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In a setback for Meta-owned WhatsApp, the Supreme Court on Friday cleared the path for the Competition Commission of India’s (CCI’s) probe into the messaging platform’s updated privacy policy of 2021.
The apex court cleared the decks for the regulator to further probe and reach finality in the case it initiated in March 2021 against WhatsApp for alleged abuse of dominance. The regulator viewed the data-sharing policy as exploitative and having the risk of an exclusionary effect.
The SC’s interim order came on an appeal by WhatsApp and Meta which challenged a Delhi High Court decision that went against the messaging platform. The appeal sought a stay on the CCI probe.
In its order, the Bench of Justices M R Shah and Sudhanshu Dhulia noted the regulator was an independent body that could investigate any issue that goes beyond the Competition Act, 2002. “With the view that this case violates the provisions of the Competition Act, it cannot be said that the probe initiated by the CCI goes beyond its jurisdiction,” the apex court observed.
The Bench also observed that the apex court itself had set a precedent that the CCI’s probe should be completed at the earliest. “Given the facts above, it is to be noted that the CCI cannot be restrained from carrying out its probe into the alleged violation of the Competition Act,” the Bench held.
Senior Advocate and legislator Kapil Sibal, appearing for Meta, submitted that a Constitution Bench is currently hearing a petition that will decide the validity of the privacy policy in January 2023. Also, a new data protection Bill is likely to be introduced in Parliament in the Winter session, he said. Based on these facts, the CCI should not pass a final order related to its probe, Sibal argued.
The Bench, however, did not agree and said that the CCI is an independent statutory body and its probe has nothing to do with the court’s proceedings. “Let the investigation go on.
Whatever the final order is, we will leave it to the CCI,” the Bench said.
Additional Solicitor General of India N Venkatraman, appearing for the CCI, on the other hand, said the anti-trust watchdog is only examining the abuse of dominance by the social media giants and not the constitutional issues regarding the privacy policy.
This will give clarity and certainty about the role of CCI in this matter, a senior official said. E-mails written to Meta and WhatsApp on the issue remained unanswered.
“The order of the Supreme Court will not have any immediate impact as the matter is still under investigation before the director general, CCI. However, WhatsApp will be required to participate in the investigation and give objective justification for its privacy policy and establish that it does not violate provisions of the Competition Act,” said Rahul Goel, partner at Anant Law.
In August, a Delhi High Court Bench, comprising Chief Justice Satish Chandra Sharma and Justice Subramonium Prasad, ruled that appeals of both parent and child companies were “devoid of merits”. The court even observed the previous (single-judge Bench) order, which ruled that the CCI had the jurisdiction to proceed with the probe, was “well-reasoned”.
During the previous course of hearing in the case, the messaging platform said that it would not enforce its privacy policy until the time the government’s data protection Bill came out.
The counsel for WhatsApp also argued that the privacy policy in question is being examined by the Supreme Court and so the investigation cannot be allowed until that matter is resolved. It said that the CCI’s decision was an abuse of the commission’s suo motu jurisdiction.
Facebook (now Meta) contended that just because it is the formal owner of WhatsApp and the instant messaging platform is said to share its data with the parent company do not mean that it is a necessary party to the probe.
However, the CCI argued that its probe is not related to what the SC is looking into as it is not examining the alleged violation of individuals’ privacy.
The anti-trust regulator is probing the privacy policy of both companies which appears to be neither transparent nor based on the voluntary consent of the user. Such a policy would lead to excessive data collection and ‘stalking’ of consumers for targeted advertising to bring in more users and is, therefore, alleged abuse of its dominant position.
The CCI told the court that it was not able “move an inch” in its investigation into WhatsApp’s privacy policy of 2021 on account of a court order granting time to Facebook and the instant messaging platform for filing replies in connection with the probe.
In January last year, the CCI on its own had decided to look into WhatsApp’s updated privacy policy, following news reports.
The regulator then observed that users were not provided an appropriate granular choice to object or opt-out of specific data sharing terms, adding that the reduction in consumer data protection and loss of control over personalised data can be taken as a reduction in quality under the anti-trust law.
WhatsApp and Facebook had subsequently challenged the single-judge CCI’s March 2021 order directing a probe against them, saying the issue concerning its new policy was already pending consideration before the HC and the SC.
The single judge on April 22 last year, however, refused to interdict the investigation.
“The current data privacy framework, though lackluster, is contained under the Information Technology (Reasonable Security Practices and Procedures and Sensitive Personal Data or Information) Rules, 2011. Until more robust legislation is introduced, the Rules will govern the data privacy regime in the country,” Pritika Kumar, Founder of Cornellia Chambers said.
Akshayy S Nanda, partner at Saraf and Partners said until the new privacy legislation is not introduced, unfair privacy policies of dominant platforms may be challenged before the CCI as abuse of dominant position as was done in the case of WhatsApp. “As far as non-dominant platforms are concerned, one would have to wait for the Government to introduce the personal data protection legislation,” he said.
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