CCI fines Meta, WhatsApp Rs 213 crores for forcing users to agree to 2021 privacy policy update

India’s antitrust watchdog, the Competition Commission of India (CCI), has slapped Meta, the parent company of WhatsApp, with a hefty fine of Rs 213.14 crore. The penalty comes as a result of WhatsApp’s controversial 2021 privacy policy update, which, according to the CCI, abused its dominant market position, according to a report by the Indian Express.

The Commission took issue with how the policy forced users to accept the terms, mandating data sharing between Meta companies without offering any opt-out option for users in India.

WhatsApp’s privacy policy controversy

The trouble began in January 2021 when WhatsApp introduced an updated privacy policy, making it mandatory for Indian users to accept or risk losing access to the service. This update expanded the scope of data collection and sharing across Meta-owned platforms, something that was not well received.

While European Union users had the option to decline due to stricter data privacy laws, Indian users found themselves backed into a corner, sparking widespread frustration. The CCI has argued that this “take-it-or-leave-it” approach amounted to unfair practices under the Competition Act.

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Impact on Competition

Beyond user discontent, the CCI’s investigation raised serious concerns about the competitive landscape. The Commission argued that WhatsApp’s data-sharing practices created barriers for Meta’s rivals in the digital advertising space, as per the Indian Express report.

By leveraging user data across its platforms, Meta was accused of unfairly cementing its hold on the online display advertising market, further protecting its dominant position. According to the CCI, these practices prevented new entrants from competing on equal footing, thereby limiting market access for potential rivals.

Moreover, the CCI highlighted that WhatsApp’s dominant presence in the over-the-top (OTT) messaging market gave Meta an undue advantage, strengthening its advertising business at the expense of other players.

To counter this, the Commission has not only issued a cease-and-desist order but also demanded that WhatsApp implement specific behavioural remedies to protect user data from being exploited for advertising purposes.

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Meta’s legal troubles ahead

The CCI’s ruling goes beyond just a monetary penalty. It has mandated that WhatsApp stop sharing user data with other Meta companies for advertising for at least five years. Additionally, WhatsApp must clearly outline the types of user data being collected, specify the purpose behind each data category, and ensure data sharing is not a condition for using the messaging service in India.

This regulatory scrutiny comes after significant backlash from users, many of whom flocked to rival messaging apps like Signal and Telegram when the privacy policy was first announced. Responding to the public outcry, the CCI had taken the unusual step of launching a suo motu investigation into WhatsApp’s practices back in 2021.

Legal challenges soon followed. WhatsApp and Facebook attempted to block the investigation, arguing in the Delhi High Court that similar privacy issues were already under review by the Supreme Court and other courts.

However, in 2022, the Delhi High Court dismissed these appeals, reaffirming that WhatsApp held a dominant market position. The court also noted the app’s strong lock-in effect, which makes it difficult for users to switch to competitors, even if they are unhappy with the service.