CCI imposes Rs 213.1 crore fine on Meta over WhatsApp's 2021 privacy policy update

An illustration of WhatsApp application

The Competition Commission of India (CCI) fined Meta Rs 213.14 crore on November 18 for abusing its dominant position in relation to WhatsApp's 2021 privacy policy update, in addition to issuing cease-and-desist directions.

CCI has also directed WhatsApp not to share user data collected on its platform with other Meta products or companies for advertising purposes for a period of five years, along with other remedial measures.

The order from India's antitrust watchdog delivers a blow to the parent company of Facebook and WhatsApp in its largest user market, with a combined user base of over a billion people. WhatsApp alone has more than 500 million monthly active users in the country.

CCI started an investigation in March 2021 into WhatsApp's revised privacy policy, which enabled mandatory data sharing with Facebook (now Meta) and its companies, along with an expanded scope of data collection. Prior to this, users had the option to decide whether to share their data with the company since 2016.

The policy, which started rolling out to users from January 2021, was set to take effect from February 2021. WhatsApp required users to accept the new terms to continue using the service. However, the rollout was postponed following widespread backlash.

WhatsApp also subsequently issued clarifications stating that the policy update would not affect the privacy of users' personal messages with their friends or family and emphasised that the changes were related to optional business features offered by the application.

After an investigation of over three and a half years, CCI stated that it found WhatsApp's ‘take-it-or-leave-it’ policy update was unfair since it compelled all users to accept expanded data collection terms and sharing of data within Meta Group without any opt-out.

"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" CCI stated.

The Commission stated that Meta has leveraged its dominant position in the over-the-top (OTT) messaging apps on smartphones to protect its position in the online display advertising market.

Furthermore, the sharing of WhatsApp users' data between Meta companies for purposes other than providing WhatsApp service creates an entry barrier for Meta's rivals, making it more difficult for them to compete in the display advertising market. Moneycontrol has written to Meta for a comment and will update the article once they respond.

Read: Meta India's net profit jumps 43% to Rs 505 crore in FY24; Gross ad revenue up 24%

CCI has directed that, for purposes other than advertising, WhatsApp's policy should include a detailed explanation of the user data shared with other Meta products or companies. This explanation should specify the purpose of data sharing, linking each type of data to its corresponding purpose, it said.

The competition watchdog also stated that all users in India should have the ability to manage such data sharing through an opt-out option that is displayed prominently through an in-app notification. They should also have an option to review and modify their choice through a prominently displayed tab in the application's settings menu.

Further, WhatsApp cannot mandate users to share their data with Meta's other products and companies in order to access its services in the country, it said.