The National Company Law Appellate Tribunal (NCLAT) said Today (Jan 16) it will decide on January 23 whether to pause a Rs 213.14 crore penalty imposed on Meta by the Competition Commission of India (CCI). The case revolves around WhatsApp’s 2021 privacy policy, which mandated expanded data sharing with Meta, sparking concerns over user autonomy and data privacy. Meta’s lawyers argue that the CCI overstepped its authority, while the CCI insists on the policy’s unfair impact on users.
Thank you for reading this post, don't forget to subscribe!
NEW DELHI: The National Company Law Appellate Tribunal (NCLAT) today announced that it will decide on January 23 about Meta’s request to pause a penalty imposed by the Competition Commission of India (CCI).
The penalty of Rs 213.14 crore was placed on Meta due to issues related to WhatsApp’s 2021 privacy policy.
A bench led by Chairperson Justice (Retd.) Ashok Bhushan and Technical Member Arun Baroka stated:
“We have heard the counsels for parties. We find that submissions made by parties need consideration. We admit both the appeals. Orders on interim reliefs next Thursday.”
During the hearing, Senior Advocates Kapil Sibal and Mukul Rohatgi, representing Meta and WhatsApp, argued that the CCI had exceeded its powers by ruling on WhatsApp’s privacy policy.
They emphasized that this issue is already under review by a Constitution Bench of the Supreme Court.
ALSO READ: Meta Challenges Rs 213.14 Crore Penalty By CCI Over WhatsApp Privacy Policy: NCLAT
Kapil Sibal remarked:
“This has absolutely far-reaching implications in several dimensions. CCI has gone into privacy policy of the entity. It is before 5 judges of the Supreme Court. It has no jurisdiction to deal with it.”
Sibal also claimed that the CCI’s order severely impacted WhatsApp’s business model. He pointed out that India’s new data privacy law, set to take effect in 2025, would govern the matter, making the current order irrelevant.
Rohatgi elaborated:
“WhatsApp is free. Everybody is sending messages from Good Morning to Good Night. Nobody can survive on a free model. This is not a sinister sharing. This is a benign kind of a sharing. Therefore somebody has to understand what is this sharing. Today, if you use your credit card in any part of the world, the credit company will know where you are. This is only an update of 2016 policy. In the Constitution Bench matter specifically, this update was filed in an IA. Supreme Court refused to stay.”
On the other side, Advocate Samar Bansal, representing the CCI, argued that the Supreme Court case and the CCI investigation are unrelated. He stated:
“Data privacy law will only look at personal data, Competition law looks at business data. Indian users do not have an opt-out policy; it’s not the same case with Europe.”
The case arose from a decision by the CCI in November 2022. The CCI had penalized Meta Rs 213.14 crore for abusing its dominant position through WhatsApp’s updated 2021 privacy policy. It also ordered Meta and WhatsApp to stop certain behaviors and implement specific changes within a set timeline.
Under WhatsApp’s 2021 policy, effective February 8, 2021, users had to agree to expanded data sharing with Meta to continue using the platform. Unlike the 2016 policy, users no longer had the option to opt-out. This raised concerns about data privacy and user freedom, leading the CCI to investigate potential breaches of the Competition Act, 2002.
The CCI determined that WhatsApp had a dominant position in India’s smartphone messaging and online advertising markets. It concluded that the 2021 policy adopted a “take-it-or-leave-it” approach, which imposed unfair conditions on users, violated their autonomy, and breached the Competition Act, 2002.
The CCI directed WhatsApp not to share user data with Meta or its affiliated companies for five years. WhatsApp was also instructed to clearly explain how user data would be used and ensure that data sharing would not be mandatory for accessing its services in India.
Data sharing for advertising purposes was particularly restricted as part of this directive.
PREVIOUSLY IN NCLAT
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.
Click Here to Read Previous Reports on Meta
FOLLOW US ON YOUTUBE FOR MORE LEGAL UPDATES
