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FIFI PETERS: More news now in terms of regulation in the tech sector. The [Competition] Tribunal today is publishing a statement saying that it has given GovChat and its subsidiary #LetsTalk permission to intervene in an alleged ‘abuse of dominance’ case that was brought by the Competition Commission against Meta Platforms, including Facebook and WhatsApp, and even Instagram, I believe.
GovChat is the official communications platform for the government. It was founded back in 2016 and was launched only two years later. It’s been quite instrumental for most people to use [for] lodging service-delivery complaints. It was quite integral in how government was able to communicate during the pandemic, and also helped out quite a lot with the application of social relief Covid grants.
We have Eldrid Jordaan, the founder of GovChat, with us for more on this. Eldrid, thanks so much for your time. Maybe just give us the back story of this case. It has been going on for some time – I believe since 2020. Just help us understand how we got here, and ultimately what this permission by the tribunal to intervene means for you as GovChat.
ELDRID JORDAAN: Fifi, thank you for the opportunity and good evening to your listeners.
Yes, back in 2020 Facebook threatened to off-board GovChat for allegedly breaking some of its terms and conditions. GovChat obviously denied that and decided to apply for an interim interdict [by] the Competition Tribunal. That interim interdict was obviously granted, and GovChat was able to stay on that WhatsApp platform, to be able to use the WhatsApp business API [application programming interface].
And then obviously the Competition Commission had investigated WhatsApp, Facebook South Africa and Facebook Inc, and found that it has definitely abused its market dominance – or alleged that it had abused its market dominance; it then referred that matter back to the tribunal and also suggested a 10% fine for breaching competition laws in South Africa.
Read: Facebook and WhatsApp referred to Competition Tribunal over market abuse
What GovChat then did earlier this year – I think it was in February – it then applied to also be part of the proceedings of the tribunal, which is coming forward very shortly. I think it was yesterday that the tribunal granted GovChat that order. So [we are] very pleased by the outcome and really excited to be part of that [hearing] which is coming forward.
FIFI PETERS: So just some history. You are the founder of GovChat – or you are one of the founders?
ELDRID JORDAAN: I am the founder; that is correct.
FIFI PETERS: But then afterwards, in terms of the boardroom dynamics and boardroom matters at GovChat itself, it’s been eventful. One of your majority shareholders or your partners is Capital Appreciation. I’m just trying to understand the dynamics between yourselves and Capital Appreciation and whether they are also excited, and whether they’re also on board [regarding] this permission that the tribunal has given for GovChat to participate.
ELDRID JORDAAN: Sure. Capital Appreciation is a 35% stakeholder within GovChat. Then there’s a 65% shareholder which is owned by a company called K2018. I am the majority shareholder in that company, but effectively own 37% within GovChat.
I think Capital Appreciation would definitely be pleased by this outcome because it assists them in being part of that hearing.
Read/listen: Capital Appreciation reports ‘solid’ FY performance
Obviously there has been a shareholder deadlock between the shareholders, ourselves and Capital Appreciation for a number of reasons, which I won’t get into now.
But I definitely think that Capital Appreciation would be excited by the outcome of this order that has been granted.
FIFI PETERS: So ultimately at stake, then, you are looking to get some compensation; essentially you want the money that you feel you are due from Meta Platforms – to the tune of around a $1 billion or so. Is that still the case?
ELDRID JORDAAN: Well, after these proceedings I definitely think that GovChat is going to pursue a damages claim against Facebook and WhatsApp. But that is another matter.
We obviously need to follow process, and the next process is the tribunal hearing, where we will take part. We’ll be able to cross-examine witnesses. We’ll be able to request the tribunal to direct and summons – order – anyone that we feel needs to be part of this matter. We’ll also get access to certain documents.
That was another reason for this intervention application, because Facebook tried to [prevent us from receiving] the confidential findings of the Competition Commission, and wanted GovChat to see only the non-confidential findings.
So this intervention application that was granted yesterday [Monday] allows us to see and get access to certain documents to just understand what the Competition Commission found that led them to believe that Facebook had breached – or had allegedly breached – competition laws in South Africa.
FIFI PETERS: You did mention that the Competition Commission actually found in your favour as it pertained to the initial matter, but what exactly was WhatsApp and Facebook’s issue with you at the time – when they accused you of not complying with certain requirements and threatened to remove you from their platform?
ELDRID JORDAAN: It is really, really strange, the behaviour of WhatsApp and Facebook with GovChat over the number of years since 2018.
They say that GovChat has not been authorised to do the work that it does. But in 2018 WhatsApp and GovChat launched the GovChat platform on WhatsApp – and we are authorised.
We have agreements with the South African government, we’ve had agreements with the Department of Cooperative Governance and Traditional Affairs [Cogta]. We’ve had agreements with the departments of health, social development, and Sassa [South African Social Security Agency].
So [we are] well authorised to do the work that we do, and that is to connect South African citizens with government.
As you said in your introductory comments, GovChat played a pivotal role during Covid, enabling vulnerable South African citizens to get access to that R350 grant.
We processed, I think, in excess of 30 million grants over that Covid period. I think after GovChat really started doing well at helping millions of South Africans, this is when Facebook started having a problem because WhatsApp wanted to do what GovChat was doing, and wanted a direct relationship with the South African government.
But what they didn’t understand was that GovChat was a co-created platform. It was co-created with the South African government, with departments like Cogta, the Department of Health, the Department of Social Development and Sassa.
So it wasn’t just technology that was brought to the South African government; it was actually co-created.
What Facebook then wanted to do was to off-board us, and for [itself] to have a direct relationship with the South African government going forward.
So it is a business model that they wanted to own directly, and they saw us as a threat because we were succeeding in being able to help vulnerable South Africans connect with these [services].
FIFI PETERS: Eldrid, we are losing you, but I think we get the sense of the story. Thanks so much for joining us and sharing your side of things. We’ll certainly be following the developments as they unfold with Eldrid Jordaan, founder of GovChat, and maybe even reach out to Meta tomorrow just to give them the right of reply as to what they’re being accused of. [Our producer] Kaldora Naidoo has nodded and will try for Meta tomorrow.
