Meta Challenges Rs 213 Crore CCI Fine Over WhatsApp Policy: NCLAT to Decide

The National Company Law Appellate Tribunal (NCLAT) has scheduled its decision on Meta’s plea for an interim stay on a Rs 213.14 crore penalty imposed by the Competition Commission of India (CCI) for January 23, 2025.

A Bench led by Chairperson Justice (Retd.) Ashok Bhushan and Technical Member Arun Baroka noted that the arguments from both parties merit further consideration.

“We have heard the counsels for parties. We admit both appeals. Orders on interim reliefs next Thursday,” the Bench said.

Background of the Case

In November 2022, the CCI imposed a penalty of Rs 213.14 crore on Meta for abusing its dominant position through WhatsApp’s 2021 privacy policy update. The policy required users to accept expanded data sharing with Meta, removing the opt-out feature available in its 2016 policy. The CCI deemed this a “take-it-or-leave-it” approach that violated user autonomy and the Competition Act, 2002.

The CCI also issued a cease-and-desist order, directing Meta and WhatsApp to implement behavioural remedies, including:

• Prohibiting WhatsApp from sharing user data with Meta or its affiliates for five years.
• Restricting data sharing for advertising purposes.
• Requiring WhatsApp to clearly link the purpose of each type of data sharing in its privacy policy.

Arguments by Meta and WhatsApp

Senior Advocates Kapil Sibal and Mukul Rohatgi, representing Meta and WhatsApp, contended that the CCI had overstepped its jurisdiction. They argued that the matter is already under consideration by a Constitution Bench of the Supreme Court regarding privacy issues.

Sibal highlighted the potential conflict between the CCI’s order and the upcoming data privacy law:

“India’s data privacy law will come into effect in mid-2025, rendering the CCI’s order meaningless. The CCI has no jurisdiction over privacy policies already under the Supreme Court’s review.”

Rohatgi defended WhatsApp’s 2021 update, stating:

“This is not sinister data sharing but benign. WhatsApp’s free model requires a business framework. Mandatory acceptance of updated terms is consistent with its evolution.”

CCI’s Counterarguments

Advocate Samar Bansal, appearing for the CCI, clarified that the regulator’s focus is distinct from data privacy concerns:

“Data privacy law addresses personal data, while competition law addresses business practices and user autonomy. Indian users lack an opt-out option, unlike their European counterparts.”

Key Issues at Stake

• Jurisdiction Overlap: Whether the CCI’s investigation overlaps with the Supreme Court’s ongoing review of WhatsApp’s privacy policy.
• Impact on Competition: Whether the mandatory data-sharing terms unfairly exploit WhatsApp’s dominant position in India’s messaging and online advertising markets.
• User Autonomy: Ensuring users have control over their data-sharing preferences.

What Lies Ahead

The NCLAT’s decision next week will determine whether Meta and WhatsApp will receive interim relief. The case has far-reaching implications for competition and data privacy in India, especially with the country’s upcoming data protection laws set to take effect in 2025.