4 days Ago By Sakshi Sadashiv K
Explainer Briefly Slides The Competition Commission of India (CCI) has imposed a Rs 213.14 crore penalty on Meta, citing anti-competitive practices linked to WhatsApp’s 2021 privacy policy update. In its order , the CCI instructed Meta to “cease and desist” from such practices.
Furthermore, it has mandated the implementation of specific behavioral remedies within a set timeframe to address the competition concerns. The CCI stated that the penalty pertains to WhatsApp’s 2021 Privacy Policy, specifically focusing on its implementation and the methods used to collect and share user data with other Meta entities. Consequently, among the directives, the CCI has prohibited WhatsApp from sharing user data collected on its platform with other Meta entities or products for advertising purposes for a period of five years.
Additionally, the regulator emphasised that access to WhatsApp services in India should not be conditional on users agreeing to share their data with Meta companies for purposes other than WhatsApp’s core services. The penalty and directives stem from WhatsApp’s implementation of its 2021 privacy policy, which the CCI found to be an “abuse of its dominant position”, particularly in how it handled user data collection and sharing with other Meta entities. In this case, the CCI identified two relevant markets: the market for OTT messaging apps via smartphones in India, and the market for online display advertising in India.
It was determined that Meta, operating through WhatsApp, holds a dominant position in the market for OTT messaging apps on smartphones in the country. Additionally, Meta was found to maintain a leading position in the online display advertising market in India, surpassing its competitors. What is WhatsApp’s 2021 privacy policy update? In January 2021, WhatsApp informed users about updates to its terms of service and privacy policy.
The in-app notification, set to take effect on February 8, 2021, required users to accept the revised terms, which included an expanded scope of data collection and mandatory data sharing with Meta companies, to continue using the platform. In contrast, under the earlier privacy policy dated August 25, 2016, users had the option to choose whether to share their data with Facebook. However, it’s important to note that due to Europe’s General Data Protection Regulation (GDPR), WhatsApp has to allow users in the region to opt-out of the service.
This means that the 2021 privacy policy update did not apply to users in the European Union. However, this was not available to users in India. CCI concluded that WhatsApp’s 2021 policy update, presented on a “take-it-or-leave-it” basis, violates the Competition Act by imposing unfair conditions.
It compels all users to accept expanded data collection and sharing terms within the Meta Group without offering an option to 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,” it said .
Directives Issues by CCI The CCI stated that the sharing of WhatsApp users’ data among Meta companies for purposes beyond providing WhatsApp services creates entry barriers for Meta’s rivals, effectively denying them market access in the display advertising sector. With respect to sharing of WhatsApp user data for purposes other than advertising, CCI states “WhatsApp’s policy should include a detailed explanation of the user data shared with other Meta Companies or Meta Company Products. This explanation should specify the purpose of data sharing, linking each type of data to its corresponding purpose.
” For data sharing unrelated to providing WhatsApp services, the regulator directed that all users in India, including those who accepted the 2021 update, must be given the option to manage such sharing through a prominently displayed opt-out feature via an in-app notification. Additionally, the CCI instructed that users should have the ability to review and change their data-sharing preferences through a clearly visible tab in WhatsApp’s settings. The regulator also mandated that all future policy updates adhere to these requirements.
Zuckerberg’s Vision for Meta In 2017 , the then Facebook CEO Mark Zuckerberg explained how the platform planned to monetize its Messenger and WhatsApp applications, emphasizing the importance of businesses organically using the apps. He stated that user behavior needed to shift, with people reaching out to customer support or accessing news content through Messenger or WhatsApp. “In terms of making money on that, once we have that behavior, I think there are going to be a number of ways that we can amplify that,” he added.
He further stated that Facebook had initiated this process by displaying ads in news feeds, enabling users to interact with businesses via Messenger or WhatsApp. Additionally, Facebook considered allowing paid content within Messenger to boost engagement and monetisation. Furthermore, in 2019 , Mark Zuckerberg stated that Facebook did not store sensitive data in countries with weak legal protections or where governments could forcibly access it, reiterating opposition to data localisation.
He stated “More countries are following the approach of authoritarian regimes adopting strict data localisation policies where governments can more easily access people’s data, and I’m highly concerned about that future.” He acknowledged risks to Facebook’s business and community if blocked in major markets, referencing RBI’s 2018 mandate requiring payments data localisation, which delayed WhatsApp Payments’ rollout in India. According to Zuckerberg , a private space in messaging is ideal for private business transactions: “Through messaging specifically, I’m more optimistic because of the private nature of this space, right? When you’re using a messaging service, you know that everything there is very intimate and private so it feels like a more natural space to be interacting with a business in a private way for doing transactions.
” Zuckerberg had stated that the aim was for discovery to occur on public platforms like Facebook and Instagram, with follow-ups and transactions taking place on Messenger and WhatsApp. “For businesses I think that this is going to help complete the loop and help them to actually sell more things which ultimately is what they care about when they’re using the platform”. Why it Matters The CCI’s judgment against Meta is significant because India represents Meta’s largest user base, with WhatsApp being central to its operations.
With over 500 million users, WhatsApp is deeply integrated into daily life in India, making it a key platform for business and communication. “We’re seeing particularly promising signs on WhatsApp in terms of retention and engagement, which has coincided with India becoming our largest market for Meta AI usage,” stated Meta CFO Susan Li during the company’s Q2 earnings call in July this year, reported TechCrunch. The CCI’s ruling limits Meta’s ability to monetize WhatsApp’s vast user base in India by restricting data usage.
Meta’s response to the CCI Ruling WhatsApp’s parent company Meta said today that it does not agree with the CCI decision and plans to appeal, reported Business Standard. “We disagree with the CCI’s decision and plan to appeal. As a reminder, the 2021 update did not change the privacy of people’s personal messages and was offered as a choice for users at the time.
We also ensured no one would have their accounts deleted or lose functionality of the WhatsApp service because of this update,” said a Meta spokesperson. Read More:.
