• AK & Partners

WhatsApp Pay ‘Tying’ Case – At a Glance

Updated: Feb 9

Authored by Anuroop Omkar, Partner & Parth Oberoi, Associate

India, currently the world’s fastest-growing FinTech market as seen by its tremendous rate of adoption and implementation of pre-paid payments instruments (‘PPI’) and Unified Payments Interface (‘UPI’), a government-regulated real-time digital payment technology. In an attempt to capitalize on India’s growing payments system market, foreign players like Google released their payments applications in India. In a similar fashion, WhatsApp (owned by Facebook) which is primarily a messenger services platform, released its UPI-based payment feature named WhatsApp Pay which received regulatory approval from the National Payments Corporation of India (‘NPCI’) on February 07, 2020. WhatsApp Pay was to be introduced in India in a phased manner but through embedding it in the WhatsApp messenger services application which was unprecedented as the payment system operators recognized by NPCI have different compliance requirements than messenger applications and the manner in which these two distinct services were being offered as a part of one application, raised certain anti-competitive concerns.


In light of the above, information was filed before the Competition Commission of India (‘CCI’) accusing WhatsApp of technically ‘tying’ its messenger services with its new payments feature which refers to a process where a dominant entity offering a product referred to as the ‘tying product’ (in this case, WhatsApp Messenger), integrates it with a separate and distinct product - ‘tied product’ (WhatsApp Pay), in order to gain an advantage in the tied products market. To prevent adverse impact on the competition in the tied products market, the above arrangement is prohibited under Section 4(2)(d) of the Competition Act, 2002 (‘Act’).

Under Indian jurisprudence, ‘tying’ refers to a practice whereby the seller of a product or service requires the buyers to also purchase another separate product or service.

For the regulator (CCI) to establish technical ‘tying’ it must be satisfied that:

  • the tied products are two separate products;

  • the offeror is dominant in the market for the tying product;

  • customers do not have a choice to only obtain the tying product independently of the tied product; and

  • the arrangement can have anti-competitive effects in the market.

To realize WhatsApp’s dominance in the market of Over-The-Top (‘OTT’) messaging apps through smartphones, it may be noted that WhatsApp is the leading player in the smartphone-based OTT messaging service market in India with a massive userbase of 500 million users. It may thus be inferred that the proposed model of integrating the WhatsApp Pay option in the messenger application shall give WhatsApp an instant consumer exposure to half a billion users, thereby allowing it to use its dominance in one market to penetrate into another market.


Despite the above, CCI, the antitrust watchdog of India in Harshita Chawla v Whatsapp and Facebook[1] held that WhatsApp’s practice of integrating WhatsApp Pay into the existing messenger application did not constitute tying on two grounds firstly, that the element of coercion in purchasing and using the two products together was absent since WhatsApp users are free to use any other UPI applications available in India; and secondly, because the entry of WhatsApp Pay is not capable of foreclosing competition in the payment services market since there is a status-quo and bias in favor of the incumbent UPI payment applications like Google Pay, Phone Pay and Paytm.

Although CCI has applied the test to check technical tying, it might have overlooked few important factors like:

The primary App Stores (Android and IOS) from which WhatsApp can be downloaded do not offer the messaging and the payment products separately thus forcing the consumer to purchase the two products together and not independently which leads to coercion.

The automatic or free availability of the tied product itself has the capability to foreclose competition in the tied product’s market and in the present case CCI should have investigated this possibility of foreclosure in the digital payments market due to the automatic availability of WhatsApp Pay following its integration with WhatsApp messenger.

Status quo bias in digital payments market may anytime shift from other competing applications to WhatsApp, since there is a high probability that users will be discouraged to download other applications to make payments thereby thwarting the consumers from exercising their preference to use another UPI-enabled digital application.

We know that the digital software application-based market is on the rise with more consumers expanding the network and in this rapidly growing software application market where developers are in constant tussle over accumulation of users, it is imperative for the regulator to create a sound jurisprudence regarding technical tying to regulate and promote competition.

[1] Harshita Chawla v. Whatsapp and Facebook, CCI, Case no. 15 of 2020


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