[Utkarsh is a student at Hidayatullah National Law University.]
Threads, a recently launched application by Meta on 6 July 2023, has emerged as a formidable competitor to the social media giant Twitter. Twitter has faced widespread criticism from users due to its capricious policies, particularly since its acquisition by billionaire Elon Musk. Despite Musk's announcement of a new CEO for the platform, his radical measures for Twitter, from the introduction of a policy limiting verified accounts to reading 6000 posts per day with similar restrictions of 600 and 300 posts for unverified and new verified accounts, respectively, have raised concerns. Against the backdrop of these substantial policy changes, the introduction of the Threads platform by Meta offers a potential alternative to Twitter. Notably, Threads experienced remarkable success, amassing 10 million sign-ups within a mere 7 hours of its launch.
The terms and conditions published by Meta for the usage of Threads raises significant concerns for competition law enforcement agencies worldwide. Three major issues are likely to come under scrutiny. First, there is the potential abuse of Meta's dominant position in one relevant market to enter another relevant market. Second, the network effects enjoyed by Meta could lead to the denial of market access for the competitors. Lastly, concerns may arise regarding the tying of products. These concerns gain weight from the terms and conditions published by Meta for its users.
Leveraging Dominant Position
Primarily, the utilization of Threads requires users to possess an Instagram account, thus making it essential to have an Instagram account in order to access the Threads platform. Section 4(2)(e) of the Competition Act 2002 (Act) stipulates that when an enterprise exploits its dominant position in one relevant market to enter or safeguard other relevant markets, it constitutes an abuse of the dominant position by said enterprise. It is noteworthy that when Facebook acquired Instagram, it was regarded as a "photo-sharing app", but it is now apparent that Facebook and Instagram are direct rivals, both under the ownership of Meta. Similarly, although Threads may exhibit dissimilarities with Twitter, it will still fall within the same relevant market as Twitter since the fundamental nature of the content on both platforms is textual in form.
In numerous jurisdictions such as Germany, Meta is already facing charges for abusing its dominant position in the market. It is no secret that Meta holds a dominant position in the social media market, with its major platforms including Facebook, Instagram, and WhatsApp. Thus, two conclusions can be drawn: Threads will operate within the same relevant market as Twitter, and Meta enjoys a dominant position in the relevant market of social media platforms. The policy enforced by Meta, which mandates the creation of an Instagram account to access Threads, exemplifies how Meta leverages its dominant position in one relevant market to enter another relevant market.
It could be argued that Twitter itself, as a social media giant, holds a dominant position in the relevant market, while Threads is far from attaining a dominant position that surpasses Twitter. However, the data comparing the user base of Twitter (over 350 million users) and Threads (less than 15 million users) is irrelevant to our discussion. What matters is the dominant position held by Meta, not Threads. The authorities in their rulings in National Stock Exchange of India Limited v. Competition Commission of India and Shri Shamsher Kataria v. Honda Seil Cars Limited and Others have determined that the dominant player in the first relevant market does not necessarily need to possess a dominant position in the second relevant market when attempting to leverage its position in the first relevant market to enter the second relevant market. The CCI has adopted a strict approach in such cases, going as far as stating that a high degree of associational link between the two relevant markets is not necessary (emphasis supplied). The CCI has clarified in the aforementioned cases that the enterprise abusing its dominant position in the second market warrants a separate investigation. However, the fact that the enterprise has exploited its dominant position in the first relevant market to enter another relevant market itself constitutes an abuse under the Act. Meta may argue that the requirement of an Instagram account for using Threads is solely for initial traction, but this argument does not negate the charge of abusing a dominant position under Section 4(2)(e) of the Act.
Abusing the Network Effects
The second concern pertains to the network effects enjoyed by Meta. Users who access Threads are required to have an existing Instagram account, as stipulated in the terms of agreement published by Meta for Threads usage. Deleting the Threads profile and data necessitates the deletion of the user's Instagram account, highlighting the power wielded by Meta due to network effects. This network effect also acts as a barrier to market access for new entrants since users can only utilize Threads by creating an account on the platform. Such practices are in violation of Section 4(2)(c) of the Act.
Tying Products and Services
Furthermore, the policy mandating users to sign up on Instagram in order to use Threads contravenes Section 4(2)(d) of the Act, which states that it is unlawful to subject the conclusion of contracts to acceptance by other parties of supplementary obligations that lack connection to the subject of such contracts, as determined by their nature or commercial usage. If a user desires to use Threads, they are compelled to create an Instagram account, an obligation that is not an industry practice. Notably, Meta owns both WhatsApp and Facebook, but there is no requirement for users to have an Instagram account to access these platforms. Users are granted the freedom to sign up through their phone numbers or email IDs. Similarly, users are not obliged to sign up on any other platform to create a Twitter account. Therefore, this compulsion lacks any connection or commercial usage.
Conclusion
Tech giant Google has alleged that the CCI has unscrupulously replicated steps taken by other jurisdictions to maintain competition. While there may be some truth to this claim, it is crucial for the CCI to play a proactive role when necessary rather than relying solely on other antitrust watchdogs to take action. Given India's large user base for these social media giants, the CCI should assume the responsibility of addressing any malpractices by these platforms and maintaining fair competition in the market.