The National Company Law Appellate Tribunal (NCLAT) on Tuesday upheld the Competition Commission of India (CCI)’s ₹213.14 crore penalty on WhatsApp and its parent company, Meta Platforms Inc., for allegedly abusing their dominant market position in India. The case revolves around WhatsApp’s controversial 2021 privacy policy update, which compelled users to share personal data across Meta’s platforms, raising concerns of coercion and anti-competitive practices.

Background of the Case

In January 2021, WhatsApp announced changes to its terms of service and privacy policy, which came into effect on February 8, 2021. The update significantly expanded the scope of data collection and integration across Meta’s ecosystem, including Facebook, Instagram, and Messenger. Users who wished to continue using WhatsApp were required to consent to the policy, effectively leaving them with a “take it or leave it” choice.

The CCI took suo motu cognisance of the policy change, arguing that the update forced users to share personal and business data with Meta companies and created barriers for competing messaging and advertising platforms. In November 2024, the CCI concluded that the 2021 policy amounted to exploitative abuse under Section 4 of the Competition Act, imposing unfair and one-sided terms on users.

Among its orders, the CCI had also directed that WhatsApp should not share user data with other Meta entities for advertising purposes for a period of five years, alongside levying the ₹213.14 crore penalty.

WhatsApp and Meta’s Challenge

WhatsApp and Meta challenged the CCI’s decision before the NCLAT, contending that the regulator had acted without proper evidence or jurisdiction. They argued that the 2021 privacy update merely reflected continued platform integration and did not constitute coercion. The companies emphasized that the 2016 privacy policy, which allowed users to opt out of cross-platform data sharing, had been upheld, and many users continued to retain that option.

Their legal team, represented by senior advocates Mukul Rohatgi, Kapil Sibal, and Arun Kathpalia, asserted that the CCI’s decision lacked empirical support, including user surveys, competitor data, or user testimonies, and therefore could not conclusively demonstrate abuse of dominance. They also highlighted that users could switch to alternatives like Telegram or Signal, albeit with the practical difficulty that entire social networks often need to migrate collectively.

CCI’s Arguments

The CCI, represented by senior advocate Balbir Singh, argued that the 2021 update coerced users into compliance by removing the opt-out mechanism, thereby violating principles of user autonomy and meaningful consent. The regulator contended that the policy created an ecosystem lock-in, giving Meta a competitive advantage in online advertising by leveraging user data across multiple platforms.

Singh emphasized that WhatsApp’s dominance, combined with integration across Meta’s social and messaging platforms, effectively limited consumer choice and stifled competition. “Even if alternatives exist, users cannot migrate alone; their entire network must move,” he told the tribunal, highlighting the network effects that entrenched Meta’s market position.

NCLAT’s Decision

The NCLAT, in a bench comprising Chairperson Justice Ashok Bhushan and Technical Member Arun Baroka, largely upheld the CCI’s findings regarding WhatsApp’s abuse of dominance through its exploitative 2021 privacy policy. The tribunal agreed that the “take-it-or-leave-it” policy deprived users of meaningful consent, eroded privacy—a critical component of service quality—and created entry barriers for rival platforms in the online advertising ecosystem.

However, the NCLAT set aside the CCI’s finding under Section 4(2)(e), which related to leveraging dominance. The CCI had earlier concluded that Meta used WhatsApp’s dominance in messaging to expand its position in online display advertising. In addition, the NCLAT nullified the CCI’s order that restricted WhatsApp from sharing user data with Meta companies for advertising purposes for five years, noting that this specific direction was excessive.

The tribunal clarified:

“The plea is allowed only to the extent of the findings of the Commission in so far as it holds breach of Section 4(2)(e) of the Act and to setting aside the directions in paragraph 247.1 [the ban on WhatsApp sharing data with other Meta companies]. The rest of the order dated 18.11.2024 is upheld.”

Implications for WhatsApp, Meta, and Users

With this decision, WhatsApp and Meta are required to pay the ₹213.14 crore penalty, reinforcing regulatory oversight over data practices and competition compliance in India. While the five-year data-sharing ban has been removed, the ruling underscores that dominant tech platforms cannot impose exploitative or coercive terms on users.

The ruling is expected to have broader implications for digital privacy, consumer rights, and competition in India, especially as regulators increasingly scrutinize tech giants for cross-platform data integration and market dominance.

Conclusion

The NCLAT’s decision marks a significant development in India’s ongoing efforts to regulate the digital economy and ensure fair competition. While WhatsApp and Meta retain the ability to integrate their services for operational purposes, the tribunal’s judgment reinforces that such integration cannot come at the cost of user autonomy or exploitative practices.

As the digital ecosystem in India continues to expand, this ruling is likely to shape future privacy policies and competitive practices across messaging, social media, and online advertising sectors.

---