On Tuesday, the National Company Law Appellate Tribunal (NCLAT) partly allowed the appeal filed by Meta Platforms Inc. and WhatsApp LLC against the Competition Commission of India’s (CCI) November 2024 order concerning WhatsApp’s 2021 privacy policy update. A two-member Bench comprising Chairperson Justice Ashok Bhushan and Technical Member Arun Baroka upheld the Rs. 213.14 crore penalty imposed by the CCI but set aside the finding that Meta leveraged WhatsApp’s dominance in the messaging market to enhance its position in online advertising. The Tribunal also quashed the Commission’s direction prohibiting Meta and WhatsApp from sharing user data for advertising purposes for five years, granting the companies limited relief in an otherwise adverse order.
The case stemmed from WhatsApp’s 2021 privacy policy update, which made it mandatory for users to consent to the sharing of their data with other Meta group entities as a condition for continued use of the app. The CCI, acting suo motu, initiated an investigation, observing that the update removed user’s ability to opt out of data sharing, a shift that raised concerns over abuse of dominant position under Section 4 of the Competition Act, 2002.
The CCI held in it's previous order that Meta and WhatsApp had contravened Section 4(2)(a)(i) of the Competition Act, 2002 by imposing unfair conditions on users and Section 4(2)(e) of the Competition Act, 2002 by using WhatsApp’s market power to gain advantage in the online display advertising market. The Commission further directed that WhatsApp must not share user data with any Meta entity or product for advertising purposes “for a period of five years from the date of receipt of this order.”
Meta contended that the CCI’s findings strayed into the realm of privacy and data protection, areas outside the Commission’s jurisdiction and governed by separate regulatory frameworks. It argued that competition law cannot be used as a substitute for data protection regulation, and that the Commission’s directions would disrupt WhatsApp’s free-to-use business model.
The CCI, on the other hand, maintained that its findings were confined to anti-competitive practices arising from the use of dominance in one market to benefit another. It asserted that the issue was not privacy per se, but the imposition of unfair terms on users that distorted competition in digital markets.
After examining the rival contentions, the Tribunal held that while WhatsApp’s conduct warranted the imposition of a monetary penalty, the CCI had overreached in its finding of leveraging under Section 4(2)(e) of the Competition Act, 2002 and in imposing the five-year restriction on data sharing.
The Bench observed that the findings of the Commission, so far as they relate to Section 4(2)(e), are set aside. The rest of the order is upheld. In effect, while the Rs. 213.14 crore penalty for imposing unfair conditions under Section 4(2)(a)(i) of the Competition Act, 2002 remains intact, the restriction on sharing user data for advertising purposes stands removed. The interim stay granted by the NCLAT in January 2025 on the five-year prohibition has thus been confirmed and made final.
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