The Competition Commission of India (CCI) has imposed a penalty of Rs213.14 crore on Meta for abusing its dominant position while implementing a privacy policy update in 2021 on WhatsApp and collecting and sharing user data with other group companies. CCI also directed WhatsApp not to share user data collected on its platform with other Meta companies or Meta products for advertising purposes for five years. Meta says it disagrees with the CCI's decision and plans to file an appeal.
In a release, CCI says, "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. Accordingly, the Commission finds that Meta (through WhatsApp) has contravened Section 4(2)(a)(i) of the Act."
"Further, as regards sharing of data between Meta companies, the Commission has concluded 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, in contravention of the provisions of Section 4(2)(c) of the Act. 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," it added.
The commission also issued cease-and-desist directions and also directed Meta and WhatsApp to implement certain behavioural remedies within a defined timeline.
CCI says it delineated two relevant markets i.e., the market for over-the-top (OTT) messaging apps through smartphones in India and the market for 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, CCI found that Meta holds a leading position compared to its competitors in the online display advertising in India.
From January 2021, WhatsApp notified users about updates to its terms of service and privacy policies. The in-app notification stated that effective 8 February 2021, users were required to accept these terms, including the expanded scope of data collection as well as mandatory data sharing with Meta companies, to continue using WhatsApp.
Under the previous privacy policy of 25 August 2016, WhatsApp users were given the option to decide whether they wanted to share their data with Facebook. However, with the latest policy update 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.
With respect to sharing user data for purposes other than advertising, CCI asked WhatsApp to 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."
"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," CCI says.
The Commission also directed WhatsApp to provide users with a choice to manage such data sharing by way of an opt-out option prominently through an in-app notification and the option to review and modify their choice with respect to such sharing of data through a prominent tab in the settings of the WhatsApp application.
