The Competition Commission of India (CCI) has imposed a significant penalty of ₹213.14 crore on Meta, the parent company of WhatsApp, for abusing its dominant market position. The ruling pertains to WhatsApp’s 2021 privacy policy update involving controversial data collection and sharing practices with other Meta entities.
In addition to the ₹213.14 crore monetary penalty on Meta, the CCI issued a cease-and-desist order and mandated behavioural changes be implemented within a set timeframe. During its investigation, the CCI identified two key markets in India: the over-the-top (OTT) messaging app market and the online display advertising market.
CCI Findings
The Commission concluded that WhatsApp, operated by Meta, holds a dominant position in the OTT messaging app market in India, while Meta maintains a leading position in the online display advertising market.
The controversy began in January 2021 when WhatsApp introduced updates to its privacy policy and terms of service. Effective February 8, 2021, the new policy required users to accept expanded data-sharing terms with other Meta companies. Unlike the 2016 policy, which allowed users to opt out of data sharing with Facebook, the 2021 update eliminated this option, leaving users no choice but to comply or lose access to the app.
The CCI found this “take-it-or-leave-it” policy to be an unfair condition under the Competition Act, violating Section 4(2)(a)(i). The Commission stated that WhatsApp’s dominant position, coupled with limited alternatives for users, coerced them into accepting the terms, undermining their autonomy.
The investigation also revealed that the expanded data sharing between Meta entities created significant entry barriers for competitors, violating Section 4(2)(c) of the Act. Moreover, Meta allegedly leveraged its dominance in the OTT messaging market to strengthen its position in the online display advertising market, breaching Section 4(2)(e).
Mandated Remedies
To mitigate anti-competitive harm, the CCI directed Meta and WhatsApp to adopt several measures:
- Restricted Data Sharing: WhatsApp has been barred from sharing user data with other Meta companies for advertising purposes for five years. After this period, specific regulations will govern such data sharing.
- Enhanced Transparency: WhatsApp must clearly explain the types of user data shared with other Meta entities, specifying their purposes. Data sharing unrelated to WhatsApp services cannot be a condition for app usage in India.
- User Autonomy: All users, including those who accepted the 2021 update, must be provided with an opt-out option for non-service-related data sharing through a prominent in-app notification. Users should also have access to a clear tab in the app’s settings to review and modify their choices.
- Compliance in Updates: Future privacy policy updates must adhere to these requirements.
Meta’s Response
Meta has announced its intent to appeal the CCI’s decision. A company spokesperson asserted that the 2021 update did not compromise the privacy of personal messages and was presented as an optional feature for users.
“We ensured no accounts were deleted or lost functionality due to this update. The update aimed to introduce optional business features and transparency in data usage. WhatsApp has continued to be a valuable platform for users, businesses, and government services, contributing significantly to the Indian economy,” the spokesperson said.
Meta emphasized its commitment to finding a resolution that allows the company to continue delivering services that meet user and business expectations.
(With inputs from OpIndia)
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