Meta Platforms, the parent company of WhatsApp, has obtained interim relief from India’s National Company Law Appellate Tribunal (NCLAT), which has stayed the five-year ban imposed by the Competition Commission of India (CCI) on WhatsApp's data-sharing practices. The tribunal's decision marks a significant development in Meta’s legal battle over data privacy in one of its largest markets.
Interim Stay on CCI Ban
The NCLAT
bench underscored that the ban on WhatsApp’s data-sharing practices, linked to
its privacy policy, could potentially disrupt the platform’s business model in
India. The tribunal also directed Meta to deposit 50% of the ₹213.14 crore
penalty imposed by the CCI, with the amount refundable if Meta ultimately
prevails in the case. Meta has already paid 25% of the fine as part of the
compliance process.
This
dispute centers on the CCI's November 18, 2024, ruling, which barred WhatsApp
from sharing user data with other Meta-owned entities, including Facebook and
Instagram, for advertising purposes. The next hearing in the matter is
scheduled for March 17.
Backdrop: WhatsApp’s Privacy Policy Under Scrutiny
The
controversy stems from a privacy policy update introduced by WhatsApp in
January 2021. The update required users to accept revised terms, which included
the sharing of specific user data—such as phone numbers, device information,
and business interaction details—with other Meta entities.
The
policy drew sharp criticism for allegedly exploiting Meta’s dominant market position,
as it left users with no opt-out option—a stark contrast to the flexibility
provided to European users under the GDPR framework.
The CCI's
investigation concluded that the policy granted Meta an unfair competitive
advantage by leveraging user data for targeted advertising. As a result, the
regulator imposed a five-year ban on WhatsApp’s data-sharing practices and a
penalty of ₹213.14 crore.
Meta’s Legal Argument and Implications
Meta has
challenged the CCI's order, arguing that India’s forthcoming Digital
Personal Data Protection Rules, 2025, will address many of the data privacy
concerns raised in the case. The company contends that enforcing the CCI’s
ruling before the new legislation comes into effect would disrupt its
operations and render parts of the ruling obsolete.
Meta’s
business model relies heavily on integrating user data across platforms to
deliver personalised advertising. The company argued that the ban would impair
its ability to support Indian businesses, many of which depend on platforms
like WhatsApp for customer engagement. For instance, fashion retailers
leveraging WhatsApp for customer interactions might lose the ability to target
advertisements effectively on Facebook and Instagram, adversely impacting their
sales.
Facebook
India Online Services, a key revenue contributor to Meta’s ecosystem, reported
record revenue of $351 million in the 2023-24 financial year. The CCI’s
directive, if enforced, could force Meta to overhaul its advertising services
and disrupt revenue streams.
User Consent and Global Trends
The CCI
has maintained that user consent must be informed and voluntary. It argued that
users should not be compelled to accept expanded data-sharing terms as a
prerequisite for accessing WhatsApp. This principle mirrors global regulatory
trends, such as Germany’s temporary ban on Facebook’s processing of WhatsApp
user data in 2021 and Ireland’s substantial fine against WhatsApp for a privacy
policy breach.
Evolving Data Privacy Landscape in India
The case
highlights the complexities of regulating global tech companies in diverse
markets. India’s Digital Personal Data Protection Rules, 2025, expected
to be implemented by mid-year, aim to harmonise data privacy standards across
industries. These upcoming regulations could address the concerns raised by the
CCI while redefining the framework for corporate data-sharing practices.
While
Meta has aligned its European operations with stricter privacy laws, its Indian
practices have faced criticism for allegedly undermining user autonomy. The
contrasting regulatory environments underscore the challenges of enforcing
uniform data privacy standards globally.
Future Outlook
The NCLAT’s interim relief for Meta allows for further legal deliberations, with significant implications for data privacy and corporate practices in India. As the country moves toward implementing comprehensive data protection laws, the case serves as a pivotal moment in shaping the regulatory landscape for global tech giants operating in India
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