The National Company Law Appellate Tribunal (NCLAT) on Tuesday partly upheld the Competition Commission of India’s findings that WhatsApp was abusing its dominant position but set aside the decision that prohibited the Meta Platforms-owned social media platform from sharing user data with Meta companies for advertising purposes.
It also upheld the penalty of Rs 213 crore imposed by the competition watchdog on the US-headquartered firm last November.
A bench comprising Justice Ashok Bhushan, chairperson, and Arun Baroka, member (technical), ruled that WhatsApp, through its 2021 policy, forced users to accept its data-sharing terms without offering an opt-out provision.
“We find that mandatory acceptance of broad and vague data-sharing terms amounted to coercion and an unfair condition on users. We thus find a violation of competition law by WhatsApp through the introduction of WhatsApp Policy 2021 and its subsequent conduct,” the judgment stated.
It also said that cross-platform data sharing between WhatsApp and Meta enhanced the latter’s advantage in the display advertising market, creating an entry barrier for rival firms in the digital advertising segment.
The judgment further noted that since WhatsApp is fully controlled by Meta, it gives rise to special circumstances leading to abuse of dominant position, and stated that “denial of market 2 is happening.”
However, the appellate tribunal held that “it cannot be concluded that it (Meta) has leveraged its dominance in one market (over-the-top messaging) to protect or extend dominance in another (online display advertising), mainly for the reason that WhatsApp and Meta are distinct legal entities.”
The NCLAT also upheld the competition watchdog’s direction requiring WhatsApp to explain the details of user data shared with other group companies. The CCI had asked WhatsApp to “specify the purpose of data sharing, linking each type of data to its corresponding purpose,” when shared for purposes other than advertising.
WhatsApp had argued that the data shared with group companies was a subject matter that fell within the ambit of privacy and data protection law.
“We cannot accept the contentions of the appellant that the impugned order imposes remedies on WhatsApp/Meta which are unnecessary, disproportionate, and squarely fall within the realm of privacy and data protection law,” the judgment said.
It also upheld the penalty of Rs 213 crore imposed by the competition watchdog on the US-headquartered firm last November.
A bench comprising Justice Ashok Bhushan, chairperson, and Arun Baroka, member (technical), ruled that WhatsApp, through its 2021 policy, forced users to accept its data-sharing terms without offering an opt-out provision.
“We find that mandatory acceptance of broad and vague data-sharing terms amounted to coercion and an unfair condition on users. We thus find a violation of competition law by WhatsApp through the introduction of WhatsApp Policy 2021 and its subsequent conduct,” the judgment stated.
It also said that cross-platform data sharing between WhatsApp and Meta enhanced the latter’s advantage in the display advertising market, creating an entry barrier for rival firms in the digital advertising segment.
The judgment further noted that since WhatsApp is fully controlled by Meta, it gives rise to special circumstances leading to abuse of dominant position, and stated that “denial of market 2 is happening.”
However, the appellate tribunal held that “it cannot be concluded that it (Meta) has leveraged its dominance in one market (over-the-top messaging) to protect or extend dominance in another (online display advertising), mainly for the reason that WhatsApp and Meta are distinct legal entities.”
The NCLAT also upheld the competition watchdog’s direction requiring WhatsApp to explain the details of user data shared with other group companies. The CCI had asked WhatsApp to “specify the purpose of data sharing, linking each type of data to its corresponding purpose,” when shared for purposes other than advertising.
WhatsApp had argued that the data shared with group companies was a subject matter that fell within the ambit of privacy and data protection law.
“We cannot accept the contentions of the appellant that the impugned order imposes remedies on WhatsApp/Meta which are unnecessary, disproportionate, and squarely fall within the realm of privacy and data protection law,” the judgment said.
