WhatsApp Privacy Policy Case: CCI Slaps INR 213 Cr Penalty On Meta

In a major blow to WhatsApp, the Competition Commission of India (CCI) has slapped a penalty of INR 213.14 Cr on its parent Meta for abusing its dominant position.

The penalty pertains to WhatsApp’s 2021 privacy policy case. In a statement, the competition watchdog said it has also issued “cease-and-desist directions” and directed both Meta and WhatsApp to implement certain “behavioural remedies” within a “defined timeline”.

“The Competition Commission of India today imposed a penalty of INR 213.14 Cr on Meta for abusing its dominant position. This relates to how WhatsApp’s 2021 Privacy Policy was implemented and how user data was collected and shared with other Meta companies,” the statement said. 

WhatsApp published its contentious privacy policy in 2021, which said users who would not accept the amended policy would not be able to access WhatsApp chats or groups. The policy also said that WhatsApp would share more user data with parent company Facebook, particularly related to business transactions on WhatsApp, other activities, as well as device-level information from users.

The aftermath saw a huge controversy as users slammed the new policy. Two individuals also challenged the policy, which paved the way for more data sharing between WhatsApp and Meta, in the Delhi High Court (HC), contending that it was a violation of their privacy and free speech.

The CCI’s fine is a result of a two-year long probe into the social media major that spanned two relevant markets – OTT messaging apps and online display advertising. So, what did the watchdog rule?

The Finer Print

In the statement, the Commission concluded that the 2021 privacy policy update’s “take-it-or-leave-it” approach constituted an imposition of unfair conditions under the Competition Act.

It also added that forcing users to comply with the policy undermined customer autonomy and constituted an abuse of Meta’s dominant position. 

The competition watchdog said that data sharing between Meta and WhatsApp could have resulted in a barrier to entry for the rivals of the social media juggernaut, adding that the policy could have resulted in denial of market access to other players in the display advertisement and messaging app markets. 

Accordingly, the CCI has now directed the social media juggernaut to undertake a series of sweeping changes to its India operations. It has barred WhatsApp from sharing its user data with other Meta companies for advertising purposes for a period of next five years. 

Additionally, the competition watchdog has ordered Meta and WhatsApp to undertake the following changes with regards to data sharing for advertising-related matters post the five year timeline and for non-advertising purposes:

• WhatsApp’s policy should include a detailed explanation of the user data shared with other Meta companies or related company products
• The explanation should specify the purpose of data sharing, linking each type of data to its corresponding purpose
• Sharing of user data between WhatsApp and other Meta companies, other than for providing services, shall not be made a condition for users to access the app in India
• All WhatsApp users should be the given choice to manage this data sharing by way of an opt-out option “prominently” through an in-app notification
• WhatsApp will have to offer the users the option to review and modify their choice with respect to such sharing of data through a prominent tab in settings of WhatsApp app
• All future policy updates shall also comply with these requirements

It is pertinent to note that the electronics and information technology ministry had also filed an affidavit in the Delhi HC in April 2021, challenging the privacy policy from a data privacy perspective. The ministry had then claimed that the policy violated IT Rules, 2011 on five counts. 

WhatsApp had also filed a petition in the Delhi HC for a stay on the CCI probe in May 2021 but the court ruled in favour of the CCI. The messaging platform appealed the order before a two-judge bench of the Delhi HC but the bench yet again ruled in favour of the CCI.

Subsequently, in February 2023, the Supreme Court (SC), while hearing a plea by Meta, directed WhatsApp to publicise that users in India are not required to accept the 2021 privacy policy update to use the app.

It is pertinent to note that India is the biggest market globally for WhatsApp, with 535.8 Mn users.