In a landmark decision, the Competition Commission of India (CCI) has imposed a hefty penalty of ₹213.14 crore on Meta for abusing its dominant position.
The penalty pertains to the controversial implementation of WhatsApp’s 2021 Privacy Policy, which mandated data sharing between WhatsApp and other Meta companies, raising serious concerns about user autonomy and market fairness.
This CCI move marks a significant moment in India’s regulatory oversight of digital platforms.
The competition watchdog has also issued cease-and-desist directions and also directed Meta and WhatsApp to implement certain behavioural remedies within a defined timeline.
Key Findings
The CCI identified two relevant markets: (i) OTT messaging apps via smartphones in India, where WhatsApp was deemed dominant; (ii) online display advertising in India, where Meta holds a leading position.
The 2021 Privacy Policy required users to accept expanded data collection and mandatory sharing with Meta companies to continue using WhatsApp, removing the opt-out option available under the 2016 policy. The CCI ruled this “take-it-or-leave-it” approach as an unfair condition, constituting a violation of Section 4(2)(a)(i) of the Competition Act, 2002.
Additionally, the CCI found Meta guilty of creating entry barriers for competitors in the online display advertising market by leveraging WhatsApp user data (Section 4(2)(c)); protecting its dominance in advertising by exploiting its market power in the messaging app space (Section 4(2)(e)).
Behavioural Remedies Ordered
To curb the anti-competitive practices, the CCI has issued the following directives to Meta and WhatsApp:
1. No Data Sharing for Ads: WhatsApp is prohibited from sharing user data with Meta companies for advertising purposes for five years.
2. Enhanced Transparency: WhatsApp must clearly outline the data shared with Meta companies, linking each type of data to specific purposes.
3. Opt-Out Option: Users must have the ability to opt out of non-service-related data sharing via in-app notifications and app settings.
4. Policy Updates Compliance: All future policy updates must adhere to these transparency and opt-out requirements.
Implications for Big Tech
This ruling sends a strong signal to tech giants operating in India about the need to respect competition laws and user rights. The decision emphasises the CCI’s commitment to curbing monopolistic practices in digital markets and ensuring fair competition, sources said.
The Competition Commission of India (CCI) had in 2021 directed an investigation into WhatsApp’s privacy policy update, raising concerns about its potential anti-competitive practices.
The policy update, announced in January 2021, mandated users to share their data with Facebook (now Meta), WhatsApp’s parent company, or risk losing access to the platform. This raised widespread alarm over user privacy and data security, prompting a backlash from civil society, regulators, and users worldwide.
The CCI took suo moto cognizance of the update, viewing it as an abuse of WhatsApp’s dominant position in the instant messaging market under Section 4 of the Competition Act, 2002.
Key concerns include:
1. Exploitation of Users: The policy was seen as exploitative, forcing users to accept terms detrimental to their privacy due to WhatsApp’s market dominance.
2. Anti-competitive Implications: The sharing of user data with Meta could strengthen its market position in digital advertising, potentially foreclosing competition.
3. Lack of Transparency: The CCI highlighted concerns about the opacity of the policy, where users were not given a meaningful choice or clarity about data usage.
The investigation also aligns with global scrutiny of big tech firms over data privacy and competition concerns. Notably, regulators in Europe fined WhatsApp for similar privacy violations.
Through its investigation, the CCI assessed that the policy constituted an abuse of dominance and contravenes India’s competition law. This case underscored the intersection of privacy, data protection, and competition law, setting a precedent for regulatory oversight in the digital economy.