The Delhi High Court has held that WhatsApp’s 2021 privacy policy creates a “take-it-or-leave-it” situation, virtually forcing its users into agreement by providing a mirage of choice, and then sharing their sensitive data with Facebook [WhatsApp LLV v. Competition Commission of India & Anr].
A Division Bench of Chief Justice Satish Chandra Sharma and Justice Subramonium Prasad said that WhatsApp occupies a dominant position in the relevant product market and that there exists a strong lock-in effect which renders its users incapable of shifting to another platform despite dissatisfaction with the product.
This was exemplified by how, despite an increase in the downloads of Telegram and Signal when the 2021 policy was announced, the number of WhatsApp users remained unchanged, the Court said.
“By and large, to ensure retention of its user base and to prevent any other disruptive technology from entering the market, data is utilised by tech companies to customise and personalise their own platforms so that its userbase remains hooked. When data concentration is seen through this prism, it does give meaning to the new adage that “data is the new oil”, and, as noted in the CCI Order dated 24.03.2021, it raises competition concerns because it prima facie amounts to imposition of unfair terms and conditions upon its users, thereby violating Section 4(2)(a)(i) of the Competition Act,” the Court held.
The Court said that the 2021 policy was a substantially modified version of its 2016 policy since under the new terms, there is no “opt-out” option, the presence of which led the Competition Commission of India (CCI) to conclude that the 2016 Policy did not violate the Competition Act.
The observations were made in the order dismissing appeals by WhatsApp and its parent company Facebook challenging a single-judge’s order which refused to stay a probe ordered by the CCI into the privacy policy in March 2021.
The judges rejected Facebook’s argument that it is a separate and distinct legal entity from WhatsApp, and therefore, it should not be subjected to an intensive and intrusive investigation.
The Court held that solely for the reason that the policy itself does not emanate out of Facebook, it cannot hide behind the fact that it is the direct and immediate beneficiary of the data sharing mechanism envisaged by the policies.
These circumstances necessitate the presence of Facebook as a proper party in the investigation related to the 2021 policy and the alleged anti-competitive practices they trigger, the Court held.
The Bench also held that the investigation conducted by the CCI will not be affected by the outcome of the proceedings pending before the Supreme Court and Delhi High Court.
“In the event the Supreme Court upholds the 2021 Policy, then surely CCI can venture into the question as to whether the provisions of the Act have been violated or not. In the event that the 2021 Policy is set aside by the Supreme Court, the CCI will still possess the jurisdiction to investigate the violation of the Act, if any, during the pendency of the matter before the Supreme Court when the 2021 Policy was in operation. In either of the cases, it cannot be stated that the CCI does not have the authority to look into this affair being the market regulator.”
Answering the question raised by WhatsApp and Facebook as regard the overlapping jurisdiction of the CCI and the Constitutional courts, the Bench held,
“The sphere of operation of both are vastly different. Neither this Court nor the Supreme Court are analysing the 2021 Policy through the prism of competition law.”
The Court, therefore, concluded that the judgment of the single-judge is well-reasoned and devoid of any merit and substance that would warrant interference.
Senior Advocates Harish Salve along with Advocates Tejas Karia, Shashank Mishra, Supritha Prodaturi and Shashank Mishra appeared for WhatsApp.
Facebook was represented by Senior Advocate Mukul Rohatgi along with Advocates Sweta Shroff Chopra, Gauhar Mirza and Nitika Dwivedi.
Advocates Binsy Susan, Anjali Kumar, Shyamal Anand and Vishesh Sharma appeared for Meta Platforms Inc.
Senior Advocate Parag Tripathi, along with Advocates Ajit Warrier, Yaman Verma, Swati Aggarwal and Mishika Bajpai appeared for Facebook India.
Additional Solicitors General N Venkataraman and Balbir Singh, along with Advocates V Chandrashekara Bharathi, Amritha Chandramouli, S Ram Narayan, Samar Bansal, Madhav Gupta, Vedant Kapur, Monica Benjamin and Anu Sura appeared for CCI.
Advocates Varun Pathak, Mitali Daryani, Yash Karunakaran and Vani Kaushik appeared for other respondents.
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