The WhatsApp - CCI privacy battle!
Published: Apr 28, 2021
By Prashanth Shivadass & Sriharsha Palanki*
1. Suo Moto 01 of 2021 1
Living in a world integrated with technology in every crevice and corner, awareness regarding the implications of changes is critical to our digital existence. With controversial policy revisions and mandatory acceptance being a rule to its continued usage, WhatsApp had raised several questions in the minds of its stakeholders worldwide. The Competition Commission of India ("CCI"), took cognizance of the potential impact of the revision in WhatsApp's Policy and Terms for its users. The said revision was prima facie observed as a potential misuse/abuse of its dominant position among its comparable platforms by CCI. 2 Hence, a direction was issued the Director General to launch an investigation under Section 26(1) of Competition Act, 2002 and to submit a report within 60 days.
1.1 WhatsApp on CCI's radar
Since 2017, CCI had been closely examining various allegations against Whatsapp. For instance, in Case No. 99/2016 3 (Vinod Gupta case) it was noted that an "opt-out" facility was provided to the users in case they were not desirous of sharing account information with Facebook as per previous policies dated August 25, 2016 and December 19, 2019. The said facility could be utilised within 30 days of consent to the updated terms of service and privacy policy, which was a lavish timeframe for availing the said opportunity.
Considering the above-mentioned policies and the latest revision, CCI deemed it appropriate to seek responses from WhatsApp and its parent company, Facebook via its latest order. WhatsApp thereafter filed its confidential version on February 3, 2021 which, according to the CCI, was not in consonance with Regulations 11 and 35 of the CCI (General) Regulations, 2009, and therefore an extended time was granted to Whatsapp and Facebook to submit their responses i.e., February 25, 2021.
1.2 Response from the Parent & Subsidiary
Both Facebook and WhatsApp responded via separate emails wherein Facebook submitted that it should not be arrayed as a party to the proceedings since the messaging services were offered by WhatsApp alone. CCI, on the other hand, was of the opinion, that it was evasive and is a clear non-compliance with the CCI's directions, since Facebook was a direct beneficiary of the data collected from WhatsApp in light of the amended data-sharing policy.
WhatsApp filed its public version citing their compliance with CCI's regulation mechanism and made submissions in this regard. However, the burning issue remained un-complied with, and the same was rightly observed by the CCI. Replies filed were clearly not in compliance and the same was recorded in the order in addition to a direction to the Secretariat to ensure that no such pleadings should be entertained in the future.
2. Averments made by WhatsApp
A preliminary objection was that the terms of service and privacy policy (including the proposed amendment) were within the purview of the information technology law framework and that those issues are sub judice before the courts and other fora in India. Further it was averred that the Commission should not look into the same set of issues since they were sub judice . Whatsapp in this regard placed their reliance on Competition Commission of India vs Bharti Airtel Limited and Others 4('Bharti Airtel'), wherein the Apex court of India had held that:
"The decision emphasized the need to maintain comity between decisions of different authorities on the same set of issues. Further, the Commission should only exercise jurisdiction after the proceedings had concluded before the sectoral regulator and attained finality."
3. Initiation of anti-trust probe by CCI
A laudable exercise by the CCI was to defend its stand to initiate a probe into the potential functioning of the new policy as amended by WhatsApp. The said issue had a humongous range of possibilities where the Parent company (Facebook) and subsidiary (WhatsApp) could reap benefits and establish themselves as a monopoly in the market which would further lead to potential abuse of a dominant position. CCI opined that the Supreme Court's decision in Bharti Airtel, has no relevance to the issue at hand. Further, it was stated that WhatsApp has failed to point out any proceedings on the subject matter since the core objective of CCI in this case was to examine any such violation pertaining to Section 4 of the Competition Act, 2002 .
In an ecosystem that feeds on data contributed by its users, WhatsApp boasts of the maximum userbase. The difference lies in the General Data Protection Regulation (GDPR) law in European Union which disallows WhatsApp from revising privacy policies that mandate users to accept for continued services. In this regard, CCI has rightfully taken its stance in favour of the privacy rights of consumers deeming the revised policy to be exploitative in nature.
4. Proceedings before the Delhi High Court
WhatsApp LLC 5 and Facebook Inc. 6 filed Writ Petitions against the CCI wherein the Order dated March 24, 2021 was challenged before the Hon'ble High Court of Delhi on the following grounds:
a. That the update in dispute intends to provide further transparency to the users with respect to the collection and utilization of data generated based on usage of the service;
b. That the 2021 update does not expand WhatsApp's ability to share data with Facebook and hence does not impact the privacy of personal messages of the users;
c. The 2021 update only provides specifics on the manner in which WhatsApp works with businesses that use Facebook or third parties to manage their communications with WhatsApp users;
d. Despite judicial challenge to the 2021 update pending before the Supreme Court and the Delhi High Court, the respondent had wrongly taken Suo moto action and passed the impugned order.
After considering the submissions made by both the parties in April 2021 7, the Hon'ble High Court of Delhi dismissed the petition(s) by way of their order dated April 22, 2021, 8 since it found no merits in the matter:
a. The order passed under Section 26(1) of the Act is purely administrative in nature and does not entail any consequence on the civil rights of the Petitioner;
b. Since WhatsApp is dominant in the relevant market for Over-The-Top (OTT) services, users may find it difficult to switch to a substitute. Therefore, the issues raised by the Respondent (CCI) are within its jurisdiction under the Act;
c. Mere pendency of a reference before the larger bench does not denude the other courts of their jurisdiction to decide on the lis before them. Hence, the CCI cannot be said to be bound to necessarily hold its hands and not exercise the jurisdiction otherwise vested with it under statute.
5. Conclusion
The CCI in the Harshita Chawla case 9, noted that Whatsapp renders services in the nature of OTT messaging including video calls, group communication, real-time location sharing, among others. In terms of number of users in India, Whatsapp touches nearly 530 million. While one may not be able to quantify market strength, Whatsapp definitely is a dominant force in its category, overtaking its peers. Undeniably, the advantage that resides with WhatsApp is far greater and the benefits can be potentially reaped, should this policy come into effect.
In light of the holding in Harshita Chawla case , the CCI laid down in its order that there is no cogent reason why WhatsApp should seek a revision in its policy for reasons other than establishing a dominant position. Pursuant to the said revision, users flocked to rival applications offering similar services, albeit slightly varied in the nature of their construct, WhatsApp did not lose a sliver of their user-base thereby establishing a fact that it has ingrained itself into the lives of the society - by being un-substitutable.
Further, the CCI opined that users are the rightful owners of data generated by the continued utilization of services, and the original developer of the application shall not be entitled to its usage. At this juncture, it is pertinent to note that WhatsApp has not been vocal about the range of historical data that will be shared with Facebook Inc., as per the revised data sharing policy. Further, such data may also be shared with third party services which are the source of revenue for applications owned and maintained by Facebook. Hence, there is no justifiable reason why such cross-over usage of data shall be in the interest of the users as opined by WhatsApp in its "aim of transparency" statement. Owing to the above facts and analysis, WhatsApp's policy revision does not appear transparent and on the contrary it appears to be unfair since there is no voluntary user consent.
In view of the above, the CCI rightly considered the parallels drawn in respect of future policy revisions that may mandate advertisers in regard to utilization of user data procured from WhatsApp.
The battle for data protection and user privacy rages on as companies with capitalist goals continue to attempt at data procuring through various pathways for revenue generation.
For now, it appears that CCI has won the battle and it remains to be seen who wins the war.
[The authors are Partner and Associate respectively, with Shivadass & Shivadass (Law Chambers) The Authors would like to acknowledge the contributions of Mr. Chaitanya Sharma, a 4th year law student from School of Law, Christ University, Bangalore and Mr. Tarun, 4th year law student from Symbiosis Law School, Hyderabad. The views expressed are strictly personal.]
1See, CCI vs WhatsApp LLC & Anr., S.M Case No. 01 of 2021, Competition Commission of India order under Section 26(1) of Competition Act, 2002 dated March 24, 2021 = 2021-TIOLCORP-12-CCI.
2 See, Order under Section 26(1) of the Competition Act, 2002 by the Competition Commission of India dated March 24, 2021
3 See, Vinod Kumar Gupta vs WhatsApp Inc., Case No. 99 of 2016, Competition Commission of India order under Section 26(2) of Competition Act, 2002 dated June 01, 2017 = 2017-TIOLCORP-30-CCI.
4See, Competition Commission of India vs Bharti Airtel Limited and Others , (2019) 2 SCC 521 = 2018-TIOLCORP-05-SC-CL
5See, WP 4378/2021 & CM 13336/2021 filed by WhatsApp LLC
6See, WP 4407/2021 & CM 13490/2021 filed by Facebook Inc
7Dates of hearing - April 08, 2021, April 12, 2021 & April 13, 2021 (Judgment reserved)
8WhatsApp LLC & Anr. Vs CCI, decided on April 22, 2021, Hon'ble High Court of Delhi at New Delhi
9 Harshita Chawla vs WhatsApp Inc., Case No. 15 of 2020, Competition Commission of India, decided on August 18, 2020 = 2020-TIOLCORP-26-CCI
