The National Company Law Appellate Tribunal (NCLAT) on Thursday stayed a five-year ban imposed by the competition watchdog CCI on data-sharing practices between WhatsApp and its parent Meta for advertising purposes, offering a breather to the tech giant.
Meta had challenged the Competition Commission of India’s (CCI) directive issued in November 2024, which imposed a ban on data sharing between WhatsApp and other Meta entities for advertising purposes, warning that it may have to roll back some features. It had also slapped a Rs 213 crore penalty on Meta for abuse of its "dominant position." The NCLAT also stayed the Rs 213.14 crore penalty, subject to the deposit of 50 percent of the penalty amount (after taking into consideration 25 percent already deposited) within two weeks.
The tribunal observed that the five-year ban imposed may lead to the collapse of the business model followed by messaging platform WhatsApp. It further noted that WhatsApp is providing its services to users free of cost. "We have also noticed that the Supreme Court has not granted an interim order staying the 2021 privacy policy, and the Digital Personal Data Protection Act 2023 has also been passed and is likely to be enforced, which may cover all issues pertaining to data protection and data sharing. We are of the prima facie view that the ban of five years imposed... needs to be stayed," it said, while listing the next hearing on March 17.
The CCI had concluded that WhatsApp’s 2021 privacy policy update unfairly compelled users to agree to the wide collection of data and its sharing within the Meta group. Meta welcomed the NCLAT’s decision to grant a partial stay on the Competition Commission of India’s (CCI) order and said it would evaluate its next steps. "While we will evaluate next steps, our focus remains on finding a path forward that supports millions of businesses that depend on our platform for growth and innovation, as well as providing high-quality experiences that people expect from WhatsApp," a Meta spokesperson said.
In November, the CCI imposed a penalty of Rs 213.14 crore on social media major Meta for unfair business practices with respect to the WhatsApp privacy policy update done in 2021. Meta Platforms and WhatsApp had challenged this order before the NCLAT, which is an appellate authority over the orders passed by the CCI. In its 156-page order, the CCI had, on November 18, 2024, directed Meta to cease and desist from anti-competitive practices. According to that CCI order, Meta and WhatsApp have also been asked to implement certain behavioral remedies within a defined timeline to address the anti-competition issues.
The regulator called for implementing various remedial measures, including barring WhatsApp from sharing data collected on its platform with other Meta companies or Meta company products for advertising purposes for five years. Among other directions, CCI had said that sharing of user data collected on WhatsApp with other Meta companies or Meta company products for purposes other than providing WhatsApp services shall not be made a condition for users to access WhatsApp services in India.
Murugavel Janakiraman, CEO & Founder of Matrimony.com, said that the decision of the National Company Law Appellate Tribunal (NCLAT) on Meta’s appeal against the CCI ban on WhatsApp’s data sharing policies underscores the limitations of the existing ex-post nature of competition law and highlights the need for ex-ante regulations. "Ex-ante rules restricting 'data usage,' as proposed in the draft Digital Competition Bill, can go a long way in preventing large digital platforms/gatekeepers from abusing their dominant position, sometimes even to the disadvantage of the end-users," Janakiraman said.
As such, the ex-ante provision aims to ensure that the behaviors of large digital enterprises are proactively monitored and that the CCI intervenes before instances of anti-competitive conduct transpire. In an ex-post framework, intervention happens after the occurrence of anti-competitive conduct.
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