The National Company Law Appellate Tribunal (NCLAT) is set to deliver a pivotal verdict on Tuesday in the high-profile case involving WhatsApp and its parent company Meta, which has challenged the ₹213.14 crore penalty imposed by the Competition Commission of India (CCI) for alleged abuse of dominant market position. The case revolves around WhatsApp’s controversial 2021 privacy policy update, which mandated users to share data across Meta’s platforms to continue using the messaging app. The tribunal’s decision will determine whether the CCI’s findings regarding coercion and exploitation of user data withstand judicial scrutiny, and could have significant implications for data privacy, platform accountability, and regulatory authority in India.

The background to the case dates back to January 2021, when WhatsApp announced an update to its terms of service and privacy policy, effective from February 8, 2021. The revised policy significantly expanded the scope of data collection from individual users, businesses, and third parties. It also enabled seamless integration of data across Meta’s ecosystem, which includes Facebook, Instagram, and Messenger. Critics argued that the update was coercive because it left users with a binary choice: accept the new terms or lose access to the platform.

Taking suo motu cognisance of this update, the CCI concluded in 2024 that the 2021 policy constituted exploitative abuse under Section 4 of the Competition Act. The regulator observed that the policy stripped users of autonomy and forced them into mandatory data sharing across Meta’s platforms. According to the CCI, this data integration amplified Meta’s competitive advantage, enabling it to monetise user information through targeted advertising and other commercial avenues. The CCI subsequently imposed a penalty of ₹213.14 crore on Meta and barred WhatsApp from sharing user data with other Meta companies for advertising purposes for a period of five years.

WhatsApp and Meta challenged the order before the NCLAT, arguing that the CCI had acted without sufficient evidence or jurisdiction. Their legal team contended that the regulator’s conclusions were unsupported by empirical data, user surveys, competitor metrics, or testimonies. They highlighted that the 2016 privacy policy had already allowed users to opt out of data sharing with Meta’s other platforms, and that those who exercised the option continued to retain it even after the 2021 update. The companies argued that the CCI’s characterization of the 2021 update as entirely coercive was legally flawed.

During the proceedings, the tribunal, led by NCLAT Chairperson Justice Ashok Bhushan and Technical Member Arun Baroka, had stayed the five-year ban on data sharing and directed Meta to deposit 50% of the penalty amount pending the outcome of the case. This allowed WhatsApp and Meta to continue their data practices while the legal challenge was under consideration.

In its arguments before the NCLAT, the CCI, represented by senior advocate Balbir Singh, emphasised that the 2021 update had removed any meaningful choice for users. Singh noted that the “take it or leave it” approach imposed undue urgency and effectively forced users into compliance with the expanded data-sharing terms. He further highlighted that the integration of WhatsApp with other Meta platforms created a network effect that made it practically impossible for users to switch to alternative messaging apps. Even though platforms such as Telegram or Signal were available, the value of a messaging service is inherently tied to the size of a user’s network. As a result, users faced a scenario in which leaving WhatsApp without their contacts moving to the same alternative platform was not a viable option.

The CCI argued that the resulting data ecosystem enabled Meta to leverage user information for advertising and other commercial purposes, thereby entrenching its market dominance. Singh contended that the 2021 update, unlike the 2016 policy, forced users into sharing information without any mechanism for meaningful consent. According to the CCI, this practice violated the Competition Act and constituted an abuse of dominant position in the digital messaging market.

Conversely, WhatsApp and Meta’s legal team, including senior advocates Mukul Rohatgi, Kapil Sibal, and Arun Kathpalia, maintained that the CCI had no solid empirical basis for its conclusions. They argued that user autonomy had not been compromised, as individuals continued to have the ability to manage their data settings. The defense also pointed out that the NCLAT had previously upheld the 2016 privacy framework, which provided opt-out mechanisms, underscoring that the regulator had erred in treating the 2021 update as fundamentally different or coercive.

The case raises broader questions about the intersection of competition law, consumer protection, and digital privacy in India. It reflects the regulatory challenges posed by large tech platforms that operate integrated ecosystems across multiple services. Critics of the 2021 policy update argued that it effectively forced consumers to surrender privacy in exchange for continued access to essential communication tools, highlighting concerns about informed consent and market power in the digital age.

Observers note that the NCLAT’s verdict could have significant implications not only for Meta and WhatsApp but also for other technology companies operating in India. A ruling in favour of the CCI may signal stricter scrutiny of platform-level integration and mandatory data-sharing practices, potentially influencing the design of privacy policies across digital services. Conversely, a ruling favouring WhatsApp and Meta could reinforce the argument that consumers retain control over their data and that market choice is preserved even within large, integrated networks.

The outcome of this case will also be closely watched in the context of India’s evolving digital regulatory framework. With growing attention to data privacy, consumer protection, and anti-competitive practices in the tech sector, the NCLAT decision could set a precedent for how regulators enforce competition law in the rapidly expanding digital economy. The case highlights the delicate balance regulators must maintain between fostering innovation and protecting consumer rights, particularly in markets dominated by a few global players.

As the tribunal prepares to pronounce its judgment, stakeholders across legal, corporate, and policy circles are anticipating a ruling that could clarify the boundaries of competition law in relation to digital platforms. Whether the verdict will uphold the CCI’s ₹213.14 crore penalty, modify it, or overturn it entirely remains to be seen. The decision is expected to influence future regulatory oversight of privacy and data-sharing practices, and may also impact ongoing debates around the ethical and commercial responsibilities of technology companies in India.

In conclusion, the NCLAT’s verdict on WhatsApp and Meta’s challenge to the CCI penalty represents a crucial moment in the regulation of digital platforms in India. It involves complex issues of competition law, data privacy, user autonomy, and corporate responsibility. The outcome will have wide-ranging implications for how integrated technology ecosystems operate, the enforcement powers of regulatory authorities, and the rights of consumers in India’s rapidly growing digital marketplace. Stakeholders await the ruling with keen interest, as it may well shape the regulatory landscape for global technology companies operating in India for years to come.