1. Case Overview and Parties
- Parties Involved: The Opposite Parties (OPs) are WhatsApp LLC (OP-1) and its parent company, Meta Platforms, Inc. (OP-2). The informants included individual Prachi Kohli and the Internet Freedom Foundation (IFF).
- The Trigger: In January 2021, WhatsApp notified users of a mandatory update to its Privacy Policy and Terms of Service. Users were required to accept these terms by February 8, 2021, to continue using the application.
2. Core Issues and Allegations
The primary concern was that the 2021 update removed the choice previously available to users (in the 2016 policy) to opt out of sharing their WhatsApp data with Facebook (now Meta). The investigation focused on:
- Abuse of Dominant Position: Whether Meta utilized its dominance in the messaging market to impose unfair conditions and leverage data for its advertising business.
- “Take-it-or-leave-it” Terms: The mandatory nature of the update was alleged to be an exploitative “imposition” of unfair conditions.
- Cross-Market Leveraging: Using data collected from WhatsApp users to gain an unfair competitive advantage in the online display advertising market.
3. Relevant Market and Dominance
The Commission delineated two relevant markets:
- Market for Over-the-Top (OTT) messaging apps through smartphones in India.
- Market for online display advertising in India.
Dominance Finding: Meta was found to be dominant in the OTT messaging market. This dominance is sustained by massive network effects (a large user base making it difficult for users to switch) and the lack of comparable competitors in India.
4. Key Findings of the Commission
- Unfair Imposition: The CCI concluded that making data sharing a prerequisite for using the service constituted an “unfair condition” under Section 4(2)(a)(i) of the Competition Act. It deprived users of autonomy and a genuine choice.
- Excessive Data Collection: The update expanded the scope of data collection (including metadata, business interactions, and transaction data) beyond what was strictly necessary for providing messaging services.
- Barrier to Entry: By aggregating data from WhatsApp, Meta created a “self-reinforcing cycle” that acts as a barrier to entry for smaller advertisers and rivals who cannot replicate such vast data sets.
- Non-Price Parameter: The Commission noted that privacy is a critical non-price parameter of competition. Degrading privacy protections while maintaining a dominant position was seen as an abuse of market power.
5. Defense by Meta/WhatsApp
- Jurisdictional Objection: The OPs argued that the matter was a “data protection and privacy” issue currently being adjudicated by the Supreme Court and High Courts, and thus outside the CCI’s purview.
- Functionality: They claimed that even after May 2021, users did not lose functionality if they hadn’t accepted the update.
- Service Necessity: They maintained that data sharing was essential for infrastructure, safety, and optional business features
6. Final Order and Remedies
The CCI found Meta and WhatsApp in contravention of Sections 4(2)(a)(i), 4(2)(c), and 4(2)(e) of the Act. It issued the following directions:
- Cease and Desist: The OPs must stop the anti-competitive data-sharing practices.
- Data Sharing Ban: WhatsApp is prohibited from sharing user data with other Meta companies for advertising purposes for five years.
- Opt-out Provision: For non-advertising purposes (other than providing the core service), WhatsApp must provide users in India a clear opt-out choice through a granular notification.
- Monetary Penalty: A penalty of Rs. 213.14 crore was imposed on Meta for its abusive conduct.