NCLAT Upholds CCI’s Jurisdiction Under Section 4 of the Competition Act to Probe WhatsApp–Meta Data-Sharing Practices [Read Order]
The NCLAT ruled that data-sharing practices can have competition law implications and that privacy and competition concerns are not mutually exclusive. The decision reinforces the CCI’s authority to examine anti-competitive effects of digital data use even where privacy issues overlap.
In a landmark judgment, the National Company Law Appellate Tribunal (NCLAT) has upheld the Competition Commission of India’s (CCI) jurisdiction to investigate WhatsApp and its parent company, Meta Platforms Inc., for alleged abuse of dominance under Section 4 of the Competition Act, 2002.
The case originated from the CCI’s suo motu order of March 2021, directing an investigation into WhatsApp’s 2021 update that required users to consent to expanded data sharing with Meta group entities as a condition for continued service.
The CCI found that such conduct constituted “exploitative and exclusionary” behaviour and violated Sections 4(2)(a)(i), 4(2)(c), and 4(2)(e) of the Act. The Commission concluded that WhatsApp and Meta had leveraged their dominance in the “OTT messaging market” to strengthen Meta’s position in online display advertising, effectively compelling users to accept data-sharing terms.
In its November 2024 order, the CCI imposed a ₹213.14 crore penalty on Meta and ordered a five-year restriction on WhatsApp from sharing user data with Meta companies for advertising purposes. It also directed that future policies must provide users with opt-out choices and clear, purpose-linked disclosure of how their data would be used.
Meta and WhatsApp challenged the order before the NCLAT, arguing that the CCI lacked jurisdiction and had intruded into the domain of privacy regulation.
The appellants relied on the Supreme Court’s privacy ruling in K.S. Puttaswamy (Retd.) v. Union of India (2017) and the soon-to-be-enforced DPDP Act, 2023, contending that data protection and user consent were beyond the purview of competition authorities. They further claimed that the CCI had ignored the 2016 Vinod Kumar Gupta decision, where similar privacy terms had been upheld at the preliminary stage.
Rejecting these arguments, the two member bench comprising AshokBhushan (Judicial member) and Arun Baroka observed that the Competition Act and data protection laws operate as complementary frameworks, not exclusive ones.
The Tribunal stated that while privacy laws address individual consent and protection, competition law examines whether such policies are used as tools of market abuse. “The mere overlap in subject matter does not oust the jurisdiction of the CCI,” the order noted.
The Tribunal also upheld CCI’s findings that WhatsApp’s 2021 policy differed materially from its 2016 version, especially because the latter offered users an opt-out option that was absent in the 2021 update. However, the Tribunal granted partial interim relief, staying only the five-year ban on data sharing for advertising, citing possible disruption to WhatsApp’s business model.
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