WhatsApp privacy policy puts users in ‘take-it-or-leave-it’ situation: Delhi HC

Updated on Aug 27, 2022 02:27 AM IST

The court noted that the 2016-privacy update had given an “opt-out” option that primarily led to CCI rendering its conclusion that the 2016 policy did not violate the Competition Act.

WhatsApp’s new privacy policy shares sensitive data with its parent company Facebook (now Meta) and virtually forces users into agreement by providing a mirage of choice, the Delhi high court has said while refusing to halt CCI investigation into the instant messaging platform’s policy. (Representative use)
WhatsApp’s new privacy policy shares sensitive data with its parent company Facebook (now Meta) and virtually forces users into agreement by providing a mirage of choice, the Delhi high court has said while refusing to halt CCI investigation into the instant messaging platform’s policy. (Representative use)
By, New Delhi

WhatsApp’s new privacy policy shares sensitive data with its parent company Facebook (now Meta) and virtually forces users into agreement by providing a mirage of choice, the Delhi high court has said while refusing to halt CCI investigation into the instant messaging platform’s policy.

The high court’s ruling was announced on Thursday but a detailed order was available only on Friday, and it showed the bench to have agreed with the contention of the Competition Commission of India and a single judge bench of the HC, whose order the tech companies had challenged.

“The 2021 [privacy] policy… places its users in a “take-it-or-leave-it” situation, virtually forcing its users into agreement by providing a mirage of choice, and then sharing their sensitive data with Facebook Companies envisaged in the policy,” a bench of chief justice Satish Chandra Sharma and justice Subramonium Prasad said in the order.

On Thursday, the court refused to halt the probe ordered by CCI and said that the matter is devoid of merits.

The high court’s verdict came while dismissing the appeals of WhatsApp and Facebook against an order of the single judge rejecting their challenge to a probe ordered by CCI into the instant messaging platform’s controversial privacy policy rolled out in 2021, but eventually put on hold due to a backlash.

Saying that the single judge’s order was well reasoned and did not warrant any interference, the bench said it was evident that the CCI has arrived at its decision that a prima facie case of violation of provisions of the Competition Act, 2002, has been made out against WhatsApp and Facebook, that would require an investigation by the Director General of CCI.

It said that the single judge has also taken into consideration the relevant factors before observing that concentration of data in the hands of WhatsApp may raise competition concerns, thereby resulting in the violation of provisions of the Act.

The court noted that the 2016-privacy update had given an “opt-out” option that primarily led to CCI rendering its conclusion that the 2016 policy did not violate the Competition Act.

“However, in the face of changed circumstances, considering the dominant position occupied by WhatsApp, the investigation proposed to be conducted by CCI does not warrant interference, and res judicata would, thus, not be applicable in the instant case,” the court said in a 49-page-judgment.

The court also rejected the submission of Facebook/ Meta that it did not have anything to do with the privacy update and it was being roped into the controversy just because it owns WhatsApp.

It accepted the submissions of the additional solicitor general (ASG) for CCI that one of the key issues with the 2021 Policy is its propensity to share the data of its users with Facebook Inc, the parent company of WhatsApp.

“Solely for the reason that the policies itself do not emanate out of Facebook Inc., the Appellant cannot hide behind the fact that it is the direct and immediate beneficiary of the data sharing mechanism envisaged by the policies. These circumstances necessitate the presence of Facebook (now Meta) as a proper party in the investigation pertaining to the 2021 Policy and the alleged anti-competitive practices they trigger,” the court said in the judgment.

During the arguments, both WhatsApp and Facebook (now Meta) argued that when the top court is already seized of the issue, CCI could not have overlapped the Supreme Court on the issue, adding that the issues being common can potentially lead to conflicting opinions.

However, refusing to accept this contention, the court said that the spheres of operation of both are vastly different and neither the high court nor the Supreme Court are analysing the 2021 policy through the prism of competition law.

It said the investigation conducted by the CCI will not be affected by the outcome of the proceedings pending before the apex court and the high court.

Acknowledging the dominant position of WhatsApp in the market, the court said that there exists a strong lock-in effect which renders users incapable of shifting to another platform despite dissatisfaction with the product – as is exemplified by how, despite an increase in the downloads of Telegram and Signal when the 2021 Policy was announced, the number of users of WhatsApp have remained unchanged.

It said that to ensure retention of its user base and to prevent any other disruptive technology from entering the market, data is utilised by tech companies to customise and personalise their own platforms so that its user base remains hooked.

“When data concentration is seen through this prism, it does give meaning to the new adage that “data is the new oil”, and, as noted in the CCI Order dated 24.03.2021, it raises competition concerns because it prima facie amounts to imposition of unfair terms and conditions upon its users, thereby violating Section 4(2)(a)(i) of the Act,” the court said.

On July 9, 2021, during a hearing, WhatsApp informed the court that it had “voluntarily agreed to put on hold” its new privacy policy till the Data Protection Law is enacted and the Parliament approves it, adding that users would not be compelled to accept the new security update.

The company had pushed back the deadline for its contentious new privacy policy launched in January last year which allowed it to share some data about users’ interactions with business accounts with its parent company Facebook.

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