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Synopsis

The Competition Commission of India (CCI) has  imposed a penalty of ₹213.14 crore on Meta Platforms for abusing its dominant position through WhatsApp’s controversial 2021 privacy policy update. The Commission also issued cease-and-desist orders and directed Meta and WhatsApp to implement behavioural remedies within a defined timeline.

The policy, which mandated data sharing with Meta companies, was found to be anti-competitive. “Under the previous privacy policy dated 25.08.2016, WhatsApp users were given the option to decide whether they wanted to share their data with Facebook. However, with the latest policy update in 2021, WhatsApp made data sharing with Meta mandatory for all users, removing the earlier option to opt out. As a result, users had to accept the new terms, which include data sharing with Meta, in order to continue using the platform,” the press release issued by CCI highlighted.

The investigation revealed that WhatsApp’s 2021 policy update forced users to accept expanded data-sharing terms with Meta, without providing an opt-out option, unlike the 2016 policy. This change, effective February 8, 2021, required users to either accept the terms or lose access to WhatsApp.

The CCI examined two key markets:

1. OTT Messaging Apps through Smartphones in India: WhatsApp was found dominant in this market.
2. Online Display Advertising in India: Meta was determined to hold a leading position.

The CCI concluded that the policy violated the Competition Act by:

1. Unfair Conditions (Section 4(2)(a)(i)): The "take-it-or-leave-it" approach imposed unfair terms, undermining user autonomy due to the absence of effective alternatives.
2. Denial of Market Access (Section 4(2)(c)): Sharing user data among Meta companies created barriers for competitors in the online display advertising market.
3. Leveraging Dominance (Section 4(2)(e)): Meta used its dominance in OTT messaging to bolster its position in online display advertising.

In furtherance, the CCI directed Meta and WhatsApp to restrict data sharing with Meta companies for advertising purposes for five years. Additionally, WhatsApp must enhance transparency by providing a clear explanation of the purpose and scope of user data sharing. Importantly, sharing data for non-advertising purposes cannot be made a condition for accessing WhatsApp services. Users must also be given an opt-out option, along with tools to manage and modify their data-sharing preferences within the app. Furthermore, all future privacy policy updates must strictly comply with these directives.