The Competition Commission of India (CCI) has imposed a penalty of ₹213.14 crore on Meta Platforms, the parent company of WhatsApp, for abusing its dominant position in relation to the contentious privacy policy update rolled out by the messaging platform in 2021. The watchdog accused Meta of implementing the policy in a manner that was detrimental to users' interests, citing concerns over data collection and sharing practices.

The CCI’s ruling also includes a directive for Meta and WhatsApp to implement specific behavioural remedies within a prescribed timeline. A key mandate prohibits WhatsApp from sharing user data collected on its platform with other Meta entities for advertising purposes for a period of five years.

The controversy dates back to January 2021, when WhatsApp introduced an updated privacy policy requiring users to accept expanded data-sharing terms, including sharing information with other Meta companies. While users in India were compelled to comply, those in the European Union were exempt due to the region's robust data protection regulations.

The CCI also issued a cease-and-desist order, underscoring the need for fair practices in data collection and privacy. The penalties and restrictions aim to ensure greater accountability and transparency in the handling of user data. The move reflects increasing scrutiny over tech giants in India, where data privacy and user rights have become pressing concerns amid the rapid growth of the digital economy.

The CCI highlighted that WhatsApp’s 2021 privacy policy update, introduced on a “take-it-or-leave-it” basis, imposed "unfair conditions" on users, violating provisions of the Competition Act. The mandatory acceptance of the updated terms left Indian users with no alternative but to consent to expanded data-sharing practices, which the Commission deemed exploitative.

Furthermore, the CCI criticised the sharing of WhatsApp user data with other Meta companies for purposes unrelated to the messaging service. It observed that such practices not only created significant entry barriers for Meta’s competitors but also amounted to the denial of market access in the display advertising sector. This, the Commission said, consolidated Meta’s dominance at the expense of fair competition.

The watchdog’s findings underline the broader implications of data-sharing policies on market dynamics and user rights, reinforcing the need for stringent oversight of tech companies operating in India.

“Meta has engaged in leveraging its dominant position in the OTT (over the top) messaging apps through smartphones to protect its position in the online display advertising market,” in contravention of the Competition Act, the CCI said.

The CCI directed WhatsApp to revise its privacy policy to include a detailed explanation of the user data being shared with other Meta companies. The updated policy must clearly specify the purpose of such data sharing, with each type of data explicitly linked to its corresponding purpose, ensuring greater transparency for users.

“Sharing of user data collected on WhatsApp with other Meta Companies… for purposes other than for providing WhatsApp services shall not be made a condition for users to access WhatsApp Service in India,” the CCI said.

Meta has not issued a statement in response to the CCI’s order at the time of reporting. The controversy surrounding WhatsApp’s 2021 privacy policy update, which led to a mass exodus of users to competitors like Signal and Telegram, prompted the CCI to initiate suo motu proceedings. It directed its investigative wing, the Office of the Director General, to examine the policy’s implications.

Both WhatsApp and its parent company, Meta, challenged the investigation in the Delhi High Court, arguing that matters related to the privacy policy were already under consideration by the Supreme Court and High Court. However, in 2022, the Delhi High Court dismissed further appeals by the companies. The court noted that WhatsApp’s dominant market position, coupled with its strong lock-in effect, left users with limited alternatives despite their dissatisfaction with the updated policy.