This article will be examining the CCI’s decision, its reasoning, and any other antecedent questions that remain unanswered. However, before all this, we need to briefly discuss what the changes actually are, as there has been considerable confusion regarding them.
Updated Terms And Conditions
The changes led to a wave of panic and speculation, which obviously resulted in the spread of misinformation. WhatsApp also came out with its own set of clarifications, but whether it is comprehensive or not is up to question. What is not up for dispute is the fact that WhatsApp made this new policy mandatory. The user had to accept these new changes or they would lose access to their chats and would not be able to use WhatsApp any longer.
The primary change came in terms of its treatment of businesses. WhatsApp stated that it would allow businesses to use hosting services from Facebook, through which it could access customer chats. Pursuant to this, the application will share customer data like phone numbers and transaction information with these businesses. This will allow businesses to target advertisements and use transaction data to make business decisions.
In summary, alot of misinformation has been present around these changes. Much of this has been false. At the same time, WhatsApp is not a good faith actor and has been actively harvesting and processing user data. Here, it was merely being transparent with its practices and revamping some business-related services, in order to fulfil its goal to become a major e-commerce player.
CCI’s Order And Delhi High Court Case
WhatsApp tried to challenge the CCI’s jurisdiction based on various grounds, such as the presence of another regulator, that the matter was sub judice in another forum, that the subject matter was outside the ambit of competition law. We do not need to go into the reasoning of this, but the CCI rejected all of these preliminary objections and determined that the investigation could proceed.
The first determination that the CCI had to make was whether WhatsApp had a dominant position in the relevant market. It identified the “market for OTT [over the top] messaging apps through smartphones in India to be the relevant market, extensively quoting from its previous decision in the Harshita Chawla case. The CCI ultimately determined that WhatsApp had a dominant position in the market, because of global usage data and “information available in the public domain”. The CCI thus upheld what it had decided in Harshita Chawla, and said even though that decision is from August, 2020, the rise of apps like Signal has not significantly dented WhatsApp’s position since it is entrenched due to “network effects”. Network effects are scale effects, i.e. increase in a number of users leads to an increase in the value of the application for other users, which leads to a corresponding increase in users, which again leads to an increase in the value. This is compounded and the result is that the dominant company is effectively entrenched.
The CCI also complains the new policy is “unduly expansive and disproportionate”. Transaction and payment data, battery level, signal strength, app version, mobile operator, language, Internet Service Provider, time zone, device information, service-related information, identifiers, location information would now be shared with Facebook.
Lastly, the CCI notes that many of the information categories are “unintelligible” and imprecise. The information covered under users interacting “with others (including businesses)”, “service-related information”, “mobile device information”, “payments or business features” are all undefined. Further, much of the policy uses qualifiers like “including”, “for example”, which means that the data types being collected are not exhaustive and the limit of data collection is unclear.
Thus, because of the mandatory nature of the new policy, the expansive nature of data collection and imprecise definition of what data will be collected, the CCI made out a prima facie case that needed further investigation.
Facebook and WhatsApp challenged this decision in the Delhi High Court, arguing that the Competition Commission was abusing its suo motu jurisdiction and did not have authority to try the case, since the Supreme Court was already hearing a similar matter. The CCI responded that it was not investigating the privacy concerns, but was investigating the competition aspects of the case. It further argued that prima facie the new policy would be used to create user profiles in a manner equivalent to “stalking”, and all for the purpose of targeted advertising. The hearings have concluded and the Delhi High Court has reserved its judgement.
The order raises several interesting questions. First, the order seems to state in unequivocal terms that it is investigating proposed changes before they are enforced. However, this runs against the general consensus surrounding abuse of dominance claims, which traditionally are brought after abuse of dominant position has occurred. This represents a sea of change in the way the CCI investigates abuse of market dominance cases, and it is interesting to see how this will be dealt with going forward.
Second, the CCI has now waddled into the sector of data privacy. While it is obviously a positive development as data is increasingly being used to create a competitive advantage, there remain some problems of enforcement. The CCI, for any remedy, will have to rely on the data privacy laws in the nation to determine infringement and come out with a remedy. However, the Personal Data Protection Bill has not yet been passed and it is unclear if and when it will come into force. As a result, the question of remedies and determination of how law has been violated will be of definitive importance later on.
However, one of the most unexpected yet welcome contributions of the CCI order is the clarity it introduces to the exact scope of changes being introduced. WhatsApp and social media have been involved in a protracted misunderstanding regarding the new changes, and the CCI order’s greatest contribution in the present is ensuring that the exact problems with these updates can be highlighted.
The saga is far from over. The Delhi High Court has not made a final decision, and the Director General’s detailed investigation may absolve WhatsApp at the end of the investigation. Though there are a few questions that remain unanswered, the move is largely a positive one, and it will be interesting to see how it plays out.
 Supra note 1.
 Vinod Kumar Gupta vs. WhatsApp Inc., Case No. 99 of 2016, Competition Commission of India.
 Harshita Chawla v. WhatsApp Inc, CCI Case No. 15 of 2020, Competition Commision of India.
 PTI, ‘Ordered probe of WhatsApp policy on competition aspect: CCI to Delhi High Court’ Economic Times, 13 April, 2021, available at : https://economictimes.indiatimes.com/news/india/ordered-probe-of-whatsapp-policy-on-competition-aspect-cci-to-delhi-high-court/articleshow/82048168.cms (last visited April 15, 2021).
 Board of Control for Cricket in India v. CCI, COMPAT, Appeal No. 17 of 2013; Supra note 13.
 The Personal Data Protection Bill, 2019, Bill No. 373 of 2019.
BY DEBAYAN BHATTACHARYA | NATIONAL LAW UNIVERSITY, DELHI