CCI imposes Rs 213.14 crore penalty on meta for anti-competitive practices

The Competition Commission of India (CCI) has imposed a hefty monetary penalty of Rs. 213.14 crore on Meta for abusing its dominant position.

According to CCI, the case pertains to the implementation of WhatsApp's 2021 Privacy Policy, which involved controversial data collection and sharing practices with other Meta entities.

Along with the penalty, the CCI has issued cease-and-desist directions and mandated behavioural remedies to be implemented within a stipulated timeline.

The CCI identified two key markets in its investigation: the market for over-the-top (OTT) messaging apps through smartphones in India and the market for online display advertising in India.

The Commission concluded that WhatsApp, operated by Meta, holds a dominant position in the OTT messaging app market in India. Similarly, Meta was found to have a leading position in the online display advertising market compared to its competitors.

In January 2021, WhatsApp introduced updates to its terms of service and privacy policy, notifying users via in-app prompts.

Effective from February 8, 2021, the new policy required users to accept expanded data collection terms, including mandatory sharing of user data with other Meta companies.

Unlike the 2016 privacy policy, which allowed users to opt out of data sharing with Facebook, the 2021 update removed this choice, compelling users to accept the terms or lose access to WhatsApp.

The CCI found this 'take-it-or-leave-it' policy to be an unfair condition under the Competition Act, as it forced users to comply with expanded data collection and sharing terms, undermining their autonomy.

Given WhatsApp's network effects and lack of effective alternatives, the update constituted an abuse of Meta's dominant position, violating Section 4(2)(a)(i) of the Act.

The Commission also highlighted anti-competitive practices arising from the sharing of user data between Meta entities.

Sharing WhatsApp user data with other Meta companies for purposes beyond providing WhatsApp services creates significant entry barriers for competitors, violating Section 4(2)(c) of the Act.

Meta leveraged its dominance in the OTT messaging app market to strengthen its position in the online display advertising market, contravening Section 4(2)(e) of the Act.

To address the identified anti-competitive harm, the CCI directed Meta and WhatsApp to implement several measures.

WhatsApp is prohibited from sharing user data collected on its platform with other Meta companies for advertising purposes for five years. After this period, certain provisions will apply to regulate such data sharing.

WhatsApp must provide a detailed explanation of the types of user data shared with other Meta companies, specifying the purposes for each type of data.

Data sharing for purposes other than providing WhatsApp services cannot be a condition for using WhatsApp in India.

All users, including those who accepted the 2021 update, must be offered an opt-out option for nonservice-related data sharing via a prominent in-app notification.

Users should be able to review and modify their choices through a clear tab in the app's settings. Future policy updates must comply with these requirements.