WhatsApp has been under the radar of the Competition Commission of India (CCI) for a long time with regards to its 2021 privacy policy update, where certain user data will be shared with its parent Meta. Now the situation has intensified with the likelihood that the commission might impose a penalty on the social media platform for anti-competitive practices.
A report by Mint published on October 14 highlights that the CCI will soon issue an order on the case. Further, the order might also attract a penalty. The commission has reportedly prepared a draft order on the basis of the report made by the Directorate General (DG).
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WhatsApp Clarifies Data Privacy Policy
The 2021 privacy policy update by WhatsApp is the heart of the controversy. After being implemented in January 2021, the policy received criticism, with several people shifting to social media platforms such as Signal and Telegram.
Soon after this, the social media platform issued a clarification where it highlighted that it does not read and share personal messages with its parent company, Meta. Further, the company mentioned that the features are related to optional business features on the messaging app.
“Neither WhatsApp nor Meta can read your messages or hear your calls with your friends, family, and co-workers on WhatsApp. Whatever you share, it stays between you,” the company said in a blog post.
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However, Meta might use commercial activities for targeted ads, the company highlighted. The messaging app indicated that the policy update focuses on optional business messaging, where businesses may use Meta’s hosting services and could use conversation data for marketing, including ads on Meta.
The company said in a blog post, “You may see an ad on Facebook or Instagram with a button to message a business using WhatsApp. If you have WhatsApp installed on your phone, you’ll have the option to message that business. Meta may use the way you interact with these ads to personalize the ads you see on Facebook or Instagram.”
Soon after this new policy was implemented, it was challenged in the Delhi High Court via a Public Interest Litigation (PIL) in January 2021. The petitioner, Chaitanya Rohilla, a lawyer, highlighted that the policy was a violation of the right to privacy. Rohilla also highlighted that the new policy was rolled out without the permission of the government.
Since then, this policy has become a topic of discussion, with several appeals filed by the social media giant against a probe on the same. In March 2021, the CCI ordered an investigation to understand the “full extent, scope, and impact” of the new privacy policy by WhatsApp. The CCI mentioned that though the matter was related to privacy, it also talked about access to data, which in turn became a competition issue.
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On August 22, 2022, the Delhi High Court dismissed a plea by WhatsApp against the CCI probe into its privacy policy. The court said that the appeals filed by the appellants are devoid of merit. The court reportedly observed, “The 2021 policy, however, places its users in a 'take-it-or-leave-it' situation, virtually forcing its users into an agreement by providing a mirage of choice and then sharing their sensitive data with Facebook companies envisaged in the policy.”
Eventually, the Supreme Court, in October 2022, also refused to halt the CCI probe. The court said that the CCI has the jurisdiction to look at violations of competitive aspects.
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Amid the ongoing probe, a spokesperson of WhatsApp reportedly said, “WhatsApp gave users the choice of accepting the Privacy Policy Update, and users who chose not to accept the update continue to use WhatsApp to communicate with friends and family without having their accounts deleted or losing functionality.”
CCI's Role in Assessing Dominant Position
The privacy policy introduced in 2021 has been a concern for regulators and consumers alike, raising questions about data privacy and competition implications, say experts.
“However, from WhatsApp’s perspective, the policy was designed to offer enhanced functionality and integration across Meta’s services, enabling users to benefit from a more connected digital experience. This argument has been raised in past cases, where WhatsApp has defended the policy as pro-innovation and in the interests of user convenience, not as a means to stifle competition,” says Purusharth Singh, co-founder, White & Brief’s Sidebar.
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Experts say that the CCI must assess whether WhatsApp holds a dominant position in this case, whether its privacy policy terms constitute an unfair burden and how the policy impacts market competition. Section 4 of the Competition Act addresses the prohibition of abuse of dominant position, restricting certain behaviors by dominant players in relevant Indian markets as outlined in this section.
A question that looms now is: how much authority do social media platforms have with regards to user data? “The authority that a social media platform has in respect of the personal data of the users would eventually depend on and be governed by the data privacy law, i.e., the Digital Personal Data Protection Act, 2023 (DPDPA). Though the DPDPA was passed last year, its provisions have not come into force as yet as the rules to be framed under the legislation are awaited,” says Akshayy S. Nanda, Partner at Saraf and Partners.
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The DPDPA states that social media platforms must act in the best interest of their users by handling personal data responsibly.
However, the matter at hand raises complex questions for the authorities to resolve. “This matter will pose complex questions for the authorities to resolve, such as the implications if the CCI determines that WhatsApp's privacy policy contravenes competition laws, but it is ultimately upheld as valid under the DPDPA,” says Nanda.
Another challenge Nanda highlights is whether the CCI can consider WhatsApp's user data sharing with group companies for profiling and targeted ads illegitimate if users have given valid consent, on the grounds that it provides WhatsApp with an unfair competitive advantage. What remains to be seen is how authorities navigate the social media space as usage of social media platforms becomes an integral part of our lives.
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