The Commission bench consisting of Ashok Kumar Gupta (Chairperson), Sangeeta Verma (Member), and Bhagwant Singh Bishnoi (Member) noted in its order that there is a need for detailed investigation to ascertain the full extent, scope, and impact of data sharing through involuntary consent of users.
WhatsApp and its parent company Facebook were directed to file their response to the allegations of users that their personalized data is being compromised by the said platforms.
A response was filed by WhatsApp that was not found adequate as per Regulation 35 of the Competition Commission of India (General) Regulations, 2009. The Commission observed that Facebook had failed to file a response altogether. Both companies later responded to the CCI's directions by email on February 25.
The CCI in its order stated that although an opportunity was given to the platforms, WhatsApp has failed to comply with the directions and also took a plea that is arbitrary and unsustainable in nature.
The Commission finds the contention of WhatsApp that compliance with such requirement is a "cumbersome obligation" and "may result in a delay of proceedings before the Hon'ble Commission", as rather egregious and being inconsistent with the General Regulations.
Facebook contended that it should be removed from the array of the party, the Commission stated, "Facebook is a direct and immediate beneficiary of the new updates and in these circumstances, it is egregious that Facebook is feigning ignorance about the potential impact of the updates altogether and avoiding from providing its perspective thereon."
It rejected the contention of Facebook and added that "Facebook is a proper party in the present matter and its presence is required for an effective and complete determination of the issues involved in the present matter."
The CCI is considering the policy of the WhatsApp from the perspective of competition lens and it is examining the issue-
Whether WhatsApp's new policy has any competition concerns and violates Section 4 of the Competition Act?
The Commission while dealing with the aforesaid issue stated that the purpose of such sharing appears to be beyond users' reasonable and legitimate expectations regarding quality, security, and other relevant aspects of the service for which they register on WhatsApp.
It added that "One of the stated purposes of data sharing viz. targeted ad offerings on other Facebook products rather indicates the intended use being that of building user profiles through cross-linking of data collected across services."
The Commission also stated that data concentration would definitely lead to competition concerns where it is perceived as a competitive advantage. Such conduct prima facie amounts to imposition of unfair terms and conditions upon the users of WhatsApp messaging app, in violation of the provisions of Section 4(2)(a)(i) of the Act.
The CCI opined that "In a data-driven ecosystem, the competition law needs to examine whether the excessive data collection and the extent to which such collected data is subsequently put to use or otherwise shared, have anti-competitive implications, which require anti-trust scrutiny."
The CCI stated that in the case titled Harshita Chawla v. WhatsApp Inc., Case No. 15 of 2020 ('Harshita Chawla case') it was concluded that WhatsApp is dominant in the relevant market for OTT messaging apps through smartphones in India.
The Commission further stated that "Such opacity, vagueness, open-endedness and incomplete disclosures hide the actual data cost that a user incurs for availing WhatsApp services."
It added that "It is also not clear from the policy whether the historical data of users would also be shared with Facebook Companies and whether data would be shared in respect of those WhatsApp users also who are not present on other apps of Facebook i.e., Facebook, Instagram, etc."
Regarding the concern of the personal data of the users at risk, the Commission said that there is no justifiable reason that the users should not have any control or say over cross-product processing of their data and it is a mandatory condition for using the App.
It concluded that this is definitely contravening the provisions of the Competition Act and it is causing 'abuse of dominance' that is in contravention of Section 4 of the Competition Act, which prohibits abuse of dominance.
The Commission concluded that "WhatsApp has prima facie contravened the provisions of Section 4 of the Act through its exploitative and exclusionary conduct, as detailed in this order, in the garb of the policy update. A thorough and detailed investigation is required to ascertain the full extent, scope, and impact of data sharing through involuntary consent of users."
The Commission directed the Director-General (DG) for a detailed investigation in the said issue of compromise of private data of users and abuse of dominance. The DG was directed to submit a report within 60 days from the pronouncement of the order.