CCI imposes a fine of ₹213.14 crore on Meta for anti-competitive practices

In a landmark decision, the Competition Commission of India (CCI) has imposed a heavy fine of ₹213.14 crore on Meta for abusing its dominant position.

The fine relates to the controversial implementation of WhatsApp’s 2021 Privacy Policy, which mandates data sharing between WhatsApp and other Meta companies, raising serious concerns about user autonomy and market fairness.

This move by the CCI marks an important moment in Indian supervision of digital platforms.

The competition watchdog has also issued tax relief and directed Meta and WhatsApp to implement certain behavioral solutions within a specified timeline.

Key findings

The CCI identified two relevant markets: (i) OTT messaging apps via smartphones in India, where WhatsApp was considered dominant; (ii) online display advertising in India, where Meta has a leading position.

The 2021 Privacy Policy required users to accept expanded data collection and mandatory sharing with Meta Companies to continue using WhatsApp, removing the opt-out option available under the 2016 policy. The CCI found this “take-it-or-leave-it” approach to be an unfair condition, violating Section 4(2)(a)(i) of the Competition Act 2002.

Furthermore, the CCI found Meta guilty of creating barriers to entry for competitors in the online display advertising market by using WhatsApp user data (Article 4(2)(c)); protecting its dominance in advertising by using its market power in messaging apps (Article 4(2)(e)).

Behavioral remedies ordered

To curb the anti-competitive practices, the CCI has issued the following guidelines to Meta and WhatsApp:

1. No data sharing for advertising: WhatsApp is banned from sharing user data with meta companies for advertising purposes for five years.

2. Improved Transparency: WhatsApp should clearly outline the data shared with Meta companies, tying each type of data to specific purposes.

3. Opt-out option: Users should have the ability to opt-out of non-service related data sharing through in-app notifications and app settings.

4. Policy Update Compliance: All future policy updates must comply with these transparency and opt-out requirements.

Implications for Big Tech

This ruling sends a strong message to the tech giants operating in India on the need to respect competition laws and user rights. The decision underlines the CCI’s commitment to curb monopolistic practices in the digital markets and ensure fair competition, sources said.

The Competition Commission of India (CCI) had led an investigation into WhatsApp’s privacy policy update in 2021, raising concerns over its potential anti-competitive practices.

The policy update, announced in January 2021, required users to share their data with Facebook (now Meta), WhatsApp’s parent company, or risk losing access to the platform. This raised widespread alarms about user privacy and data security, prompting a response from civil society, regulators and users around the world.

The CCI itself took note of the update and deemed it an abuse of WhatsApp’s dominant position in the instant messaging market under Section 4 of the Competition Act, 2002.

Key concerns include:

1. Exploitation of users: The policy was seen as exploitative and forced users to accept terms that were harmful to their privacy due to WhatsApp’s market dominance.

2. Anti-competitive implications: Sharing user data with Meta could strengthen its market position in digital advertising, potentially foreclosing competition.

3. Lack of transparency: The CCI highlighted concerns about the opacity of the policy, with users not being given meaningful choice or clarity over data usage.

The research also aligns with major tech companies’ global research into data privacy and competitive issues. Regulators in Europe in particular have fined WhatsApp for similar privacy violations.

With its investigation, the CCI aims to assess whether the policy constitutes an abuse of dominant position and is contrary to Indian competition law. This case underlines the intersection of privacy, data protection and competition law, and sets a precedent for regulatory oversight in the digital economy.