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COMPETITION COMMISSION OF INDIA’S PROBE INTO WHATSAPP’S 2021 PRIVACY POLICY- AN ANALYSIS

INTRODUCTION

The growth, development and advancement in technology, coupled with the onslaught of the Covid-19 pandemic has led to consumers’ increased reliance on digital and technology-based products and services in every aspect of life. Technology has also permeated into the functioning of various businesses in different markets that also depend on technology to operate. Therefore, to stand out in a highly competitive market, many enterprises provide personalized and customized products and services to their customers- for this, consumer data needs to be collected. This is especially relevant in the context of large-scale tech companies that use this data to gain a competitive advantage. Concerns have been raised about the collection and usage of sensitive consumer data by big tech companies as an invasion of consumers’ privacy. Breach of consumer data and privacy is viewed as a violation of data privacy laws and regulations in particular, but also a violation of technology laws, human rights, and even antitrust law. With the advancement and growth in technology, laws also need to be dynamic, to tackle various issues and concerns that misuse of technology can pose, such as data privacy, and Competition Law is no exception. Using Antitrust/Competition Law to address data privacy concerns has been a matter of discussion for quite a while, with jurisdictions such as Germany combining data privacy and competition law. India is also not too far behind in this development, with the Competition Commission of India (CCI) recognizing access to data as a non-price factor based on which digital enterprises compete, in its 2021 Market Study on the Telecom Sector.

WHATSAPP’S PRIVACY POLICY AND CCI’S INVESTIGATION

WhatsApp updated its privacy policy in January 2021, which provided for sharing of sensitive user information between WhatsApp and Facebook (now Meta), in order to assist the latter in better targeted and personalized services and advertising. In other words, whatever user information WhatsApp obtained could be shared with Facebook, i.e., WhatsApp’s parent company. For this, WhatsApp users were mandated to agree to the updated privacy policy offered by WhatsApp without any choice whatsoever. The CCI, taking suo moto cognizance of this, conducted a preliminary evaluation and passed an order u/s 26(1) of the Competition Act, 2002, prima facie concluding that WhatsApp resorted to an abuse of its dominant position u/s 4 of the Act because it made the users’ continued access to the messaging application contingent on them agreeing to the terms of the updated privacy policy, i.e., allowing WhatsApp to share information with Facebook. Therefore, the CCI ordered an investigation into the same. The CCI determined WhatsApp’s dominance on the basis of accessibility to user data being considered as a non-price factor based on which digital and tech firms compete. The CCI concluded that WhatsApp enjoys a dominant position in the relevant market in India by virtue of its large user base, to such an extent that it is considered as an indispensable tool for communication in all spheres of life. Once dominance was established, the CCI went on to define how this dominance is abused by an entity- with a tremendous amount of data already at its disposal (in the context of Facebook), coupled with the potential to harness and gather more data, such data collection, use and sharing can lead to antitrust violations. The CCI, therefore, concluded that the ‘take-it-or-leave-it’ nature of WhatsApp’s updated privacy policy amounts to an abuse of dominance.

APPEAL BEFORE THE DELHI HIGH COURT

Aggrieved by the order of CCI directing the Director General to conduct investigation, WhatsApp and Facebook approached the Delhi HC challenging the CCI’s powers and jurisdiction to entertain matters relating to user data privacy. One of the grounds of the challenge was that since issues relating to the constitutional validity of the updated privacy policy of 2021 were already being dealt with by the Supreme Court in a sub judice matter, the CCI overstepped its jurisdiction and powers by questioning the privacy policy. The HC observed that the mere fact that certain overlapping issues are pending adjudication before the SC does not mean that the CCI’s investigation should be halted. Regarding the same privacy policy, two different fora are dealing with completely different issues altogether, wherein the constitutionality issue before the Court relates to a contravention of Article 21 (if there are data privacy breaches and violations), whereas the CCI is dealing with the unfair nature of such an updated policy. A Division Bench of the High Court also upheld this view. Therefore, the HC refused to intervene in the matter.

THE MATTER REACHES THE SUPREME COURT

The Supreme Court, on appeal, also refused to intervene in the present matter. It observed that when the CCI has already passed its prima facie order u/s 26(1) of the Act, there is no need for any other authority to get involved in the same. It opined that since the investigation relates to a violation of the provisions of the Competition Act, 2002, the argument that the CCI lacks jurisdiction in such matters is not tenable, since it is an independent body. It further elaborated on the High Court’s observations, stating that CCI’s investigation and the matter pending before the Supreme Court and High Court are two completely different situations dealing with different aspects of the 2021 Privacy Policy. Therefore, the Supreme Court upheld CCI’s powers and jurisdiction to entertain and deal with matters relating to WhatsApp’s Privacy Policy of 2021, notwithstanding a pending matter before the Supreme Court and/or the High Court dealing with the issue of user’s data privacy.

CONCLUSION

The WhatsApp privacy matter can be considered a watershed moment for the CCI, as it marks the regulator’s foray into the intersection between Competition Law and Data Privacy, and how this law can actually be used to address data privacy violation concerns as well. This intersection and vigilance of antitrust regulators are especially significant in the context of Big Tech companies- the Big Tech companies have access to large amounts of data, (or they have the wherewithal to gain access to such data), based on which they exert their power and influence to benefit themselves, to the detriment of the market and the consumers. With data becoming an invaluable resource, especially for tech-based enterprises, it is only natural for antitrust lawmakers and regulators also to take note of such changes in the market dynamics and incorporate them in the laws and their enforcement- the CCI recognizing data as a non-price factor based on which firms compete in its Market Study on the Telecom Sector of 2021 is a prime example of this. This is when the CCI understood that apart from the conventional and traditional methods of abuse of dominance, such as unfair pricing and denial of market access, among others, low standards for users’ data privacy, will not only be a form of abuse from the perspective of low consumer welfare, but will also be misused by the same entity, or shared with another entity for its own benefits, as was the case with WhatsApp and Facebook (now Meta). This amounts to an exclusionary tactic, as the entity with access to such data will be at an unfair advantage, as compared to its competitors in the market. The WhatsApp case has given a clear indication that the present provisions of the Competition Act, 2002 are somewhat sufficient and flexible enough to raise antitrust concerns emanating from digital markets- however, since technology is dynamic, so are digital markets, and so are tech firms’ anti-competitive tactics and behaviour. Further development, not only in the form of investigations but also in the form of new legislation would also be required.

Author(s) Name: Jai Hindocha (Symbiosis Law School, NOIDA)