TaxTMI 
TaxTMI 
2022 (8) TMI 154
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....ition Commission of India (for short 'CCI') in Case No. 99 of 2016. 2. The Appellant has prayed the following reliefs: i. To Set aside the impugned order dated 01.06.2017, passed by the CCI in Case No. 99 of 2016; ii. Direct the 'Director General to cause an investigation to be made into the matter; and iii. Pass any other order(s) as this Tribunal may deem fit and proper in the facts and circumstances of the case. 3. The Appellant - Shri Vinod Kumar Gupta, Chartered Accountant, representing a society, named, Fight for Transparency Society. As per the submission of the learned counsel for the Appellant that the main objective of society is to bring the voice of people at large before the appropriate judicial forums for protection of their rights and secure social justice etc. 4. The brief facts of the case as stated by the Appellant is as follows: a. The Appellant has alleged the anti-competitive conduct of WhatsApp for which he has submitted certain information, particularly, relating to the privacy policy of WhatsApp. b. It is also stated that WhatsApp has made many changes to its privacy policy for the first time from the tim....
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.... future. It was held in Brooke Group Ltd Vs. Brown & Willamson Tabacco Corpn, it was held that Predatory price conduct consists in a business rival pricing its product in an unfair manner with an object to eliminate or retard competition and thereby gaining and exercising control over prices in the relevant market. The Plaintiff must prove: * That the price complained of is below an appropriate measure of its rival's costs. * That the competitor had reasonable prospects of recouping its investment in below-cost price. h. WhatsApp dropped of subscription fee it previously charged users and become fully free in Jan.2016. Previously it used to charge 0.99$ per annum subscription fees after one year of free trial, and IOS users were charged one off charge for lifetime. The same removal of charges was confirmed by the official blog of WhatsApp. i. The subscription amount was the source of income for WhatsApp which was to the tune of $10.8 million before Facebook acquisition, with that gone their remained no source of income for the group, and had to depend on Facebook i.e. parent company (with huge financial as well as other resources) to maintain its....
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....behalf of users, while if user wants to change any T&C of service, they are required to take express consent from the R2. Unfair imposition of opt in: * Given only 30 days either to accept terms and conditions or delete account, with Pre selection of opt in (page 113 of Reply to Appeal by WhatsApp) * Proper mechanism for notice not followed- In Application procedure followed to obtain consent. Unless accepted that User won't be able to use services. Not given in regional/local languages and newspaper Unfair Ability to terminate services from Users, without giving any reason: Despite the largest users of nearly 20 cores having been hooked to the service, R2 reserves the right to terminate services at any point of time without any intimation. Creating a possibility wherein the entire country can be brought to a standstill (ref. page no. 174 of the Appeal). Jurisdiction and Governing Law of California: Despite having the largest user base in any country of 20 crores in India, the jurisdiction for disputes is only California. Practically, not feasible for any user from India to approach for any legal grievance redr....
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....r known and unknown to a user, is in possession of R2. If this data is breached in the hands of R2, the user may not even be aware of this breach. On the one hand, the user is supposed to inform the R2 of any possible data breach, while R2 disowns the duty to inform the user/owner of the data in case of data breach by R2. In other words, a duty to keep the WhatsApp account safe is imposed on the user, while the whole data and its control lie with R2 (Ref. page 172 of the Appeal) They have empowered themselves to transfer the information to anyone: having retained the power to sell data to anyone including India's enemy country or terrorist's groups or to business rivals, R2 does not take the duty even to inform the owner to information i.e. the user, as to whom the information has been transferred. Normally, being the owner of data, the user must be aware of how the license given by R2 is being utilized or the data being sub-licensed. Implications of this generic power are wide and many, as large number of Top Military personnel, bureaucrats, politicians and policy makers use the services of WhatsApp on regular basis, it has acquired license to sell their data, including, ....
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.... the Commission with reference to the 'relevant product market' or the 'relevant geographic market' or with reference to both the markets. In regard to the relevant product market, the Commission notes that 'WhatsApp', an instant communication app for smartphones using standard cellular mobile numbers, is a platform for communication through texting, group chats and voice and video calls. It is noted that instant communication apps cannot be compared with the traditional electronic communication services such as text messaging, voice calls etc. as provided by various telecommunication operators. It is so because unlike traditional modes of communication, instant messaging using communication apps are internet based and provide additional functionalities to the users. For example, users of communication apps can see when their contacts are online, when they are typing or when they last accessed the application. Further, instant communication apps can be used through smartphones only whereas traditional electronic communication services can be used through any mobile phone. There are also differences in the pricing conditions in both the above said modes of co....
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....ommission is of the view that relevant market in this case may be considered as 'the market for instant messaging services using consumer communication apps through smartphones in India'. 14. On the issue of dominance of the OP in the relevant market as defined supra, the Commission notes that in India a number of other players such as Apple with iMessage, BlackBerry with BBM, Samsung with Chat ON, Google with Google Hangouts and Microsoft with Skype are providing consumer communication apps and are also active in the provisions of smartphone hardware and operating systems. Besides, many other consumer communication apps providers such as Hike, Viber, WeChat and Snapchat are also active in market. As per the information available in the public domain, globally 'WhatsApp' is having a billion monthly active users and within India, it is having 160 million monthly active users. According to a study of 'Jana and mCent', 97% of the smartphone users in India use a communication app daily and the most popular is 'WhatsApp', which is installed on 96% of devices and has more daily active users than any other communication app in India. As per the sai....
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....WhatsApp', including his/ her messages, photos, and account information, will be shared onto 'Facebook' or any other apps of 'Facebook family of companies' for any third party to see, and nothing a user posts on those apps will be shared by 'WhatsApp' for any third party to see. 16. The Informant has also alleged that the conduct of the OP is in breach of the IT Act, 2000 and the right to privacy. In this regard, the Hon'ble High Court of Delhi in W.P. (C) 7663/2016 in the matter of Karmanya Singh Sareen and Others Vs. Union of India and Others; wherein the Petitioners, who were the users of WhatsApp, had made the prayer that sharing user data of subscribers of 'WhatsApp' with any entity including 'Facebook' should be prohibited and protection and safety of privacy of details/ data of every kind of user of 'WhatsApp' should be ensured; vide its order dated 23rd September, 2016 has observed that: "However, the contention of the petitioners is that the proposed change in the privacy policy of WhatsApp amounts to infringement of the Right to Privacy guaranteed under Article 21 of the Constitution of India. Even ....
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....rs for availing their services for instance, Hike, Messenger and Viber are also available for free. It appears to be the standard practice in the industry/ business that all consumer communication apps are not charging any fee from the users. The Commission observes that 'WhatsApp' was previously charging subscription fee from its users which was subsequently scrapped. This may be due to the presence of many other service providers who are offering the services for free of cost. Furthermore, from the submissions of the OP, the Commission notes that the revenue model of the OP is like other players in the industry/ business and it is still evaluating the various modes that can be used to earn revenues from its services by providing value to its customers. 19. The Commission also observes that there are no significant costs preventing the users to switch from one consumer communication apps to another. It may be due to the following reasons: (i) all consumer communication apps are offered for free of cost or at a very low price (mostly free), (ii) all consumer communication apps are easily downloadable on smartphones and can co-exist on the same handset (also called ....
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....a. The R2/WhatsApp LLC has no access to user chat contents as technically messages are end to end encrypted. b. Since end-to-end encryption means no other than the sender and recipients, not even WhatsApp can read or otherwise access message/ all content. Technically encryption offers a secrecy and it can be read only by those to whom it is addressed and this is a reason that it is widely prevalent and being used by the Banks/e-commerce sites and other devices manufacturing etc. What it was stated by the Ld. Sr. Counsel that 2016 update allowed WhatsApp to collect and share limited information with Meta and other 3rd parties for specific purposes. He went on to submit that WhatsApp only collects limited information from its users as per its 2016 privacy policy and a user is required to provide their mobile number and users are only required to enter at least some characters in the name field and they are not required to provide a real name. Since WhatsApp is not verifying user name and so is the case with sharing of other information including profile photo is optional. c. It was submitted by the Ld. Sr. Counsel that WhatsApp with Meta under the 2016 update, but t....
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....4(2)(a) of the Act, the Appellant is required to establish that (a) the Update was 'imposed' on users, and (b) the Update was 'unfair' and the Appellant has filed to meet either of these requirements. It is submitted that in any event, there is no basis for concluding that either conditions are satisfied and thus there is no violation of Section 4(2)(a) of the Act. e. At the outset, it is important to note that the 2012 Privacy Policy of R2 specifically allowed it to (i) amend its privacy policy , (ii) share user information with a third party service provider "to the extent that is reasonably necessary to perform, improve or maintain the WhatsApp Service" and "to protect the security or integrity of the WhatsApp site or our servers, and to protect the rights property or personal safety of WhatsApp, our users or others", and (iii) in case of an acquisition or merger of R2 with a third party, transfer or assign the information collected from users to such third party. These are standard provisions, which reserve the commercial rights of any service provider. Though the 2012 Privacy Policy allowed R2 to update its privacy policy without seeking further user consent, R2 went ....
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....without any option to reserve any one portion. If the mere lack of an option to reject or reserve any portion of the terms of use / EULA is considered to be abusive, as is alleged by the Appellant, then any and all such terms / EULAs of an allegedly dominant enterprise would be in contravention of Section 4 of the Competition Act. This would severely infringe an enterprise's rights to enter into contractual relationships under terms it considers reasonable. Therefore, the allegation of the Appellant that the Update was unfair is baseless and against competition law principles, and ought to be dismissed. The Appellant also alleges that the "assurance" given earlier through official blogs by Respondent No. 2 that the collected user information would not be used for commercial purposes was "unfairly" withdrawn by the update. The Appellant has completely misconstrued the postings by Respondent No. 2. This post is irrelevant in the present case, as the proposed business model of charging users a fee was never implemented in India except for a short duration to iPhone users. In any event, the post merely sought to explain Respondent No. 2's then proposed revenue generation model ....
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....rd, enabling those users to decide whether or not Facebook, Inc. may use their account information to improve their Facebook advertisements and products experience. Further, several governments owned companies, including the State Bank of India, and the Indian Railway Catering and Tourism Corporation Limited, also collect and use customer information in similar ways see https://www.onlinesbi.com/sbijava/PrivacyStatement.html: https://www.services.irctc.co.in/beta_htmls/term_termsrc.html. As is evident from the above, Respondent No. 2 submits that collection of data is a common practice among online market participants, and it is important for improving the customer experience and quality of services. The mere collection and use of data by a business cannot be held to be unfair. Users benefit from the improved quality of services and products that result from the use of this data, and those products and services are often provided at no cost for the user. The Appellant has not provided any evidence or reasoning as to how such collection and usage of user information has damaged him or any other user of WhatsApp. In fact, the sharing of information has in no way diminished, but to th....
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.... iMessage, Viber, Hike, Line, imo, Messenger, Snapchat, or the SMS services offered by every telecommunications operator in India. Market shares do not establish dominance in the innovation driven Consumer Communications Applications market; The Appellant has sought to establish that Respondent No. 2 is dominant based solely on an assertion that Respondent No. 2 has high market shares based on incomplete and misleading data. First, the percentage of phones that have downloaded a particular app does not indicate how frequently such an app is used or its share of a market in any meaningful sense. Indeed, the evidence that is in the record indicates that other consumer communications applications have entered successfully and grown rapidly. Hike, for example, has over 100 million users and is only one of many such services. Second, Respondent No. 2 submits that market shares in and of themselves, do not establish dominance. In a technology driven market that is dynamic and constantly evolving, such as the market under consideration in the present case, market shares tend to fluctuate drastically and are not sufficient to show dominance. This is also recognized by the EC in Facebook/Wh....
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.... present appeal, on multiple grounds that it is neither a necessary nor a proper party for the effective adjudication of disputes raised in the instant proceedings. It was also stated that they were non-party to the original proceedings before the Commission in the case no.99 of 2016 apart from other reasons as stated in those IAs. The order so passed by this Tribunal on 25.10.2017 are appended below: "25.10.2017- An application has been preferred by 'Facebook, Inc.' and 'Facebook India Online Services Pvt. Ltd.' for deleting them from the array of the respondents as both of them are arrayed as Respondent No. 3 to the appeal. According to them, they were not party before the Competition Commission of India (hereinafter referred to as the 'Commission') and they have been wrongly impleaded as party respondent to the present appeal. Learned counsel for the appellant referring to the rejoinder filed before the Commission submits that certain allegations had also been made against the 'Facebook Inc.', but the Commission has not dealt with such allegations in the impugned order. We have heard the learned counsel for the parties and perused the record. ....
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....ific purposes. He stressed that WhatsApp has no access to user chats content, as messages are end to end encrypted. Even on query by the Bench he went on to confirm through his submission that WhatsApp messages including chats, group chats, videos, files etc are end to end encrypted and nobody other than the sender and recipients can illicit any information out of that even not WhatsApp or any third party. Encryption is technical a widely used programme by the Banks, e-commerce site etc. g. It was also confirmed by the learned Sr. Counsel that the WhatsApp has collected only mobile number of the user and some characters in the name field which may not be a real name and sharing of all other information was optional. h. He has stressed that the coverage of Section 4(2)(a) of the Act requires to prove by the Appellant that it has imposed directly or indirectly unfair or discriminatory conditions in services. The Appellant has failed to prove with any data or any reasoning other than that inbuilt system has provided the user with the option to accept the update or disconnect from WhatsApp site. i. We do not find anything unusual in this as it was not compuls....
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....areen Vs. Union of India & ors. (W.P(c) No. 7663 of 2016, found no infirmity in the 2016 update and the matter is litigated before the Hon'ble Supreme Court of India in Karmanya Singh Sareen & Anr. Vs. Union of India (SLP (C) No. 804 of 2017). p. The Commission in its elaborate order dated 01.06.2017 has reached to the conclusion that the WhatsApp Inc. is in a 'dominant position' in the relevant market. We agree with it as the Commission has collected the data which reveals that 96% of devices uses WhatsApp and are active users than any communication App in India. The Commission has also found that 56% of the Internet Users in India use 'WhatsApp' and 51% use 'Facebook' everyday. Hence, it is primarily accepted that the WhatsApp Inc. and now the changed management after take over is in a 'dominant position' in the 'relevant market'. q. What the Appellant has failed to prove that the Opposite party/Respondent is abusing its dominant position in the relevant market by introducing privacy policy which compels its users to share their account details and other information with Facebook as the Respondent has provided the users opt out of sharing user accounts informati....
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....tors or consumers or the relevant market in its favour; (b) "predatory price" means the sale of goods or provision of services, at a price which is below the cost, as may be determined by regulations, of production of the goods or provision of services, with a view to reduce competition or eliminate the competitors." s. From the above it is very clear, unless you abuse the 'Dominant Position' prohibitory action cannot be taken against you. As far as the issue of 'predatory pricing' is concerned, there is no cost being charged by WhatsApp messaging at the moment and hence, directly we cannot confirm that it is predatory prices as R1/Commission has rightly observed that there are no significant costs preventing the users to switch from one consumer communication Apps to another as also almost all consumer communication Apps are offered free of costs or at a very low price (mostly free) and available normally by simple user interfaces. It is very much clear world-wide nothing is free but it is the organization which lends such services develops some business modules to generate sufficient income to sustain its growth. Hence, based on all these discussions, we do not ....
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....amount to abuse of dominant position in the relevant market where R2 is operating as one of the service providers in the form of messaging App where multiple messaging providers are available as also in the service sector. In the digital age it has become a common practice. It is also proved, beyond doubt, that this Tribunal is not competent under the Competition Act, 2002 to enter into the violation of Information Technology Act, 2002 where relevant authorities are different to adjudicate the issue and in this case the Hon'ble Delhi High Court has already examined the issue and has passed the consequential order Karmanya Singh Sareen Vs. Union of India & ors. (W.P(c) No. 7663 of 2016 and the same is in appeal before the Hon'ble Supreme Court of India in Karmanya Singh Sareen & Anr. Vs. Union of India (SLP (C) No. 804 of 2017). x. It is also very clear that this Tribunal is to do the judicial scrutiny of the orders passed by R1. While examining the issue, the citations available within Indian jurisdiction are primarily to be relied and if, no reference, is there then only, we can opt for the judgment in foreign jurisdiction. Each countries statute has its own nuances. We h....
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....nformation such as contacts to be used for their personal (commercial) benefits and ends, and is as such in violation of sub clause (b) . 22. And since WhatsApp plans on sharing that information with Facebook, it would be in fact facilitating the access of data held by mobile, in contravention of this Act. Thus such conduct also leads to therise of contravention of subclause (g). 13 23. That the mobile is covered under the definition of "computer" as defined under S. 2 sub clause (i) of the Information Technology Act, 2000. And thus hereinabove mentioned clauses shall apply and the conduct of party may be made liable. And since already shown the "computer" means any electronic magnetic, optical or other high-speed data processing device or system which performs logical, arithmetic , and memory functions by manipulations of electronic, magnetic or optical impulses, and includes all input, output, processing, storage, computer software, or communication facilities which are connected or related to the computer in a computer system or computer network; Document 3Traceback (most recent call last): File "C:\i....