The Competition Commission of India (CCI) on Monday imposed a penalty of ₹213.14 crore on Meta for abusing its dominant position. The antitrust regulator directed WhatsApp to not share user data collected on its platform with other Meta companies or products for advertising purposes, for a period of five years.
The fine relates to how WhatsApp's 2021 Privacy Policy was implemented and how user data was collected and shared with other Meta companies.
The antitrust watchdog also issued cease-and-desist directions and also directed Meta and WhatsApp to implement certain behavioural remedies within a defined timeline.
In this matter, the Commission delineated two relevant markets i.e., the market for OTT messaging apps through smartphones in India; and the market for online display advertising in India. Further, Meta Group operating through WhatsApp was found to be dominant in the market for OTT messaging apps through smartphones in India. Furthermore, it was also found that Meta holds a leading position compared to its competitors in the online display advertising in India.
Starting from January 2021, WhatsApp notified users about updates to its terms of service and privacy policies. The in-app notification stated that, effective February 8, 2021, users were required to accept these terms, including expanded scope of data collection as well as mandatory data sharing with Meta companies, to continue using WhatsApp. Under the previous privacy policy dated August 25, 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 Commission has concluded that the 2021 policy update by WhatsApp on a ‘take-it-or-leave-it’ basis constitutes an imposition of unfair condition under the Act, as it compels all users to accept expanded data collection terms and sharing of data within Meta Group without any opt out. Given the network effects and lack of effective alternatives, the 2021 Update forces users to comply, undermining their autonomy, and constitutes an abuse of Meta’s dominant position.
As regards sharing of data between Meta companies, the Commission has concluded that (a) sharing of WhatsApp users’ data between Meta companies for purposes other than providing WhatsApp Service creates an entry barrier for the rivals of Meta and thus, results in denial of market access in the display advertisement market, in contravention of the provisions of Section 4(2)(c) of the Act; and (b) Meta has engaged in leveraging its dominant position in the OTT messaging apps through smartphones to protect its position in the online display advertising market and the same is in contravention of Section 4(2)(e) of the Act.
