The Competition Commission of India (CCI) imposed a penalty of Rs. 213.14 crore on Meta for abusing its dominant position. The penalty stems from WhatsApp’s 2021 policy update, which the CCI found to be unfair as it forced users to accept terms on a “take-it-or-leave-it” basis. This practice was deemed a violation of Section 4 of the Competition Act, 2002.
The Competition Commission of India (CCI) imposed a penalty of Rs. 213.14 crore on Meta, the parent company of WhatsApp, for abusing its dominant position concerning the implementation of WhatsApp’s 2021 privacy policy.
In a press release, the CCI announced that it has issued cease-and-desist orders to both Meta and WhatsApp, requiring them to implement specific behavioral remedies within a defined timeline.
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The statement read,
“The Commission also issued cease-and-desist directions and directed Meta and WhatsApp to implement certain behavioral remedies.”
In January 2021, WhatsApp notified users about updates to its terms of service and privacy policy, which were set to take effect on February 8, 2021. The notification indicated that users needed to accept the new terms to continue using the platform. Unlike the previous privacy policy from August 25, 2016, which allowed users to opt out of data sharing with Facebook, the updated policy mandated data sharing with Meta.
Users were required to accept these new terms, which expanded the scope of data collection and sharing, in order to maintain access to WhatsApp.
Following complaints about WhatsApp’s policy, the CCI initiated an investigation. It concluded that Meta Group, through WhatsApp, held a dominant position in the Indian market for messaging apps on smartphones and was also a leading player in online display advertising.
The CCI determined that the 2021 WhatsApp policy update was imposed on a ‘take-it-or-leave-it’ basis, constituting an unfair condition under the Competition Act of 2002.
The commission stated that the policy requires all users to accept expanded terms for data collection and sharing within the Meta Group, without providing an option to opt out.
The order noted,
“Given the network effects and lack of effective alternatives, the 2021 update forces users to comply, undermining their autonomy, and constitutes an abuse of Meta’s dominant position. Accordingly, the Commission finds that Meta (through WhatsApp) has contravened Section 4(2)(a)(i) of the Act,”
Regarding data sharing, the CCI identified several violations by Meta:
(a) Sharing WhatsApp users’ data among Meta companies for purposes unrelated to providing WhatsApp services creates barriers for competitors, thus denying them market access.
(b) Meta has leveraged its dominant position in the OTT messaging app market to protect its standing in the online display advertising sector.
In response, the CCI directed WhatsApp to refrain from sharing data collected on its platforms with Meta or its products for a period of five years.
As a remedial measure, WhatsApp must provide a detailed explanation in its policy regarding the user data shared with other Meta companies.
The order stipulated,
“This explanation should specify the purpose of data sharing, linking each type of data to its corresponding purpose,”
Furthermore, WhatsApp was instructed not to make data sharing a prerequisite for users to access its services in India, specifically regarding data collected for advertising purposes.
In terms of sharing WhatsApp user data for purposes other than providing WhatsApp services, all users in India (including those who accepted the 2021 update) will be given:
a) The choice to manage such data sharing through an opt-out option prominently displayed via in-app notifications.
b) The option to review and modify their data sharing preferences through a prominent tab in the settings of the WhatsApp application.
Meta represented by Shardul Amarchand Mangaldas, while the informant, Internet Freedom Foundation, was represented by Saravada through Vivek Pandey and Biyanka Bhatia.