Meta Platforms Inc. has appealed to the NCLAT against the Rs 213.14 crore penalty imposed by the CCI for abusing its dominant position through WhatsApp’s 2021 privacy policy, which mandated expanded data sharing with Meta. The CCI deemed this a “take-it-or-leave-it” approach, violating user autonomy and competition laws. Meta and WhatsApp were directed to cease unfair practices, restrict data sharing for five years, and provide detailed transparency in their policies. The case, deemed significant for the industry, will be heard on January 16, 2025.
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Meta Platforms Inc., formerly Facebook, has filed an appeal in the National Company Law Appellate Tribunal (NCLAT) against the Competition Commission of India (CCI) order imposing a penalty of Rs 213.14 crore for abusing its dominant position in implementing WhatsApp’s 2021 privacy policy.
Senior Advocates Kapil Sibal and Mukul Rohatgi, representing Meta and WhatsApp respectively, urged the appellate tribunal to list the case for hearing on January 16, 2025. Highlighting the case’s significance, they stated:
“The order has huge implications. We request your lordships to take it up yourself. Since it is going to affect the entire industry, please take it up on January 16.”
A coram of Justice (retd) Ashok Bhushan and Technical Members Barun Mitra and Arun Baroka agreed to hear the case on the requested date.
Background on the Penalty
The penalty stems from a November 18, 2024 order by the CCI, which found that Meta, through WhatsApp, abused its market dominance by implementing a “take-it-or-leave-it” privacy policy in 2021.
The policy required users to accept expanded data-sharing terms with Facebook to continue using the platform, removing the opt-out option available in its earlier 2016 policy.
Key Findings of the CCI
The CCI investigation revealed that Meta, via WhatsApp, held a dominant position in two critical markets in India: smartphone messaging apps and online display advertising.
The Commission found that the mandatory data-sharing terms imposed unfair conditions, violating the Competition Act, 2002.
The 2021 privacy update not only undermined user autonomy but also constituted an abuse of Meta’s dominant market position, as per the CCI.
The watchdog stated that WhatsApp’s policy forced users into unfair agreements, leaving them no choice but to comply.
Directions by the CCI
The CCI imposed a penalty of Rs 213.14 crore and issued the following directives to Meta and WhatsApp:
- Cease-and-Desist Orders:
Meta and WhatsApp were directed to halt practices that violated competition laws. - Restriction on Data Sharing:
For five years, WhatsApp was prohibited from sharing data collected on its platform with Meta or its associated products. - Transparency in Data Sharing:
WhatsApp was ordered to include a detailed explanation in its privacy policy about what user data is shared with other Meta companies.
“This explanation should specify the purpose of data sharing, linking each type of data to its corresponding purpose,” the CCI stated. - No Mandatory Data Sharing:
Data sharing for advertising purposes must not be a mandatory condition for availing WhatsApp’s services in India.
WhatsApp’s 2021 Policy Controversy
In January 2021, WhatsApp announced updates to its terms of service and privacy policy, which became effective on February 8, 2021.
Unlike its 2016 policy, which allowed users to opt out of data-sharing with Facebook, the new terms made data sharing mandatory.
This change sparked widespread criticism and concerns over user privacy, leading to the CCI’s probe.
The outcome of Meta’s appeal in the NCLAT is awaited and could have far-reaching implications for user data privacy and competition laws in India.
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