What’s at stake in the GovChat vs Meta personal information ‘data war’?

By Abby May and Michael Marchant for Open Secrets

12 Apr 2022

The case raises questions of fundamental public importance, because the ‘market’ GovChat and Meta are fighting over is us and our personal information.

On 14 March, the Competition Commission of South Africa upheld a complaint by South African tech company GovChat against Meta Platforms Inc and its subsidiaries WhatsApp and Facebook. The commission referred the tech giant to the Competition Tribunal for prosecution on the basis that Meta (formerly known as Facebook Inc) is abusing its market dominance in South Africa. The commission’s decision stemmed from a complaint by GovChat that Meta had threatened to prevent GovChat from using the WhatsApp platform. GovChat claims Meta did so to push out a competitor, while Meta has responded, saying GovChat is “[prioritising] its own commercial interests over the public”.

In the past, Meta has demonstrated a global pattern of using its size and power to de-platform competitors and monopolise digital services. The decision by the Competition Commission is a substantial step in efforts to hold Meta accountable and a big victory for GovChat, which relies on the WhatsApp platform for its business model. But it also raises questions of fundamental public importance, because the “market” in question that GovChat and Meta are fighting over in this dispute is us and our data. GovChat’s CEO, Eldrid Jordaan, has described it as a “data war”.

https://www.dailymaverick.co.za/article/2022-04-12-tragedy-in-kzn-as-floods-cause-devastation-mostly-for-the-poor-in-informal-settlements/

GovChat’s ‘data war’

GovChat is a private company but is intimately linked to almost every facet of South Africa’s government. The company was established in 2016 and formed a partnership with the Department of Cooperative Governance and Traditional Affairs soon after. Together they created the government’s official citizen engagement platform, GovChat, which allows citizens to find their local councillor, report service delivery issues and rate government services from police stations to departments. GovChat also collaborated with the Department of Health to facilitate tracking Covid-19 symptoms and provide the location of testing centres through the GovChat platform.

Despite this work, and the name GovChat, it is not a government venture. In its dispute with Meta, GovChat clarified that it uses its subsidiary #Let’sTalk to contract with commercial entities using WhatsApp. GovChat explained it was “more appropriate” to use #Let’sTalk because “the name ‘GovChat’ suggests an entity which is (solely) involved in government-related work”.

GovChat’s most notable relationship is with the Department of Social Development and the South African Social Security Agency (Sassa). In early 2020, GovChat set up a WhatsApp grant application portal for the Social Relief of Distress (SRD) grant process. The company offered its services to Sassa for free, thereby avoiding a competitive tender process. GovChat processed more than 13 million SRD grant applications in 2020 and 2021. Jordaan says that in the past 12 months the company’s platform has processed in excess 570 million messages, in part due to its relationship with Sassa and Social Development.

Open Secrets investigated this relationship between GovChat and Sassa, and GovChat’s role in managing applications for the SRD grant, in Digital Profiteers: Who Profits Next from Social Grants?, published in November 2021. In the report, we raise the concern that while GovChat set up the SRD application process at no charge, the ultimate play may be to access the personal data of millions of grant applicants and that it was this data that would be monetised by GovChat and its investors. While GovChat boasts that its services to government come at no charge. But no product is ever free: if it is, then you are the product.

As pointed out by Competition Commissioner Tembinkosi Bonakele, data is everything in the digital platform markets that define modern economies. GovChat’s incentive to take on Meta/WhatsApp may lie in the potential profits from collecting, storing and managing the data it receives from citizens. Through its various relationships with government departments, the company collects and stores millions of South Africans’ information including location and personal identity information, demographic information and individuals’ financial profiles. In an interview with Open Secrets, Jordaan said Facebook and WhatsApp were intent on kicking GovChat off their platforms so they could access this data – calling it a “data play”.

Jordaan is likely to be right. Facebook and other mega tech companies like Google have routinely shown that their business model is to harvest and sell our personal data without any transparency, and often in contravention of the law. In September 2021, Irish authorities were the latest to fine Facebook ($270-million, or R4-billion) for failing to be transparent and disclose to WhatsApp users how the company uses the data it gathers, and particularly how it shares that data with Facebook’s many other subsidiaries. It is little wonder that Meta sees a gold mine in GovChat’s access to the data of millions of South Africans.

But how will GovChat treat this gold mine? Its largest investor, Capital Appreciation (Capprec), is eager to monetise the platform and the relationship with Sassa. Capprec is a JSE-listed fintech company that holds a 35% stake in GovChat. Its CEO, Bradley Sacks, told the Financial Mail in 2021 that while he likes the “social impact” of GovChat, he views it as a commercial enterprise. He pointed to the intersection of big data and payments as a big opportunity, suggesting that GovChat’s possible future role as a distributor of grant payments could be a big opportunity. Sacks said: “GovChat could evolve to a mechanism of grant distribution, and payments is very much in our [Capprec’s] DNA.” GovChat had been built on the basis of “synthesis technologies of big data and analytics and artificial intelligence”.

Jordaan confirmed that the decision about monetising GovChat “remained with the shareholders”.

We should not forget that through Net1’s complete control over the financial flow of the grant payments system – from National Treasury into individual bank accounts – the company could automatically debit grant recipients’ accounts. This allowed its linked companies such as Moneyline (which sold loans) and uManje Mobile (which sold airtime and electricity), to make covert deductions from grant recipients’ accounts for financial products they were unaware had been sold to them. GovChat’s increasing proximity to the grant system, the absence of a clear tender process with Sassa, and Capprec’s stated intention to profit from the relationships, demand closer scrutiny to ensure that none of these abuses are repeated in new forms.

Blurred lines: GovChat and the government?

In addition to being the primary application system for the SRD grant, Sassa chose GovChat to trial an online booking system for disability grants in 2021. It appears that GovChat is now the preferred – and possibly only – candidate for Sassa to partner with to facilitate its transition to a digital grants processing model – while calls are growing for the introduction of a Basic Income Grant for all people aged between 18 and 59 with little to no income.

For the 2022 launch of the Social Security Review, the Department of Social Development and Sassa, rather than hosting the event at a public or government venue, chose GovChat’s Cape Town offices next to Parliament. This was not the first time the department and Sassa had hosted events at GovChat’s offices – the launch of the SRD grant application was also hosted there. This blurs the lines between the state, which is responsible for delivering social aid to millions of South Africans, and a private entity that wants in on the system for commercial reasons.

We have seen the consequences of such blurred lines before. In 2014, the Constitutional Court declared Sassa’s contract with Cash Paymaster Services (CPS) and Net1 unlawful and ordered that the companies must reveal the amount of profits they made from the contract. Nearly eight years later, CPS and Net1 have still not done so, despite repeated demands from the highest court. Justice for millions of grant recipients who suffered from their actions remains unrealised. This past abuse of the grant system should not be forgotten. It is an indication of the risks and who the real victims of a “data war” may be – the South African public and their personal information.

What can be done?

The Competition Commission’s decision to refer Meta for prosecution by the Tribunal is a big step towards holding the global tech giant accountable for its abuse of its dominance in digital markets. It should be welcomed. However, GovChat must be scrutinised too. While Meta and Google are consistently exposed for their exploitative data profiteering, these big tech companies have set a proven model for other smaller companies like GovChat to potentially follow suit.

GovChat is ultimately a for-profit company with access to the data of at least 13 million people in South Africa. Given the history of Net1 and Sassa’s failure to ensure that its private partners act responsibly and are accountable for their treatment of grant recipients, this poses several risks, not least the exploitation of the data the company stores for the sake of profit. This is not to say that Sassa should abandon efforts to digitise elements of the social grants system; there are undoubtedly benefits for accessibility that can come with digitisation. However, these benefits are not guaranteed and the risks are real.

Aside from the risks of profiting from access to the personal information of grant recipients, issues of access are also a grave concern. In a recent workshop hosted by Open Secrets and the Black Sash on the risks of the digital transformation of the grant system, grant recipients and activists voiced their concerns and potential solutions. Many suggested that Sassa and the government must ensure accessibility to internet services, lower data costs, digital infrastructure and multiple South African language options to open up digital systems to more people. Grant recipients also raised important questions about the uncertainty around what may or may not be happening to the personal information they have no choice but to submit to access grants.

The need for transparency in how companies like GovChat collect, store, manage and, crucially, monetise the data they process is crucial. The Protection of Personal Information Act and other legislation makes it clear that South Africans’ personal information and how it may be used is solely in the control of the individuals themselves. The Department of Social Development and Sassa must be vigilant and ensure that any private partner they work with abides by these controls, and must be fully transparent about the terms of their partnerships with the private sector to digitise social grants. The Information Regulator and other regulatory bodies must also remain vigilant and act swiftly to stop any company from exploiting access to grant recipients’ information. DM

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South Africa

GovChat’s ‘data war’

Blurred lines: GovChat and the government?

What can be done?