WhatsApp privacy policy: SC ruling won't affect CCI probe, says Delhi HC

If SC upholds the Policy, CCI can ascertain whether or not the provisions of the Competition Act have been violated

The Delhi High Court held that the investigation conducted by the Competition Commission of India (CCI) in the WhatsApp-Facebook privacy policy case “will not be affected” by the outcome of the proceedings pending before the Supreme Court.

In case the Supreme Court upholds the WhatsApp 2021 Policy, then CCI can surely explore whether or not the provisions of the Competition Act have been violated.

In case the 2021 Policy is set aside by the top Court, the CCI will still have the jurisdiction to probe the violation of the Act. In either case, it cannot be stated that the CCI does not have the authority look into this affair, being the market (competition) regulator, the high court said in the order made public on Friday.

During the course of the hearing, Whatsapp had argued that its privacy policy is being examined by the Supreme Court and so the investigation cannot be allowed until that matter is resolved. It had also said that CCI's decision was an abuse of the commission's suo motu jurisdiction.

The high court observed that though certain issues that the CCI is seized of in the WhatsApp-Facebook case “may substantially be in issue before the Supreme Court”, it does not lead to a conclusion that the top court and the CCI are adjudicating upon the same issue.

On Thursday, the Delhi High Court rejected WhatsApp and Facebook appeals seeking a stay on CCI's probe into the messaging platform’s updated privacy policy of 2021. The move has allowed the regulator to go ahead with the probe launched against WhatsApp for alleged abuse of dominance.

The matter has been stalled as the social messaging platform has been reluctant to provide information to the regulator related to its policy citing CCI’s jurisdiction.

Given that the validity of the 2021 Policy is under consideration before the SC and is relevant to proceedings before the CCI, the Court could have considered to stay proceedings before the CCI till the Supreme Court passes an order on the validity of the policy, it noted.

Further, post the SC's order, the CCI could have then initiated its investigation under the Competition Act, court said added the issues before the CCI involve an “intrinsic interlinkage” of data protection/privacy and competition laws issues.

Experts too pointed out the relevance of the CCI probe, if the SC holds that the 2021 policy is valid and does not violate the privacy of users, can the CCI subsequently hold the same policy to be abusive under the competition laws.

“If the Supreme Court upholds the validity of the 2021 Policy and there's no violation of privacy, then the question that arises is whether the issue pertaining to the ‘take it or leave it’ nature of the policy before the CCI remains relevant, said Akshayy S Nanda, Partner–Competition and Data Privacy Practice at Saraf and Partners.

"So, the question that arises is that if the policy does not violate the privacy of users, is it necessary under the law to still provide an ‘opt-out’ option to the users. These questions and issues will continue to arise till we don’t bring into force a comprehensive personal data protection regime," Nanda reasoned.

The main contention of WhatsApp before the Delhi High Court was that since the Supreme Court is already looking into the 2021 Policy, the CCI should hold its hand as it may potentially lead to conflicting opinions.

The High Court has held that the scope of proceedings before the apex Court and the CCI are different. It made it explicitly clear that the Supreme Court is looking into whether or not the 2021 Policy is violative of the right to privacy under Article 21 of the Constitution of India or not.

On the other hand, the CCI is investigating whether the 2021 Policy is in furtherance of the dominant position occupied by WhatsApp which is prima facie abusive in violation of the provisions of the Competition Act.

“It is not in dispute that WhatsApp occupies a dominant position in the relevant product market and that there exists a strong lock-in effect which renders its users incapable of shifting to another platform despite dissatisfaction with the product – as is exemplified by how, despite an increase in the downloads of Telegram and Signal when the 2021 Policy was announced, the number of users of WhatsApp have remained unchanged," the Delhi HC order reads.

“By and large, to ensure retention of its user base and to prevent any other disruptive technology from entering the market, data is utilised by tech companies to customise and personalise their own platforms so that its userbase remains “hooked”, it noted.

What the High Court said

1. If SC upholds the WhatsApp 2021 Policy, the CCI can look into whether the provisions of the Competition Act have been violated
2. No conclusion the apex court and the CCI are adjudicating upon the same issue 
3. The issues before the CCI involve 
4. an “intrinsic interlinkage” of data protection/privacy and competition laws issues
5. “It is not in dispute that WhatsApp occupies a dominant position in the relevant product market…” 

When data concentration is seen through this prism, it does give meaning to the new adage that “data is the new oil” and, as noted in the CCI Order dated March 24,2021, it raises competition concerns because it prima facie amounts to imposition of unfair terms and conditions upon its users, thereby violating the Act,” court said.

The Court clarified that the top Court is not analysing the 2021 policy from the prism of competition law, which the CCI is empowered to do.

“Even if the issues are the same, the approach of Supreme Court and the CCI are vastly dissimilar, and there exists no inviolable rule that the CCI would completely lack jurisdiction in the instant matter," the order said.

The Court has taken the view that parallel inquiries by two different authorities in their respective spheres of adjudication is not uncommon and a slight overlap between the inquiries does not mean that one must lead to the ouster of the other.