In a landmark decision, the Competition Commission of India (CCI) has imposed a hefty penalty of ₹213.14 crore on Meta Platforms, Inc., for abusing its dominant position through WhatsApp’s 2021 Privacy Policy. 

The CCI found that the policy’s implementation violated competition laws by imposing unfair terms on users and leveraging WhatsApp's dominance in the OTT messaging apps market to strengthen Meta’s position in the online display advertising market. Alongside the penalty, the Commission has directed Meta and WhatsApp to implement several behavioural remedies within a specified timeline.

The CCI identified two relevant markets in this matter: the market for over-the-top (OTT) messaging apps through smartphones in India and the market for online display advertising in India. It concluded that Meta Group, operating through WhatsApp, held a dominant position in the OTT messaging apps market and maintained a leading position in online display advertising compared to its competitors.

The controversy stemmed from WhatsApp’s privacy policy update announced in January 2021. This update required users to accept revised terms of service and privacy policies by 8 February 2021 to continue using the platform. Unlike the earlier 2016 policy, which allowed users to opt out of data sharing with Facebook, the 2021 update mandated data sharing across Meta companies. Users who refused to accept these terms were effectively denied access to WhatsApp. The Commission concluded that this "take-it-or-leave-it" approach constituted an unfair condition under Section 4(2)(a)(i) of the Competition Act, 2002, as it undermined user autonomy and exploited Meta’s dominant position in the messaging market.

The CCI further observed that sharing WhatsApp user data with Meta entities for purposes beyond providing WhatsApp services created significant entry barriers for competitors in the online display advertising market. This was deemed a violation of Section 4(2)(c) of the Act. Additionally, Meta was found to have leveraged WhatsApp’s dominance in the messaging market to protect its position in online display advertising, contravening Section 4(2)(e).

In response to these findings, the Commission issued a series of behavioural directives to mitigate the anti-competitive harm. For the next five years, WhatsApp is prohibited from sharing user data with Meta companies for advertising purposes. Beyond this period, certain restrictions and conditions will continue to apply.

For data sharing unrelated to advertising, WhatsApp must introduce greater transparency. Its privacy policy must detail the types of user data shared with Meta companies, along with their specific purposes. Moreover, sharing such data cannot be made a condition for accessing WhatsApp in India. Users must be provided with an opt-out option to manage data sharing through in-app notifications, as well as a prominent tab in the app’s settings to review and modify their preferences. These measures are to apply to all future policy updates as well.

The detailed order is expected to be uploaded soon.