corporate law

Published on 5 April 2025

CCI's Landmark Decision Against WhatsApp and Meta: Implications for Data Privacy in India

Introduction

Competition Commission of India (CCI) has recently acted decisively against WhatsApp and its parent company, Meta Platforms Inc., for suspicious data-sharing practices. As WhatsApp accounts for over 500 million users in India, the move marks a milestone for data privacy, competition law, and digital advertising in India. This article discusses the CCI directive, ongoing legal battle, government position, and overall implications for consumers, businesses, and the technology sector.

CCI's WhatsApp–Meta Data Sharing Order: Overview

On November 18, 2024, the CCI issued a major order under Section 27 of the Competition Act, 2002, prohibiting WhatsApp from sharing user data with Meta and its group entities (which include Facebook and Instagram) for advertisement for five years. This unprecedented action came on the heels of WhatsApp's 2021 Privacy Policy change that required sharing data with Meta as a prerequisite to further usage of the messaging application—contrasting sharply with its prior policies that provided for user opt-out.

Key Findings and Directives by the CCI:

  • Abuse of Dominant Position: The CCI stated that WhatsApp, as the market leader in the OTT messaging platform, exploited its dominance to unfairly enhance Meta's might in online advertising.

  • Unfair 'Take-It-or-Leave-It' Policy: The forced acceptance of taking the 2021 update was a forced imposition of unfair terms and was deemed an abuse of WhatsApp's market dominance.

  • Penalty and Cease-and-Desist Order: A penalty of ₹213.14 crore (~$25 million) was levied on Meta, and it was directed to cease all data-sharing for the purpose of advertisements for five years.

  • Transparency and User Choice: WhatsApp has to clearly specify what user data is shared, why it is shared, and provide an easy opt-out for non-exempt data sharing.

Example of Impact:

Imagine that a small Indian online store relies on Facebook targeted advertisements. Previously, access to WhatsApp data offered a competitive advantage to larger enterprises. The directive by the CCI aims at leveling the ground, hence giving a fair chance of play to small businesses in online marketing.

The Legal Challenge: NCLAT's Interim Stay

WhatsApp and Meta subsequently challenged the CCI order in the National Company Law Appellate Tribunal (NCLAT) at once. An interim stay on the five-year ban was on January 23, 2025, ordered by the NCLAT that suspended the CCI directive for data sharing for advertisements temporarily. The matter remains sub-judice, with the court likely to decide.

Key Legal Arguments

  • WhatsApp/Meta's Position: The companies contend that the CCI's order jeopardizes their business model in India, with potential modification of their features. The companies also contend that the CCI lacks jurisdiction over issues related to data privacy, which are governed by the Digital Personal Data Protection Act, 2023 (DPDP Act).

  • Counter-Argument by CCI: The CCI determines its jurisdiction over the anti-competitive conduct, such as data abuse ones. This is based on the fact that WhatsApp's policy update compelled users to accept exploitative terms.

Partial Stay Details:

The NCLAT stay is not complete. The prohibition on data sharing for advertising continues to be stayed, but requirements for increased transparency and user control over non-advertising data sharing continue. Meta also needs to deposit 50% of the imposed penalty subject to the appeal.

Government of India's Response: Oversight and Policy Implications

In a recent session of Rajya Sabha, Smt. Priyanka Chaturvedi raised an objection to the CCI order and the government approach to prevent misuse of WhatsApp information during the interim stay. Minister of State in the Ministry of Corporate Affairs Shri Harsh Malhotra testified to the following:

  • The CCI order is still temporarily stayed by the NCLAT.
  • The government is keeping the developments in mind but has not initiated any further action subject to legal proceedings.

Subtle Insights: Relevance of This Case

  1. Data Privacy as a Competition Matter: The CCI's determination that data privacy is a form of non-price competition connects handling of user data with consumer choice and fairness in the market, establishing a precedent for future regulation.

  2. Impact on Digital Advertising: Combination of WhatsApp information with Meta advertisements created higher barriers to entry for small businesses and reduced consumer choice. The CCI move aims to restore competitive parity.

  3. Users' Autonomy and Informed Consent: The automatic adoption of the 2021 policy resulted in significant informational asymmetry, trumping genuine user choice. The focus on opt-out provisions and openness within the order is a riposte to such problems.

  4. DPDP Act and Jurisdictional Concerns: The case hails the meeting point of competition law and data protection legislation in India, particularly with the impending DPDP Act.

  5. Global Trends: Issues at stake are in line with the same regulatory challenges Meta has faced globally, reflecting a global trend towards increased regulation of data-driven business models.

What's Next? The Road Forward

The NCLAT final order will determine the future of the five-year data-sharing prohibition, with the possibility of further appeals. Implementation of the DPDP Act will alter regulatory landscapes, affecting current case outcomes and future policy by technology companies.

Industry-wide Implications:

Regardless of legal consequences, the CCI's order is a strict warning to digital platforms emphasizing the value of user consent, transparency, and fair competition in the digital space.

Key Insights for Further Reflection:

  • Contextual Background: Earlier WhatsApp policies (2016, 2019) included opt-out for users, but this was withdrawn in the 2021 amendment, resulting in regulatory interference.

  • Global Comparisons: In tandem with Ireland's 2021 WhatsApp GDPR fine of €225 million, the case is representative of the global significance of privacy and competition issues.

  • Consumer Implications: The call to Indian consumers to switch platforms, combined with network effects, raises the stakes of WhatsApp's policy changes.

  • Data Sharing Fears: Meta warns that data limitations would harm dependent firms, such as those in India's fashion industry.

  • Regulatory Trends: The CCI's decision follows a wider trend of demanding more transparency, informed consent, and empowerment of users in the digital economy.

Conclusion

The court fight between WhatsApp, Meta, and the CCI is more than corporate interests—it's a watershed moment for data privacy, competition, and user rights in India. As the NCLAT adjudicates, all eyes are on the regulatory landscape's evolution, anticipating its effect both on technology businesses as well as common consumers. The ruling will have significant repercussions for how digital platforms handle user information, compete in markets, and safeguard consumer autonomy in the world's most populous democracy.