In a significant judgment impacting the digital privacy and competition landscape, the National Company Law Appellate Tribunal (NCLAT) has partly upheld the Competition Commission of India’s (CCI) findings against WhatsApp, while setting aside the ban that prohibited the platform from sharing user data with its parent company, Meta Platforms.
The NCLAT bench, comprising Justice Ashok Bhushan (Chairperson) and Arun Baroka (Technical Member), observed that WhatsApp’s 2021 privacy policy compelled users to accept broad and ambiguous data-sharing terms, without offering an opt-out option—a move that amounted to coercion and an unfair condition, thus violating competition law.
“Mandatory acceptance of vague and extensive data-sharing terms amounted to coercion and an unfair condition on users,” the bench noted, holding that such conduct represented an abuse of dominant position under the Competition Act.
While the tribunal upheld the ₹213 crore penalty imposed by the CCI on WhatsApp in November 2024, it disagreed with the watchdog’s complete prohibition on sharing data with Meta group companies for advertising purposes.
The judgment also highlighted that cross-platform data sharing between WhatsApp and Meta had the potential to enhance Meta’s advantage in the digital advertising space, creating entry barriers for competitors. It emphasized that Meta’s complete control over WhatsApp led to “special circumstances” that contributed to the abuse of dominance.
However, the NCLAT clarified that there was no evidence of leveraging dominance in one market (over-the-top messaging services) to gain or extend dominance in another (online display advertising). The tribunal reasoned that WhatsApp and Meta remain distinct legal entities, even though they are part of the same corporate group.
Additionally, the NCLAT upheld the CCI’s directive requiring WhatsApp to clearly explain what user data is shared with other Meta group companies, and to link each type of shared data to its specific purpose, particularly when used beyond advertising.
Key Takeaways:
- NCLAT upheld CCI’s finding that WhatsApp’s 2021 privacy policy violated competition law.
- The ₹213 crore penalty on WhatsApp stands.
- The ban on sharing user data with Meta companies has been lifted.
- WhatsApp must disclose detailed purposes for data sharing with Meta group entities.
The ruling marks a crucial balancing act between user privacy, market competition, and corporate autonomy, as regulators continue to grapple with how big tech platforms handle and monetize user data in India.