NCLAT Reserves Judgment in Meta and WhatsApp's Appeal Against CCI's ₹213.14 Crore Penalty

NCLAT Reserves Judgment in Meta and WhatsApp's Appeal Against CCI's ₹213.14 Crore Penalty

Introduction

The National Company Law Appellate Tribunal (NCLAT) has reserved its judgment in appeals filed by Meta Platforms Inc and WhatsApp challenging the Competition Commission of India’s (CCI) verdict that ordered them to pay ₹213.14 crore for alleged abuse of dominance through their 2021 privacy policy update.

Factual Background

In November 2024, the CCI imposed a penalty on Meta and WhatsApp, finding that the 2021 privacy policy update amounted to abuse of dominance. The regulator concluded that the "take-it-or-leave-it" approach imposed unfair conditions on users and undermined autonomy.

Contentions of the Parties

WhatsApp's Contention: Senior Advocate Arun Kathpalia argued that the CCI's findings were based on "factual inaccuracies" and that the 2021 policy update did not enlarge WhatsApp's ability to collect and share data. He emphasized that the policy was more transparent and detailed, and that the illustrations provided did not expand WhatsApp's capacity to collect data.

Meta's Contention: Senior Advocate Amit Sibal argued that the CCI's findings were based on exaggerations and speculation, and that user data was not shared with Meta for advertising purposes except in limited, optional contexts.

CCI's Contention: Senior Advocate Balbir Singh argued that Meta's size, resources, and integration across platforms entrenched its dominance in the messaging app market. He submitted that WhatsApp exploited this dominance by imposing the 2021 privacy policy on a "take it or leave it" basis, compelling users to accept cross-platform data sharing.

Issues

● Abuse of Dominance: The CCI's finding that WhatsApp's 2021 privacy policy update amounted to abuse of dominance.

● Penalty and Directions: The CCI's imposition of a ₹213.14 crore penalty and directions to WhatsApp not to share user data with Meta or its affiliates for five years.

Analysis

The NCLAT's judgment will have significant implications for Meta and WhatsApp, as well as the broader tech industry. The appeals raise important questions about the balance between user privacy and the need for digital platforms to collect and use data to provide their services.

Conclusion

The NCLAT's decision will determine whether the CCI's penalty and directions are upheld or set aside. The judgment will provide clarity on the regulatory framework governing digital platforms and their use of user data.