Dear Reader,
The 33rd edition of Spotlight summarises the recent NCLAT judgment in the WhatsApp case, highlighting how the tribunal reaffirmed the penalty and recognised data as a key non-price factor influencing competition in digital markets. This issue reviews what the ruling means for platform conduct and future enforcement.
We look forward to hearing your comments and suggestions!
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“Take or Leave It” No More: NCLAT Reinforces Users’ Rights in WhatsApp Policy Case
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In a watershed moment, the National Company Law Appellate Tribunal (NCLAT) hAas unequivocally upheld the Competition Commission of India's (CCI) order dated November 18, 2024, finding WhatsApp Inc. (WhatsApp) and its parent company Meta Platforms Inc. (Meta), where the said enterprise were held liable for abusing their dominant position with regards to the WhatsApp 2021 privacy policy update, unpopularly known as the “take-or-leave-it” policy. However, the NCLAT has granted some relief to the above parties by partially setting aside the findings on leveraging and the remedy, in which WhatsApp was categorically prohibited from sharing its user data with its parent company, META, for targeted advertisements. Let’s see what the key takeaways from one of the most debatable judgments passed by the CCI are.
But What’s so Unique about this Judgment? Let’s see
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1. Jurisdiction Debate Finally Settled
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One of the many key highlights to have taken the spotlight is the recognition of CCI’s jurisdiction over privacy-related competition matters, in which the NCLAT held that competition and data protection issues do not stand at loggerheads.
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Contextual Background
The question of whether privacy related antitrust issues falls under the ambit of the Competition Act has travelled a long way. Both the Delhi High Court (Single Judge, Division Bench) followed by the Supreme Court, which in October 2022 unequivocally observed that the CCI, as an independent authority, could proceed with investigation into potential data issues infringements of the Competition Act.
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What does the NCLAT have to say about that
The NCLAT held that these issues complement each other, addressing jurisdictions, distinct concerns arising from the same conduct, and affirmed the possibility of concurrent jurisdiction.
But, A Twist: A Conflicting NCLAT view last Week?
However, the current judgment stands at loggerheads with another NCLAT judgment passed last week (Swapan Dey vs. Competition Commission of India, Competition Appeal (AT) No. 5 of 2023), which granted overriding authority to the Patents Act 1970 over the CCI’s jurisdiction in patent-related matters. As for the current state of affairs, the two nearly conflicting decisions call from the Supreme Court of India.
NOTE: In paragraph 53, the NCLAT clarified that the CCI’s jurisdiction “extends to unfair data practices that may affect competition dynamics, consumer choice, and market fairness.” The DPDP Act does not; both laws complement each other.
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2. WhatsApp is Dominant; Meta is Not – Both held Liable
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- The CCI correctly defined the relevant markets: “OTT messaging apps through smartphones in India” and “online display advertising in India.”
- It could prove dominance only in the first market, where WhatsApp clearly leads, and NCLAT agreed.
- WhatsApp’s new privacy policy pushed users to accept expanded data-sharing with Meta, giving them no real choice except to agree or stop using the app.
- This amounted to an unfair “imposition” since it changed what users originally expected, reduced their control over data, and ultimately harmed privacy and consumer welfare. This led to the degradation of privacy, thereby harming consumer welfare.
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3. Data is Officially a Non-Price Factor
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Traditionally, price factors (where the impact on the market was assessed based on monetary terms) were the predominant considerations in competition assessment.
However, the NCLAT, concurring with the CCI’s observations, concluded that control confidentiality degrades service quality over “data” impacts the privacy of users, and that privacy degradation degrades service quality. Additionally, in digital markets, where sales of goods/services depend on how well advertisements reach the target audience, which in turn depends on the amount of data an enterprise holds, data can create comparative disadvantages for competitors.
Referring to its earlier decision in 𝐆𝐨𝐨𝐠𝐥𝐞 𝐋𝐋𝐂 & 𝐀𝐧𝐫. 𝐯. 𝐂𝐂𝐈 and the CCI’s order in 𝐌𝐚𝐭𝐫𝐢𝐦𝐨𝐧𝐲. 𝐜𝐨𝐦 𝐋𝐭𝐝. 𝐯. 𝐆𝐨𝐨𝐠𝐥𝐞 𝐋𝐋𝐂 & 𝐎𝐫𝐬.., the Tribunal reiterated that:
- Data has become a crucial source of market power, enabling platforms to improve services, target users more effectively, and operate more efficiently.
- Due to its scalability and reusability, data enables dominant platforms to reinforce their position, create high entry barriers, and shape market dynamics in their favour, thereby distorting competition.
Hence, the data connecting thread can ultimately affect market price factors. Moreover, the dual-edged nature of data, whether as an exclusionary concern (such as combining data across services to raise entry barriers and stifle competition) or an exploitative concern (such as demanding excessive user data or reducing service quality), was recognised by the NCLAT. Further, the NCLAT unquestionably clarified that Sections 4(2)(a)(i) and 4(2)(a)(ii) of the Act are broad enough to capture abuses involving non-price factors. This aligns with the Competition Law Review Committee, which reported in 2019 that the Act already covers data and network effects. Hence, said amendments are not needed.
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4. NCLAT Re-Affirmed Unfair Conditions Imposed by WhatsApp
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The NCLAT also unquestionably affirmed that sharing WhatsApp data with Meta led to the denial of market access to competitors, as having control over more consumer data gave Meta an unfair advantage in the display advertising market.
A New Observation
Interestingly, the NCLAT agreed that the CCI had failed to establish Meta’s dominance, noting that a “leading position” is not the same as dominance. Yet, it still upholds the finding of denial of market access under Section 4(2)(c), reasoning that the provision does not explicitly require dominance. This approach is problematic because Section 4 treats dominance as a necessary precondition for any abuse, making a finding of denial of market access without first establishing dominance inconsistent with the statute’s structure.
On the other hand, NCLAT held that an established claim (WhatsApp leveraged its dominance to benefit Meta by sharing WhatsApp data with Meta) is not an established claim, as “Meta and WhatsApp are two distinct legal entities”. The question remains: why would this stop a finding of leveraging, since the relevant provisions apply to both enterprises and groups composed of legally distinct enterprises? Why would this stop a finding of leveraging, since the relevant provisions apply to both enterprises and groups of legally distinct enterprises?
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5. Anti-Competitive Effects Proved
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The “extensive qualitative effects analysis” carried out by the CCI, coupled with statements from competitors, was used to establish anticompetitive effects. Moreover, a sigh of relief came for the CCI, as the NCLAT held that the CCI need not demonstrate actual effects and can find abuse of dominant position based on likely effects, especially in fast-moving digital markets.
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In the end, they upheld. CCI upheld the INR 213.14 crore penalty imposed on Meta and WhatsApp. The NCLAT held that the penalty was correctly calculated and would “work out to be the same” even with “slightly modified orders”. The remedies mandating transparency, user choice through opt-outs, and continued future compliance were upheld. Furthermore, a five-year restriction on cross-platform data-sharing imposed by the CCI was set aside, as (i) this became redundant once users were given opt-outs; and (ii) the rationale for the duration was missing in the CCI’s decision.
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