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Back in 2014, when Facebook acquired WhatsApp Inc., the users were assured that their privacy will not be compromised. However, WhatsApp announced the Updated Terms of Service & Privacy Policy in January 2021, which was deferred until May and again to July owing to huge backlash.
The new policy enables sharing of data of the user with Facebook Inc and companies associated thereof. WhatsApp will be able to access details like IP Address, profile picture, status, contact details, etc.
Also, the new policy amended end-to-end encryption for business accounts — that is, chats between a user and any business account will be accessible by WhatsApp.
The updated policy, it is alleged, not only breaches user data ownership and security but also imposes an unfair condition on the users to mandatorily agree to the terms of the policy if they desire to continue using its services.
Further, the nature and scope of the policy is ambiguously broad and makes the data sharing criteria non-exhaustive.
Unlike the European Union, India’s dearth of data transfer and privacy protection laws makes it difficult to seek relief in the absence of an effective redress mechanism. As such, recourse to anti-trust laws have been sought to protect consumers’ interests.
CCI intervenes
The Competition Commission of India (CCI) took s uo moto cogniance against WhatsApp in March 2021. WhatsApp is alleged to have abused its dominant position in the ‘OTT messaging apps’ marketplace, as held in the Vinod Kumar Gupta (2016) and Harshita Chawala (2020) cases.
It must also be taken into consideration that WhatsApp communication between two people can only happen if both the users have registered on it. In the event, the user doesn’t agree with the new policy and wishes to switch the platform, he/she would have to convince all his other contacts to switch. This lock-in effect makes it difficult for its users to leave its services. This amounts to contravention of quality and privacy.
Privacy is identified as a non-price competition parameter in the Microsoft/LinkedIN merger (2016) case . Moreover, the implementation of the new privacy policy provides a data advantage to WhatsApp, which in the long run will lead to data monopoly in the OTT messaging application market. This creates barriers against the entry of other competitors, eventually wiping out any competition.
On the basis of this ‘test of user choice’, CCI has ordered an investigation under Section 26(1) of the Competition Act, 2002. The investigation will on three aspects of Section 4 — determination of relevant market; determination of dominant position; and determination of abuse of dominance.
It is pertinent to note that the order concerns the opaque and vague ‘manner’ of data collection rather than the collection itself. At this juncture, one is reminded of the German antitrust (2020) case, where a similar policy announced by Facebook (Ireland) was proscribed on the basis of manner of data collection and non consensual data sharing, by the Federal Court of Justice, Germany.
WhatsApp challenged the CCI’s jurisdiction to investigate the matter, relying on pronouncement in CCI v Bharti Airtel (2018). The CCI refuted the argument on the basis of pronouncement in the Monsanto Holdings Private Ltd vs CCI (2020) where it was held that the Bharti Airtel ratio was applicable only in cases where sectoral regulators are present.
In the instant case, there is no sectoral regulator, which grants CCI a parallel jurisdiction to probe the matter. The single bench rejected WhatsApp’s challenge against the investigation order by the CCI, which is now pending appeal before the Division Bench of the Delhi High Court.
The CCI’s attempt to explore the digital economy is praiseworthy, but needs to tread carefully on the line of investigation. While there is a compelling case to enact data protection laws, there is enough manoeuvring ground in the present regime itself to evaluate market position economics and prevent abuse of dominance.
Also, the upcoming policy can buy out any potential competition. The ex-post facto approach being slow, it is still to be seen how CCI will accommodate this instance of ex-ante measure, which is also being explored by the German and EU regimen.
(The authors are law consultants and members of the Cambridge University Press (CUP) Academia.)
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