NCLAT Upholds CCI’s ₹213 Crore Penalty on Meta, Affirms Data Misuse as Abuse of Dominance
NCLAT Upholds CCI’s ₹213 Crore Penalty on Meta, Affirms Data Misuse as Abuse of Dominance
Introduction
The National Company Law Appellate Tribunal (NCLAT), New Delhi, reaffirmed the jurisdiction of the Competition Commission of India (CCI) in probing and penalising anti-competitive conduct arising from data misuse. The case centered on WhatsApp’s 2021 Privacy Policy update, which compelled users to consent to sharing their data with Meta Platforms, raising serious concerns about abuse of dominance in India’s OTT messaging app market. The CCI had imposed a ₹213 crore penalty on Meta Platforms and WhatsApp LLC for leveraging their dominant position to impose unfair terms on users and distort competition by using personal data to restrict rivals.
Factual Background
Following CCI’s November 2024 order imposing penalties, WhatsApp and Meta filed appeals before the NCLAT. They contended that the CCI lacked jurisdiction to examine privacy-related issues, which fell within the purview of the Digital Personal Data Protection Act, 2023 (DPDP Act) and the Information Technology (SPDI) Rules, 2011. The appeals also challenged the five-year ban on WhatsApp’s data-sharing for advertising purposes.
Issues
1. Whether the CCI had jurisdiction to investigate issues involving privacy and data sharing under competition law.
2. Whether Meta and WhatsApp abused their dominance in the Indian OTT messaging market by coercing users into unfair data-sharing terms.
3. Whether the five-year prohibition on user data sharing for advertising was legally sustainable.
Contentions of the Parties
Appellants (Meta & WhatsApp): The appellant asserted that privacy and data protection are distinct subjects under the DPDP Act and SPDI Rules, and thus fall outside CCI’s scope. The appellant argued that user consent and privacy-related matters are regulated by the Data Protection Authority, not the CCI. Moreover, they contended that Meta and WhatsApp are separate entities, making the application of Section 4(2)(e) of the Competition Act untenable.
Respondent (CCI): The respondent maintained that competition law and data protection law operate as complementary frameworks. CCI claimed that WhatsApp and Meta exploited user data to suppress competition and entrench dominance. The respondent supported the penalty and behavioural directions as proportionate to the abuse found.
Reasoning and Analysis
The NCLAT, led by Justice Ashok Bhushan and Member (Technical) Arun Baroka, held that the mere overlap between privacy and competition concerns does not oust CCI’s jurisdiction. It emphasised that privacy loss can be equated with service quality reduction—making it a relevant non-price factor under Section 4 of the Competition Act. The Tribunal agreed that Meta and WhatsApp had imposed unfair data-sharing terms, violating Sections 4(2)(a)(i) (unfair conditions) and 4(2)(c) (market restriction). However, it struck down findings under Section 4(2)(e) (leveraging dominance across markets), deciding that Meta and WhatsApp are separate legal entities and the provision cannot apply inter se distinct entities. Moreover, regarding the five-year ban on sharing user data for advertising, the NCLAT found no rational basis for the duration and held that providing users with clear opt-in and opt-out choices sufficiently protects competition and consumer autonomy.
Implications
The judgment marks a significant milestone in defining the intersection of data protection and competition law in India. Moreover, by affirming that privacy loss can constitute a reduction in service quality, the NCLAT has broadened the scope of non-price competition analysis under the Competition Act. It also reinforces the CCI’s jurisdiction to address data-related market abuses even when privacy laws are simultaneously applicable, ensuring that large digital platforms cannot evade scrutiny by drawing artificial lines between privacy and competition regulation. At the same time, by striking down the five-year ban on data sharing, the Tribunal balanced enforcement with proportionality, signalling that regulatory interventions must be evidence-based and limited to what is necessary to restore competition.
In this case the appellant was represented by Mr. Mukul Rohatgi and Mr. Arun Kathpalia, Sr. Advocates with Mr. Yaman Verma, Mr. Shashank Mishra, Ms. Aisha Khan, Mr. Shivek Endlaw, Mr. Parv Kaushik, Mr. Aditya Dhupar, Ms. Vedika Rathore, Ms. Devanshi Singh, Mr. Udit Dedhiya, Ms. Bani Brar and Ms. Tahira Kathpalia, Advocates.
