The Daksha Fellow Newsletter | CCI’s investigations on WhatsApp’s new privacy policy

Welcome to the Daksha Fellow Newsletter, a bi-weekly collection of essays written by our Fellows on pertinent and recent developments in tech, law and regulation etc.

Written by Bilal Md

On 24th March, the Competition Commission of India (CCI) initiated suo moto proceedings against WhatsApp. It is based on its new privacy policy, which was scheduled to roll out in January. This new policy would result in sharing user’s data which includes chat with business accounts, payments, and transaction information with its parent company Facebook and third parties associated with it. In its order, the Commission noted that the updated privacy policy required a detailed investigation to “ascertain the full extent, scope, and impact of data sharing through involuntary consent of users.”

The Commission, relying on Harshita Chawla v. WhatsApp Inc, recognized WhatsApp as a dominant player in the relevant market for OTT messaging apps. According to the CCI, WhatsApp could afford to compromise its quality of ensuring data protection because of the strong network effects it enjoys. Users may be reluctant because of poor interoperability of the data and the switching costs.

In its 21-page order, the CCI observed that users could choose whether they wanted to share their WhatsApp data with Facebook. However, the new policy differs on it as mentioned before. It suggests that the users will have to mandatorily accept the terms and policy in their entirety, including sharing their data across all the other Facebook companies. It, the CCI observed, was prima facie unfair and violates Section 4(2)(a)(i) of the Competition Act 2002 as it imposes unfair terms and conditions. Hence, the Commission directed the Director-General (‘DG’) to investigate it under Section 26(1) of the Act. The Commission also directed the DG to report on this within 60 days from the order’s receipt.

Delhi High Court Petition

Facebook, represented by Mukul Rohatgi, and WhatsApp, represented by Harish Salve, has challenged CCI’s suo moto order in the Delhi High Court. They claimed that the CCI lacks jurisdiction in this matter. The platforms contended that the CCI should not have stepped in when the matter was already placed before the Apex court and the Delhi High Court.

Aman Lekhi, representing the Commission, argued that WhatsApp’s mandatory requirement to consent to information sharing merit a detailed investigation. He contended that the relevant market is defined to check WhatsApp’s position in it. If WhatsApp is a dominant player, then the policy’s terms of coercively collecting location data, device data, and conversations will be an abuse of the dominant position. It will be an abuse since it is excessive data collection and can also result in profiling and stalking of consumers for targeted advertising.

Companies had argued lack of jurisdiction of the CCI since it is a matter of right to privacy and not competition law. To this, Mr. Lekhi contended that the CCI was investigating only the competition aspects and not the privacy angle which the Court is hearing.

The single judge-bench of J Navin Chawla has reserved the order. He has observed that the CCI order does not reflect on being ordered to investigate the abuse of the dominant position. Instead, He appears to be “concerned with the privacy issues of consumers.” Regardless of the outcome of this judgement, the CCI’s order for probe, viewed in the backdrop of the proposed Competition Act Amendments, seems to have signaled a shift in its stance on regulating the digital economy.

Disclaimer: The views and opinions presented here are solely those of the writer. Daksha Fellowship neither endorses nor subscribes to any of them.

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