CCI Orders Probe Into WhatsApp's New Privacy Policy; Finds Prima Facie 'Abuse Of Dominance'

In a significant development, the Competition Commission of India on Wednesday ordered a probe into the new privacy policy of WhatsApp, after making a prima facie observation that it was violative of the Competition Act 2000."..the Commission is of the considered opinion that WhatsApp has prima facie contravened the provisions of Section 4 of the Act through its exploitative and exclusionary conduct, in the garb of policy update", said the order passed by the CCI.The CCI observed that the privacy policy terms on sharing of personalised data with Facebook companies was "neither fully transparent nor based on specific, voluntary consent of users"."On a careful and thoughtful consideration of the matter, the conduct of WhatsApp in sharing of users' personalised data with other Facebook Companies, in a manner that is neither fully transparent nor based on voluntary and specific user consent, appears prima facie unfair to users. The purpose of such sharing appears to be beyond users' reasonable and legitimate expectations regarding quality, security and other relevant aspects of the service for which they register on WhatsApp. One of the stated purposes of data sharing viz. targeted ad offerings on other Facebook products rather indicates the intended use being that of building user profiles through cross-linking of data collected across services. Such data concentration may itself raise competition concerns where it is perceived as a competitive advantage", the 21-page order of the CCI said.It made a prima facie observation that the policy was an abuse of dominant position resulting in violation of Section 4 of the Competition Act."The impugned conduct of data-sharing by WhatsApp with Facebook apparently amounts to degradation of non-price parameters of competition viz.quality which result in objective detriment to consumers, without any acceptable justification. Such conduct prima facie amounts to imposition of unfair terms and conditions upon the users of WhatsApp messaging app, in violation of the provisions of Section 4(2)(a)(i) of the Act". The anti-trust regulator termed the privacy policy terms "take-it-or-leave-it' terms set by a dominant messaging platform, without providing much information to the users, and observed that the policy prima facie appeared to be "unfair and unreasonable"."..users are required to accept the unilaterally dictated 'take-it-or-leave-it' terms by a dominant messaging platform in their entirety, including the data sharing provisions therein, if they wish to avail their service. Such "consent"cannot signify voluntary agreement to all the specific processing or use of personalised data,as provided in the present policy. Users have not been provided with appropriate granular choice, neither upfront nor in the fine prints,to object to or opt-out of specific data sharing terms,which prima facie appear to be unfair and unreasonable for the WhatsApp users". The CCI bench comprising Ashok Kumar Gupta(Chairperson), Sangeeta Verma(Member) and Bhagwant Singh Bishnoi(Member) observed that "a thorough and detailed investigation is required to ascertain the full extent, scope and impact of data sharing through involuntary consent of users".Accordingly, the Commission directed the Director General ('DG') to cause an investigation to be made into the matter under the provisions of Section 26(1) of the Act. The Commission also directed the DG to complete the investigation and submit the investigation report within a period of 60days from the receipt of this order. The Commission has clarified that the observations are preliminary in nature and will not amount to a final expression of opinion on the merits of the case. "The DG shall conduct the investigation without being swayed in any manner whatsoever by the observations made herein", the order added as a caveat.Notably, the order has been passed in a suo moto case taken by the Commission titled "In Re: Updated Terms of Service and Privacy Policy for WhatsApp Users".WhatsApp LLC and Facebook Inc were arrayed as opposite parties in the case.The suo moto case was taken by the Commission on January 19, 2021, based on the reports about the new privacy policy update of the messenger platform.It is also pertinent to note that the Union Ministry of Electronics and Information Technology has taken a stand against the new privacy policy of WhatsApp. In an affidavit filed in the Delhi High Court in response to a PIL challenging the policy, the Centre has urged the Court to restrain WhatsApp from implementing the new policy, pending the passage of the Personal Data Protection Bill.Abuse of dominanceSection 4 of the Act proscribes abuse of dominance by an entity commanding dominant position in relevant market.The CCI noted that WhatsApp is dominant in the relevant market for OTT messaging apps through smartphones in India, as was held in an earlier decision.The Commission further noted that the previous privacy ...

CCI Orders Probe Into WhatsApp's New Privacy Policy; Finds Prima Facie 'Abuse Of Dominance'

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