Meta-CCI Row: Appellate Tribunal Stays Five-Year Ban Against WhatsApp
The NCLAT has, however, upheld the CCI direction that directed WhatsApp to provide an 'opt-out' option from data sharing so that there is choice to manage the sharing of such data.
In a big win for Mark Zuckerberg's Meta Platforms Inc., the National Company Law Appellate Tribunal on Thursday stayed the five-year ban imposed on WhatsApp by the Competition Commission of India for sharing user data with other Meta group companies for advertising purposes.
The appellate tribunal also stayed the Rs 213-crore penalty subject to a 50% deposit. Meta has already deposited 25% of the amount.
While staying the five-year ban, the NCLAT said that if the CCI's order had been allowed to continue, it would have led to a collapse of WhatsApp's business model. "WhatsApp is a free application for its users," the tribunal said.
It noted that a five-judge bench of the apex court was already hearing a matter related to WhatsApp's 2021 privacy policy and that no stay has been imposed on it as of yet.
The NCLAT, however, did not grant any stay on WhatsApp's data sharing model for non-advertising purposes.
The appellate tribunal has upheld the CCI direction that directed WhatsApp to provide an 'opt-out' option from data sharing for non-advertising purposes, so that there is choice to manage the sharing of such data.
The NCLAT has also upheld the direction, which said that WhatsApp's policy should include a detailed explanation of the user data shared with other Meta companies for non-advertising purposes.
Stating that it is an important case, the NCLAT fixed the next date of hearing in the matter for March 17.
During the last hearing, Meta Platforms Inc. and WhatsApp LLC argued that CCI's order against WhatsApp's 2021 privacy policy has far-reaching implications and if allowed to continue, will "destroy" its business model itself.
The CCI, on the other hand, maintained that if the appellate tribunal stays the order, then it will end up setting a dangerous precedent.
In November, the CCI imposed a penalty of Rs 213.1 crore on Meta, the parent entity of WhatsApp, for "abusing its dominant position" in the implementation of the messaging platform's privacy policy in 2021.
The action against Meta relates to how the privacy policy "was implemented and how user data was collected and shared with other Meta companies".
The CCI issued cease-and-desist directions and also directed Meta and WhatsApp to implement certain behavioural remedies within a defined timeline.
Through its investigation, the CCI concluded that the 2021 policy update by WhatsApp on a 'take-it-or-leave-it' basis constituted an imposition of unfair conditions under the Competition Act, 2002.
It compels all users to accept expanded data collection terms and sharing of data within Meta Group without any opt-out. Given the network effects and lack of effective alternatives, the 2021 Update forces users to comply, undermining their autonomy and constitutes an abuse of Meta's dominant position.
Also, since Meta shared WhatsApp users' data with other group companies and created an entry barrier for its rivals, it was found to abuse its dominant position in two markets — the OTT messaging app market and the online display advertising market, the antitrust regulator said.
As part of the penalty, WhatsApp was directed not to share user data collected on its platform with other Meta companies for advertising purposes for five years.
After five years, WhatsApp's policy will be required to provide a thorough justification for the user data it shares with other Meta companies.
Furthermore, the sharing of user data collected on WhatsApp with other Meta companies for purposes other than providing the messaging app's services will not be a condition for WhatsApp users in India.
The CCI noted that as a remedy, all users in India, including those who have accepted the 2021 update, will have the option to opt out through an in-app notification and to review and modify their choice regarding such data sharing through the WhatsApp app.
In response, a Meta spokesperson said the company disagrees with the CCI's ruling and plans to appeal against the fine and the curbs.
"The 2021 update offered users a choice and did not alter the privacy of their personal messages. We also ensured no one would have their accounts deleted or lose functionality of the WhatsApp service because of this update," the spokesperson said.
