Abstract: The Competition Commission of India (CCI) has again raised concerns related to privacy practices and data-sharing norms as it continues its probe into the 2021 privacy policy update by WhatsApp. The charges allege that WhatsApp, a unit of Meta Platforms Inc., abused its dominant market power to impose anticompetitive data-sharing conditions. In this article, the factual background as well legal provisions and suspected competition / privacy law infringements would be pondered upon. It further provides an assessment on the possibly impact of these activities over India’s data protection framework and competition policy, accompanied by likely legal repercussions for Meta along with WhatsApp.
Introduction:
The introduction of the controversial privacy policy update by WhatsApp in 2021 put one of India’s leading messaging platforms under regulatory scrutiny. WhatsApp altered its policy in 2021 to expand the data it shares with parent company Meta Platforms Inc., sparking backlash and fears about privacy[1]. This policy changes triggered investigations by the Competition Commission of India (CCI) under the provisions of the Competition Act, 2002. The CCI investigation continues to examine whether WhatsApp abused its dominant position in the messaging app market by putting forth anticompetitive terms on users and competitors.
The privacy policy which included clauses that enabled the platform to share user data with parent company Meta Platforms Inc addressed valuable data relating to user activity with businesses on WhatsApp, its metadata, device details and transactional information which could be sent to Meta for use in targeted advertising.[2]
Subsequently, in January 2021 CCI decided to investigate the allegations on its own motion under Sections 3 and Section 4 of Competition Act, 2002. The main point of contention was whether WhatsApp used its dominant position in the Indian messaging market to saddle users with unfair terms under their new privacy policy, which the CCI stated contravenes Section 4 dealing with abuse of dominance under Competition Act. The enforcement also brought to light concerns under section 3 of the Act which deals with Anti-Competitive Agreement.
The debate had resurfaced in 2023 and 2024, with news publications speculating that the CCI was close for wrapping up its investigation and a purported heavy fine perhaps hanging over Meta and WhatsApp for violating Competition Law. As per the reports, CCI has stated that it was of prima-facie opinion, there were contraventions and abuse in this case by WhatsApp as well as its holding company Meta on a number of grounds under various sections provisions Competition Act, 2002 which includes engaging into anti-competitive practices through mandating acceptance to data-sharing policy for offering service on WhatsApp.[3]
Legal Provisions involved:
♦ Competition Act, 2002[4]:
- Section 4 (Abuse of Dominant Position): The provision prohibits enterprises from using their dominant position in the market to impose unfair or discriminatory conditions or prices. The CCI’s investigation is primarily focused on whether WhatsApp’s 2021 privacy policy amounted to an abuse of its dominant position in India’s messaging app market by forcing users to accept the data-sharing terms with Meta. WhatsApp monopolizes India’s messaging app market, being used by millions. Section 4 of the Competition Act is very broad—it lets the Federal Government monopolies Commissioner take action on anything which might be an “abuse of a position that has been (or likely will be) acquired or maintained as a result of conduct.” By tying the use of its services to a policy that favoured its parent company, Meta, WhatsApp may have abused its dominant position in order to apply unfair and discriminatory terms on users.
- Section 3 (Anti-Competitive Agreements): The section prohibits agreements that have an appreciable adverse effect on competition (AAEC). The CCI is investigating whether WhatsApp’s updated privacy policy constitutes an anti-competitive agreement between WhatsApp and Meta, designed to unfairly enhance Meta’s market power in the online advertising space. In connection with the above, CCI is likely to examine whether it involves anti-competitive agreement between WhatsApp and Meta, meant for promoting Meta advertising business. WhatsApp sharing user data with Meta could have given the latter an undue advantage against players in the digital advertising industry, which is explicitly prohibited under Section 3 of Competition Act.
♦ Information Technology (IT) Act, 2000[5]:
- The IT Act governs the collection, use, and sharing of personal data in India. WhatsApp’s 2021 privacy policy update has also raised questions about potential violations of the IT Act, particularly in relation to the protection of user data and consent requirements under the IT (Reasonable Security Practices and Procedures and Sensitive Personal Data or Information) Rules, 2011.
♦ The Digital Personal Data Protection (DPDP) Act, 2023[6]:
- While not fully operational at the time of the policy’s introduction, the DPDP Act aims to regulate the collection and processing of personal data. WhatsApp’s policy update could be seen as undermining the principles of data minimization, purpose limitation, and informed consent, which are at the core of the data protection regime envisioned under India’s Data Protection Act.
But when it comes to privacy, apart from the competition law, WhatsApp faced big questions of user privacy & data protection in their day-to-day policy. The policy allowed wide data sharing with Meta, which would prima facie look like a violation of the IT Act and India’s upcoming data protection regime, WhatsApp did not provide clear consent mechanisms, and as a result the app was viewed unfavourably in its ability to use data — raising doubts regarding potential privacy- or data-rights breach.
Analysis:
WhatsApp’s 2021 privacy policy update and CCI inquiry provides a complex interface of competition law with data protection in digital economy. However, at the same time these actions have been raising issues related to a fair competition and how safe user data is in India’s growing digital system.
The CCI probe is a pivotal case to watch for how India will handle enforcement of dominant market player-driven anti-competitive practices in the digital economy. It also emphasizes technological validation for strong regulations around data protection as in the case of WhatsApp, it seems to have done here taking advantage of regulatory fissures and absence.
Penalty order from the CCI also paves way for future regulation of dominant digital platforms in India. This also calls for a lot of convergence between the competition law and data protection regulations especially when it comes to dealing with goliath in technology space i.e., Meta & WhatsApp.
Conclusion:
The 2021 privacy policy change on WhatsApp restarted conversations around data protection but also raised bigger issues under competition law in India. The CCI probe into whether WhatsApp, an adored brand and a leader in its sector/services, abused its dominant position by pushing users to accept data-sharing terms with Meta serves to underline the necessity of regulation in fast-changing digital markets.
If proven, the matter could cost WhatsApp and its parent company Meta with heavy penalties under Section 3 of Competition Act. Post Probe in this case could bring about rigorous enforcement to competition and privacy laws by India. It is still far off than the ongoing changes in India’s digital landscape, but this case demonstrates concretely that user privacy and fair competition are necessary conditions for developing a sound digital economy.
The findings from the CCI’s investigation could exit a legacy that not just WhatsApp and Meta would have to live with but will also inform how India ought to regulate its digital ecosystem in future.
Notes:
[1] Ganguly, N. (2024) WhatsApp’s privacy policy back in spotlight as CCI investigation intensifies, Outlook Business. Available at: https://www.outlookbusiness.com/start-up/explainers/whatsapps-privacy-policy-back-in-spotlight-as-cci-investigation-intensifies (Accessed: 18 October 2024).
[2] Anand, N. (2024) Decoded: Whatsapp 2021 privacy policy is back to haunt Meta over CCI Probe: Technology News, Business Standard. Available at: https://www.business-standard.com/technology/tech-news/decoded-whatsapp-2021-privacy-policy-is-back-to-haunt-meta-over-cci-probe-124101400563_1.html (Accessed: 18 October 2024).
[3] Tech Desk, T. (2024) Meta-owned Whatsapp may have a ‘bad’ news in India, Times of India. Available at: https://timesofindia.indiatimes.com/technology/tech-news/meta-owned-whatsapp-may-have-a-bad-news-in-india/articleshow/114214411.cms (Accessed: 18 October 2024).
[4] The Competition Act, 2002, No. 12, Acts of Parliament, 2002 (India).
[5] The Information Technology Act, 2000, No. 21, Acts of Parliament, 2000 (India).
[6] The Digital Personal Data Protection Act, 2023, No.22, Acts of Parliament, 2023 (India).
Author Bio
