CCI imposes ₹ 213.14 crore penalty on Meta for abuse of dominant position

The Competition Commission of India (CCI) on Monday imposed a penalty of ₹ 213.14 on Mark Zuckerberg owned Meta (formerly Facebook) for abusing its dominant position. The penalty is related to WhatsApp's implementation of its 2021privacy policy.

The CCI's press release said "The Commission also issued cease-and-desist directions and also directed Meta and WhatsApp to implement certain behavioural-remedies within a defined timeline."

In January 2021, WhatsApp informed users about updates to its terms of service and privacy policy, effective February 8, 2021. The notification stated that users must accept the new terms to continue using the platform. Unlike the previous privacy policy from August 25, 2016, which allowed users to opt out of data sharing with Facebook, the updated policy made data sharing with Meta mandatory. Users were required to accept these terms, including the expanded scope of data collection and sharing, to maintain access to WhatsApp.

The CCI received an information regarding the WhatsApp's violative policy and launched an investigation. It concluded that Meta Group, through WhatsApp, was in a dominant position in the market for OTT messaging apps through smartphones in India and in a leading position in online display advertising in India.

The CCI found that the 2021 WhatsApp policy update was on a ‘take- it-or-leave-it’ basis thereby constituting an imposition of unfair condition under the Competition Act, 2002. According to the commission, the policy compels all users to accept expanded data collection terms and sharing of data within the Meta Group without an option to opt out of it.

"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," the order said.

With respect to data sharing, CCI found that Meta violated the law for the following reasons

 (a) sharing WhatsApp users’ data between Meta companies for purposes other than providing WhatsApp Service creates an entry barrier for Meta's rivals to compete with them, thus denying them market access.

(b) 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 .

In the light of this, CCI directed WhatsApp not to share data collected on its platforms with Meta company or its products for five (5) years. By way of remedial measure, the WhatsApp has been directed to include a detailed explanation in its policy regarding the user data shared with other Meta Companies. "This explanation should specify the purpose of data sharing, linking each type of data to its corresponding purpose," the order said.

Furthermore, WhatsApp has been directed not to make data sharing a pre-condition for users to avail its services in India. The data sharing here would mean data collected for the purpose of advertising.

According to the order "In respect of sharing of WhatsApp user data for purposes other than for providing WhatsApp Services, all users in India (including users who have accepted 2021 update) will be provided with:

a) the choice to manage such data sharing by way of an opt-out option prominently through an in-app notification; and

b) the option to review and modify their choice with respect to such sharing of data through a prominent tab in settings of WhatsApp application."