Whatsapp LLC Vs Competition Commission of India & Ors. (NCLAT Delhi)
Conclusion: WhatsApp was fined Rs. 213.14 crore for violating sections 4(2)(c) and 4(2)(e) of the Competition Act by leveraging its dominant position to “coerce” users into adopting the upgrade, and the CCI restricted the app from sharing user data with Meta for advertising purposes for five years. National Company Law Appellate Tribunal (NCLAT) stayed the 5-year ban on WhatsApp data sharing with Meta and directed to pay 50% percent of the penalty within two weeks, holding that such a ban could disrupt WhatsApp’s business model in India.
Held: CCI penalized Meta in November 2024 for alleged unfair business activities related to WhatsApp’s amended privacy policy from 2021. Users had to agree to data-sharing conditions with Meta entities in order to receive the update. CCI ruled that because the upgrade placed unfair terms on 530 million Indian customers, it breached section 4(2)(a)(i) of the Competition Act. Additionally, it determined that rivals in online display advertising faced obstacles to entry due to data-sharing practices among Meta companies, which violated sections 4(2)(c) and 4(2)(e) of the Act. According to the CCI, the 2021 policy’s “take it-or-leave-it” strategy weakened consumer autonomy and imposed discriminatory requirements. Along with the financial penalty, CCI ordered WhatsApp to refrain from sharing user data with other Meta-owned services for the next five years, give Indian WhatsApp users the option to opt out of data sharing starting in 2029 through an in-app notification, allow users to review and modify their preferences through a separate tab in the app’s Settings, and give thorough explanations of what information was shared with other Meta platforms and why. The legal team for WhatsApp contested the CCI’s ruling on four key points on January 16. The main issues were privacy and data protection, which were covered by the Digital Personal Data Protection (DPDP) Act, a statute that had been notified but had not yet been put into effect. CCI arbitrarily imposed a five-year suspension. Additionally, WhatsApp’s business model was in peril due to the CCI decision, making it unviable for a for-profit corporation. It was held that directions which had been issued in paragraph 247.1 and 247.2 were with respect to “for advertising purposes” and “for purpose other than advertising”. Insofar as sharing of user data for advertising purposes, the said was going on from 2016 when 2016 privacy policy was enforced. The ban of five years which was imposed in paragraph 247.1 might lead to the collapse of business model which had been followed by WhatsApp LLC. It was also relevant to notice that WhatsApp was providing WhatsApp services to its user free of cost. The Hon’ble Supreme Court had not granted interim order staying 2021 privacy policy and Digital Personal Data Protection Act 2023 had also been passed and was likely to be enforced which might cover all issues pertaining to data protection and data sharing. Prima facie the ban of five years imposed in paragraph 247.1 need to be stayed. However, the directions issued by the CCI under paragraph 247.2 and 247.3 need not be stayed and they need to be complied with. The only limited interim order which were inclined to grant was to stay the direction in paragraph 247.1 by which five years’ ban had been imposed. The direction in paragraph 247.1 were stayed. Now coming to the penalty, the Commission in paragraph 263 had imposed penalty of Rs.213.14 Crores only. It was submitted for appellant that 25% penalty had already been deposited. Subject to deposit of 50% of penalty (after taking into consideration 25% already deposited), the direction in paragraph 263 need to be stayed. Appellant was directed to deposit 50% of penalty as indicated above within two weeks from today. Both the parties were granted leave to pray for modification of this order in event Digital Personal Data Protection Act 2023 was enforced or any other statutory provisions were enforced regulating to data protection and sharing of the data.
