Delhi HC dismisses Whatsapp, Meta appeals against CCI investigation

Regulator says social media network's user policies are opaque and not based on consent

In a setback to WhatsApp and Facebook (now Meta), the Delhi High Court (HC) on Thursday rejected their appeal seeking a stay on the Competition Commission of India (CCI) probe into the messaging platform’s updated privacy policy of 2021.

The verdict has cleared the decks for the regulator to further the probe and reach finality in the case it initiated in March 2021 against WhatsApp for alleged abuse of dominance. The regulator viewed the data-sharing policy exploitative and could have an exclusionary effect. 

The HC on Thursday ruled that appeals are “devoid of merits”, a Bench of Chief Justice Satish Chandra Sharma and Justice Subramonium Prasad said, while pronouncing the order. 

The court even observed that the previous (single-judge Bench) order, which had ruled that CCI has the jurisdiction to proceed with the probe, was “well-reasoned”.

The regulator couldn’t probe the matter as the messaging platform has been reluctant to provide information to the regulator related to its policy citing CCI’s jurisdiction issue.

During the previous course of hearing in the case, the messaging platform had undertaken to not enforce its privacy policy until the time the government’s Data Protection Bill comes out.

The counsel for Whatsapp had also argued that the privacy policy in question is being examined by the Supreme Court (SC) and so the investigation cannot be allowed until that matter is resolved. They had also said that CCI’s decision was an abuse of the commission’s suo motu jurisdiction.

While Facebook, Inc, had contended that just because it is the formal owner of WhatsApp and the instant messaging platform is said to share its data with the parent company does not mean that it is a necessary party to the probe.

However, the CCI argued that its probe is not related to what the SC is looking into as it is not examining the alleged violation of individuals' privacy. 

The antitrust regulator is probing the privacy policy of both companies which appears to be neither transparent nor based on the voluntary consent of the user. Such a policy would lead to excessive data collection and ‘stalking’ of consumers for targeted advertising to bring in more users and is, therefore, alleged abuse of dominant position. 

Additional Solicitor General N Venkatraman appearing for CCI had submitted that its investigation in the case cannot be stalled using judicial process. 

CCI had told the court that it was not able “move an inch” in its investigation into WhatsApp’s privacy policy of 2021 on account of a court order granting time to Facebook and the instant messaging platform for filing replies in connection with the probe.

It had said that there was “virtually a stay” on the proceedings and the antitrust regulator must be allowed to carry out its investigation and Facebook and WhatsApp must be asked to file their replies.

In January last year, CCI on its own had decided to look into WhatsApp’s updated privacy policy, following the news report.

The regulator then observed that users were not provided appropriate granular choice to object or opt-out of specific data sharing terms, adding that the reduction in consumer data protection and loss of control over personalised data can be taken as reduction in quality under the antitrust law.

WhatsApp and Facebook had subsequently challenged before the single-judge CCI’s March 2021 order directing a probe against them, saying the issue concerning its new policy was already pending consideration before the HC and the SC.

The single judge on April 22 last year, however, refused to interdict the investigation.

Insight Into The Case

• In March, 2021, CCI ordered probe into WhatsApp’s updated privacy policy
• WhatsApp, Meta subsequently challenged probe
• Firms argued that privacy policy is being examined by SC so investigation by regulator can’t be allowed
• CCI argued that it is examining competition laws’ violation and not privacy issue
• CCI alleges abuse of dominance as it involves excessive data collection, targeting advertising 
• Single-Bench refused to interfere in CCI probe 
• Firms move to two-Bench judge or Delhi High Court 
• Delhi High Court upheld single-judge order