatsApp?

The Abuse of Dominance Conundrum

A. Relevant Product Market

Before delving into the discussion regarding the possible abuse of WhatsApp’s dominant position, the relevant market has to ascertained. In the instant case, it must be noted that WhatsApp which is predominantly an instant messaging application would enter the Digital Payments Market (offering only UPI initially) by enabling the said feature on its existing application. Thereby, WhatsApp is said to utilize its already existing userbase to push its digital payments presence.

Taking into account factors such as interchangeability, characteristics of the product or service, their prices, consumer preferences and intended use as provided under Section 2(t) and Section 19(7) of the Competition Act, 2002 (the Act), two markets emanate for discussion. Firstly, the ‘Instant Messaging Services’ market. Although the focus is on WhatsApp’s payment feature, yet it is opined that WhatsApp’s primary market, i.e. instant messaging, has to be assessed in the instant case as the UPI feature (popularly called as WhatsApp Pay) is being added as an extension to its existing application. The second market that is relevant here is that of ‘Digital Payment Systems’ offering UPI as a feature.

B. WhatsApp’s Scale of Dominance

In the Instant Messaging market, WhatsApp holds 33.37% of global market share with more that 2 billion active users.[vi] Of this mammoth subscriber base, 400 million users are from India making it the largest market for WhatsApp.[vii] A study indicates that WhatsApp is installed on 95% of Android Devices and 75% of the users use the app on a daily basis in India.[viii] The statistics above clearly indicates WhatsApp as the market-leader and in a position to dominate.

As far as the Digital Payment Systems market offering UPI as a feature is concerned, a leading payment gateway provider’s report indicates that Google Pay holds a market share of over 61% followed by PhonePe and PayTM with shares of 24% and 6% respectively.[ix] In terms of number of users, Google Pay boasts of 67 million active monthly users[x] followed by PhonePe with 55 million users. With an average of 790 million UPI transaction per month[xi] (as per data for January, 2019 to September, 2019), the addition of UPI feature onto its messaging platform would enable WhatsApp with a 400 million subscriber base to instantaneously penetrate into the payments market. Even the slightest translation of instant messaging users to the UPI feature would dent the other players in the market. Therefore, factors such as position of strength, operations independent of competitive forces and effect on its competitors in the relevant market is opined to be satisfied in the instant case and thus falls squarely within the ambit of “dominant position” as explained under Section 4 of the Act.

C. The Abuse of Dominant Position Charge

It well known that a market-player’s dominant position is not per se prohibited under the Act. However, the abuse of a player’s dominant position is prohibited. Section 4(2)(e) of the Act expressly states that – There shall be an abuse of dominant position if an enterprise or a group “uses its dominant position in one relevant market to enter into, or protect, other relevant market.” In the instant case, WhatsApp’s dominant position in the Instant Messaging Services market is being utilized to enter the payment services market, clearly violating the said provision.

Similarly, Section 4(2)(c) of the Act categorizes practices resulting in denial of market access in any manner as an abuse of dominant position. It is opined that WhatsApp’s integration of UPI into its existing app forms a market denial practice since the user is incentivized to utilize the UPI feature without having to download additional applications. The mere fact of WhatsApp’s mammoth subscriber base would create a large network effect thereby affecting the already existing players in the market. Although there is no real switching cost involved, aspects such as ease of use and convenience have to also be taken into account. In the case of In Re Biocon Limited v. F. Hoffman-La Roche AG & Ors.[xii], the Commission held denial of market access under Section 4(2)(c) of the Act need not be complete and absolute in nature. Even a partial denial of market access that takes away the freedom of a substitute to compete effectively could amount to violation of Section 4(2)(c). Applying the above ratio, WhatsApp’s integration of payment system into its existing app is in clear contravention to Section 4(2)(c).

Furthermore, it is opined that a distinctive approach is required to assess abuse in digital markets. For the first time, the Commission in the case of Matrimony.com Limited v. Google[xiii] characterized traditional factors such as entry barriers and network effect in the digital context. The majority held that in multi-sided digital platforms, the network effects are more pronounced and new users tended to choose platforms or networks that already had a large user base. Thereby, market entries would become less likely and users switch less frequently to other suppliers leading to market power enhancing effect and dominance subsequently.


Digital sector’s dynamic nature has of late attracted the attention of competition and antitrust regulators across the globe. Facebook Inc’s acquisition of Instagram and WhatsApp among other deals in the digital sector, has made regulators realize the lasting impact of such deals and need to nip them in the bud. In India, WhatsApp’s foray into the digital payments sector poses a similar challenge to the CCI. Facebook-Instagram-WhatsApp’s combined data power is a serious threat to existing digital payment service providers who have over the period of time invested heavily in user onboarding and engagement.  Permitting WhatsApp to roll-out its full-fledged payment feature within its existing messaging application would drive users away from other players leading to denial of market access and thereby violating Section 4 of the Act. In order to therefore achieve a level playing field, WhatsApp’s payment feature is recommended to be separated from its existing messaging application. This would ensure WhatsApp’s payment feature is left open for success based on market forces rather than utilizing its dominant position in the field of instant messaging applications.


[i] NPCI’s Press Release available at: https://www.npci.org.in/sites/default/files/NPCI%20statement%20pertaining%20to%20WhatsApp%20BHIM%20UPI%20beta%20launch.pdf

[ii] Centre for Accountability and Systemic Change v. Union of India, W.P.(C) No. 921/2018.

[iii] Good Governance Chambers v. NPCI, W.P.(C) No.427/2020 available at:  https://main.sci.gov.in/supremecourt/2020/8181/8181_2020_31_4_22035_Order_13-May-2020.pdf

[iv] Id.

[v] WhatsApp Pay Accused of Foul Play, https://www.business-standard.com/article/current-affairs/cci-reviewing-antitrust-allegations-against-facebook-s-whatsapp-report-120051600133_1.html

[vi] Most Popular Mobile Messaging Apps Worldwide as of October 2019, https://www.statista.com/statistics/258749/most-popular-global-mobile-messenger-apps/

[vii] WhatsApp Announces 2 Billion Users Worldwide, https://www.livemint.com/technology/tech-news/whatsapp-announces-2-billion-users-worldwide-11581516342061.html

[viii] Liron Hakim, Mobile Messaging App Map – February 2018, https://www.similarweb.com/corp/blog/mobile-messaging-app-map-2018/

[ix] UPI Overhauls Cards as the Preferred Payment Mode at 45%, https://razorpay.com/blog/upi-preferred-payment-mode-september-2019-data/

[x] Google Pay’s ‘tremendous success’ in India to be replicated globally, https://www.livemint.com/technology/apps/google-pay-s-tremendous-success-in-india-to-be-replicated-globally-pichai-11580820777429.html

[xi] UPI Product Statistics, https://www.npci.org.in/product-statistics/upi-product-statistics

[xii] Biocon Ltd. & Anr. v. F. Hoffmann-La Roche AG & Ors., Case No. 68/2016, https://www.cci.gov.in/sites/default/files/68%20of%202016_0.pdf

[xiii] Matrinmony.com v. Google, Case Nos. 7 & 30/2012, https://www.cci.gov.in/sites/default/files/07%20&%20%2030%20of%202012.pdf


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