CCI slaps Rs 213 cr penalty on Meta in relation to WhatsApp privacy policy; asks co to desist from unfair biz ways

NEW DELHI: The Competition Commission of India (CCI) on Monday imposed a penalty of Rs 213.14 crore on social media major Meta for unfair business ways with respect to WhatsApp privacy policy update done in 2021.

Besides, the competition watchdog has directed Meta to “cease and desist” from anti-competitive practices.

Meta and WhatsApp have also been asked to implement certain behavioural remedies within a defined timeline to address the anti-competition issues, according to a CCI order.

The regulator has called for implementing various remedial measures, including barring WhatsApp from sharing data collected on its platform with other Meta companies or Meta company products for advertising purposes for five years.

Among other directions, CCI has said that sharing of user data collected on WhatsApp with other Meta companies or Meta company products for purposes other than for providing WhatsApp services shall not be made a condition for users to access WhatsApp Service in India.

The Competition Commission of India (Commission) on Monday imposed a penalty of Rs 213.14 crore on Meta for abusing its dominant position,

Passing the order against abuse of dominance, the Competition Commission of India (CCI) said this (penalty) relates to how WhatsApp's 2021 Privacy Policy was implemented and how user data was collected and shared with other Meta companies.

For the case, CCI delineated two relevant markets -- OTT messaging apps through smartphones in India, and online display advertising in India. "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 online display advertising in India," CCI said in a release.

Starting from January 2021, WhatsApp notified users about updates to its terms of service and privacy policies.

The in-app notification, effective from February 8, 2021, stated that 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, the release said.

"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," it added.

The watchdog 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 Competition 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. Accordingly, the Commission finds that Meta (through WhatsApp) has contravened Section 4(2)(a)(i) of the Act," it said.

Further, CCI said that 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.

According to the regulator, 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 in contravention of the competition law.

CCI has barred WhatsApp from sharing data collected on its platform with other Meta companies or Meta company products for advertising purposes for five years and the debarment period will start from the date of receipt of this order.

With respect to sharing of WhatsApp user data for purposes other than advertising, the regulator said WhatsApp's policy should include a detailed explanation of the user data shared with other Meta companies or Meta company Products.

"This explanation should specify the purpose of data sharing, linking each type of data to its corresponding purpose," it said.

The watchdog also said that sharing of user data collected on WhatsApp with other Meta companies or Meta company products for purposes other than for providing WhatsApp services shall not be made a condition for users to access WhatsApp Service in India.

Regarding sharing of WhatsApp user data for purposes other than for providing WhatsApp services, CCI said all users in India (including users who have accepted 2021 update) will be provided with the choice to manage such data sharing by way of an opt-out option prominently through an in-app notification.

Also, the regulator has asked for the option to review and modify their choice with respect to such sharing of data through a prominent tab in settings of WhatsApp application, and all future policy updates should comply with these requirements.