Meta Gets Partial Relief In Appeal Over WhatsApp Data Sharing Ban

Putting an end to an almost year-long legal face off between tech giant Meta and India’s competition watchdog Competition Commission of India’s (CCI), the National Company Law Appellate Tribunal (NCLAT) has set aside a critical section of the CCI order from 2024 while retaining the monetary penalty imposed on Meta. 

The NCLAT has overturned the five-year ban on WhatsApp sharing user data with Meta Platforms for advertising purposes. The appellate tribunal upheld the INR 213.14 Cr penalty (about $25.6 Mn) imposed on Meta.

In its judgement, the NCLAT said that CCI’s directions to Meta to cease and desist WhatsApp from sharing user data collected on its platform within its ecosystem of companies for advertising was not sustainable. 

However, the appellate tribunal upheld CCI’s directions on user data collected on WhatsApp with other Meta Companies or Meta Company Products for purposes other than for providing WhatsApp services, allowing users to opt-out of data sharing and mandating all future policy updates to be compliant of the requirements. 

NCLAT observed that Meta vehemently opposed the imposition of monetary penalty on it, calling it “disproportionate and unfair”. Claiming that it had not violated the Competition Act, the tech giant maintained that its actions relate to privacy and data protection, not competition issues; that it operates in a highly competitive market and that it neither holds nor abuses any dominant position. 

Further, Meta argued that any alleged contravention should be attributed solely to WhatsApp, as it operates as a separate legal entity. It claimed that Meta’s activities — particularly online display advertising— were independent of WhatsApp’s messaging services, and thus penalties or findings against WhatsApp should not extend to Meta.

Rebutting the arguments, the CCI upheld penalties on Meta and WhatsApp, finding WhatsApp abused its dominance in OTT messaging and Meta engaged in anti-competitive conduct in online display advertising through excessive data sharing. It held both jointly liable, citing Meta’s full control over WhatsApp and integration of operations and revenues.

“We have gone through the methodology adopted by the Commission in calculating the penalty and we don’t find any infirmity. We therefore do not find justification in ordering review of the penalty,” the NCLAT said.

In a hearing in September, Meta argued that the CCI’s case rested on assumptions about potential future conduct rather than proven violations. The tech giant had also argued that the regulator had not demonstrated how limited data sharing from optional business features—such as Click-to-WhatsApp Ads—with Meta entities had adversely impacted competition in the online display advertising market.

The NCLAT had earlier reserved its order on the matter on September 27, asking the involved parties to present written notes, not exceeding 10 pages, by October 6.

At the heart of the issue is the CCI verdict on Meta. On Nov 18, 2024, the CCI found WhatsApp abused its dominance via its 2021 policy forcing users to share data with Meta, fined Meta INR 213.14 Cr and prohibited such data-sharing for five years.

Following this, Meta challenged the CCI’s order in January. The NCLAT granted the company an interim relief, temporarily staying the five-year data-sharing ban for advertising purposes.