In a landmark decision, the Competition Commission of India (CCI) has imposed a whopping Rs 213.14 crore penalty on Meta Meta for abuse of dominant position.

The penalty relates to the controversial implementation of WhatsApp’s 2021 Privacy Policy, which mandated data sharing between WhatsApp and other Meta companies, raising serious concerns about user autonomy and market fairness.

This CCI move marks a significant moment in the regulatory oversight of digital platforms in India.

The competition watchdog also issued cease and desist instructions and also directed Meta and WhatsApp to implement certain behavioral remedies within a defined time frame.

Key findings

CCI identified two relevant markets: (i) OTT messaging applications via smartphones in India, where WhatsApp was considered dominant; (ii) online display advertising in India, where Meta holds a leading position.

The 2021 Privacy Policy required users to accept expanded data collection and mandatory sharing with Meta companies to continue using WhatsApp, removing the opt-out option available in the 2016 policy. The CCI ruled this take-it-or-leave-it approach as a condition unfair, being in breach of section 4(2)(a)(i) of the Competition Act, 2002.

In addition, the CCI found Meta guilty of creating barriers to entry for competitors in the online advertising market by exploiting WhatsApp user data (section 4(2)(c)); protecting its dominance in advertising by exploiting its market power in the messaging application space (section 4(2)(e)).

Orderly behavioral remedies

To curb anti-competitive practices, the CCI issued the following directives to Meta and WhatsApp:

1. No data sharing for ads: WhatsApp is not allowed to share user data with Meta companies for advertising purposes for five years.

2. Increased transparency: WhatsApp must clearly outline the data shared with Meta companies, linking each type of data to specific purposes.

3. Opt-out: Users must have the ability to opt-out of non-Service-related data sharing through in-app notifications and app settings.

4. Compliance with Policy Updates: All future policy updates must comply with these transparency and opt-out requirements.

Implications for Big Tech

This ruling sends a strong signal to tech giants operating in India about the need to comply with competition laws and user rights. The decision underscores CCI’s commitment to curb monopolistic practices in digital markets and ensure fair competition, sources said.

The Competition Commission of India (CCI) in 2021 directed an investigation into WhatsApp’s privacy policy update, raising concerns about its potential anti-competitive practices.

The policy update, announced in January 2021, forced users to share their data with Facebook (now Meta), WhatsApp’s parent company, or risk losing access to the platform. This has sparked widespread alarm about user privacy and data security, prompting a backlash from civil society, regulators and users around the world.

The CCI took cognizance of the update, finding it an abuse of WhatsApp’s dominant position in the instant messaging market under Section 4 of the Competition Act, 2002.

Key concerns include:

1. Exploitation of users: The policy was seen as exploitative, forcing users to accept terms that harm their privacy due to WhatsApp’s market dominance.

2. Anti-competitive Implications: Sharing user data with Meta could strengthen its market position in digital advertising, potentially foreclosing competition.

3. Lack of transparency: The CCI highlighted concerns about the opacity of the policy, where users were not given meaningful choice or clarity about the use of data.

The investigation also aligns with global scrutiny of big tech firms over data privacy and competition concerns. In particular, regulators in Europe have fined WhatsApp for similar privacy violations.

Through its investigation, the CCI aims to assess whether the policy constitutes an abuse of a dominant position and violates Indian competition law. This case highlights the intersection of privacy, data protection and competition law, setting a precedent for regulatory oversight in the digital economy.