NCLAT upholds CCI’s ₹213.14 cr penalty on WhatsApp for abuse of market position

THe subject accompany jurisprudence appellant Tribunal (NCLAT) on tues upheld the Competition Commission of India (CCI)’s ₹213.14 crore penalty on WhatsApp and its parent company, Meta, for the alleged abuse of dominant market position through WhatsApp’s 2021 privacy policy update.A bench of NCLAT Chairperson Justice Ashok Bhushan and Technical Member Arun Baroka, at the principal seat of the Tribunal in New Delhi, upheld CCI’s findings that the update forced users into data sharing across Meta’s platforms. It set aside the CCI’s direction restraining WhatsApp from sharing user data with Meta and its group companies for advertising purposes for five years.The NCLAT agreed with the CCI’s findings that WhatsApp’s 2021 policy imposed unfair and exploitative terms on users by compelling them to share data with Meta companies to continue using the service, in violation of the Competition Act’s Sections 4(2)(a)(i) and 4(2)(c). It noted that WhatsApp’s “take-it-or-leave-it” policy deprived users of meaningful consent, eroded privacy, an essential aspect of service quality, and created barriers for rival platforms in the online advertising ecosystem.The NCLAT set aside the CCI’s finding under Section 4(2)(e) relating to leveraging of dominance. The CCI had held that Meta used WhatsApp’s data advantage in the messaging market to expand its position in online display advertising.“The plea is allowed only to the extent of the findings of the Commission in so far as it holds breach of Section 4(2)(e) of the Act and to setting aside the directions in paragraph 247.1 [the ban on WhatsApp sharing data with other Meta companies]. The rest of the order dated 18.11.2024 is upheld,” the NCLAT said.In its November 2024 order, CCI held that WhatsApp’s new terms of service, which required users to accept expanded data collection and mandatory sharing with Meta entities to continue using the app, amounted to exploitative abuse under the Competition Act’s Section 4. The regulator had also barred WhatsApp from sharing user data with other Meta companies for advertising for five years.“WhatsApp will not share user data collected on its platform with other Meta Companies or Meta Company Products for advertising purposes, for a period of 5 (five) years from the date of receipt of this order,” CCI had said in its order.WhatsApp and Meta challenged the order before the NCLAT, arguing that the CCI had acted without evidence or jurisdiction. The appellate tribunal, in January 2025, stayed the five-year data-sharing ban and directed Meta to deposit 50% of the penalty amount pending the outcome of the case.The CCI, through its counsel, senior advocate Balbir Singh, had argued that WhatsApp’s 2021 privacy policy was coercive and anti-competitive. Singh told the tribunal that by removing users’ ability to opt out of cross-platform data sharing, an option available under its 2016 policy, WhatsApp had effectively forced compliance.“The 2021 update left users with no real choice. The ‘take it or leave it’ approach created undue urgency and stripped users of autonomy,” Singh had told the NCLAT during a previous hearing. He had argued that Meta’s integration of WhatsApp with Facebook, Instagram, and Messenger created an ecosystem with unmatched reach and network effects, locking users in and making it nearly impossible to switch to alternatives. “Even when options like Telegram or Signal exist, users can’t migrate alone; their entire network must move,” Singh had told the bench.The CCI claimed that such data integration amplified Meta’s competitive advantage across its platforms, enabling it to exploit user information for advertising and monetisation.WhatsApp and Meta, represented by senior advocates Mukul Rohatgi, Kapil Sibal, and Arun Kathpalia, had opposed CCI’s claims. They said the CCI had no empirical data, no user surveys, no rival metrics, and no user testimonies to support its conclusion that WhatsApp abused its dominant position. They pointed out that WhatsApp’s 2016 privacy policy, which had offered an opt-out from data sharing, had been upheld by the NCLAT.Users who exercised that option continue to retain it, the lawyers had argued, adding that the regulator erred in treating the 2021 update as an entirely new and coercive regime.The dispute arose from WhatsApp’s January 2021 announcement of revised terms of service and privacy policy, which came into effect on February 8 that year. The update expanded the scope of data collection from individuals, businesses, and third parties and enabled integration across Meta’s products.The CCI had taken suo motu cognisance of the change and concluded that the policy’s “broad and vague” data-sharing terms amounted to abuse of dominance and violated user choice.