TaxTMI 
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2025 (11) TMI 1281
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....w, Mr. Saurabh, Joint Dir., Advocates for R- 1/CCI. Mr. Kapil Sibbal and Mr. Amit Sibal Sr. Advocates with Mr. Naval Chopra, Ms. Supritha Prodaturi, Ms. Akshi Rastogi, Ms. Parinita Kare, Mr. Aatmik Jain, Ms. Ritika Bansal, Ms. Anupma Reddy Eleti, Ms. Aparajita Jamwal and Mr. Saksham Dhingra, Advocates for R-4. Mr. Abir Roy, Mr. Vivek Pandey, Mr. Aman Shankar, Sasthibrata Panda, Biyanka Bhatia and Ms. Shreya Kapoor, Advocates for R-3. JUDGMENT [Per: Arun Baroka, Member (Technical)] These two Appeals have been filed against order dated 18 November 2024 passed by the Competition Commission of India under Section 27 of the Competition Act, 2002. The Competition Appeal No. 1 of 2025 has been filed by WhatsApp LLC and Competition Appeal No. 2 of 2025 has been filed by Meta Platforms, Inc. Introduction of Appeal 2. The Competition Commission of India, in its Order dated 18 November 2024, found that WhatsApp (Meta) abused dominance by using a 2021 privacy policy to impose unfair conditions on users leverage dominance in OTT messaging Apps through smartphones in India to strengthen Meta's position in online display advertising and imposed a Rs. 213.14 crore penalty and ....
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....communication service that is used by people and businesses around the world. It claims to offer simple, secure, and reliable messaging (text, photo, files, video and audio messages) and calling (both voice and video), connecting people with those they care about most, effortlessly and privately. WhatsApp claims to have built its service on a foundation of user privacy and security and claims to creating a private and secure space where users can freely communicate. WhatsApp offers users throughout the world, including over 400 million users in India, a state-of-the-art end-to-end encrypted messaging service. Every personal message sent on WhatsApp - be it text, call, voice note, or video - uses the same industry-leading Signal encryption protocol that protects messages before they are sent until they are delivered to the intended recipient. The privacy and security of users' personal messages and calls with friends, and family are protected by end-to-end encryption, and no one can read or listen to them - not even WhatsApp. It is to be noted that on 14 February 2014 WhatsApp was acquired by Facebook, Inc. (Now Meta) and is now owned by Meta. 6. Prior to WhatsApp's 2016 update t....
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.... the petition vide its judgment dated 23 September 2016, holding: "In fact, the users of "WhatsApp" and [WhatsApp] are parties to a private contract, and the users of "WhatsApp" having voluntarily opted to avail services of the said Application, are bound by the terms of service offered by [WhatsApp]. [...] Under the privacy policy of "WhatsApp", the users are given an option to delete their "WhatsApp" account at any time, in which event, the information of the users would be deleted from the servers of "WhatsApp". We are therefore of the view that it is always open to the existing users of "WhatsApp" who do not want their information to be shared with Facebook to opt for deletion of their account." (emphasis added) [Paragraph 19, Karmanya, Delhi High Court] 9. Thereafter, the above judgment was challenged before the Hon'ble Supreme Court in ^2Karmanya Sareen v. Union of India, SLP (C) No. 804 of 2017 (Karmanya, Hon'ble Supreme Court). On 25 April 2017, IFF (i.e., Respondent No. 3) filed an application before the Hon'ble Supreme Court seeking permission to intervene and assist the Court in the matter. On 25 January 2021, IFF filed an interim application seeking to injun....
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.... points). On 13 January 2021, WhatsApp also placed full- page newspaper advertisements in popular national newspapers (such as, the Times of India and the Indian Express) in India to ensure that users across India were provided with the facts about the 2021 Update. 13. WhatsApp claims it also decided to give users more time to consider the 2021 Update and published a blog post titled "Giving More Time For Our Recent Update" (15 January Blog Post), informing users that they have until 15 May 2021 -- more than 4 months after WhatsApp first released the 2021 Update notice -- to review and consider the 2021 Update at their own pace. 14. Further, on 18 February 2021 WhatsApp issued a Help Center Article titled "About data sharing to improve people's ads and product experiences on Facebook" clarifying that it continues to honour the 2016 Opt-out and the 2021 Update does not alter this commitment. 15. On 7 May 2021, WhatsApp released an official statement (7 May Commitment) that no account will be deleted in India on 15 May 2021 nor would users lose functionality because of the 2021 Update when communicating with friends and family at least until a personal data protection legisl....
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....tphones to protect its position in the online display advertising market and the same is in contravention of Section 4(2)(e) of the Act. Remedies 246. Accordingly, in terms of the provisions of Section 27(a) of the Act, the Commission hereby directs the OPs to cease and desist from indulging in anti-competitive practices that have been found to be in contravention of the provisions of Section 4 of the Act, as detailed in this order. ... "247.1 WhatsApp will not share user data collected on its platform with other Meta Companies or Meta Company Products for advertising purposes, for a period of 5 (five) years from the date of receipt of this order. After expiry of the said period, the directions at para 247.2 (except para 247.2.1) will apply mutatis mutandis in respect of such sharing of data for advertising purposes. 247.2 With respect to sharing of WhatsApp user data for purposes other than advertising: 247.2.1 WhatsApp's policy should include a detailed explanation of the user data shared with other Meta Companies or Meta Company Products. This explanation should specify the purpose of data sharing, linking each type of data t....
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....would have been prudent for the [Commission] to have awaited the outcome of the [ongoing matters] before the Supreme Court and before [the Delhi High] Court..." before initiating its investigation. [Paragraph 33, Single Judge Judgment]. 20. On 30 April 2021, Meta and WhatsApp filed Letters Patent Appeals (LPAs) before the Division Bench of the Hon'ble Delhi High Court challenging the Single Judge Judgment. In its reply filed before the Hon'ble Delhi High Court in the LPA (Commission DHC Reply), the Commission acknowledged that, "a Competition Law regulator is not at all concerned with the possible violation of the Fundamental Right to privacy of users as guaranteed under Part III of the Constitution of India, as that is outside its well-defined remit". [Paragraph 6.3, Commission DHC Reply, enclosed at Annexure-27] The Commission also submitted that it "is examining the 2021 Policy purely through the prism of the Competition Act in discharge of its statutory function as the competition law regulator under Section 4 of the Competition Act." [Paragraph 6.3, Commission DHC Reply, enclosed at Annexure-27] These submissions were reiterated during the oral arguments, and on this basis,....
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....e Appellant that 25% penalty has already been deposited. We are of the view that subject to deposit of 50% of penalty (after taking into consideration 25% already deposited), the direction in paragraph 263 need to be stayed. We direct the Appellant to deposit 50% of penalty as indicated above within two weeks from today." 23. We have heard all sides and also perused the material placed on record and basis that, we proceed to write this judgment addressing all issues raised in the Appeal in following Sections: A. Maintainability of the Appeal B. Privacy as a competition concern||Interplay of competition law with data-protection law (DPDP Act / SPDI Rules) || exclusivity or complementarity-Jurisdiction of CCI C. Distinctions & overlaps between competition law and data privacy laws||Can CCI decide "privacy" issues? D. Validity of consent/ informed consent under competitive coercion E. Zero-price market economics and appropriate analytical approach||Competition in zero-priced digital products - Privacy of data - as a non-price factor? F. Does Indian Legislative framework include both unfair price and unfair conditions? G....
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....on of India, as that is outside its well defined remit" and that the Commission also submitted that it "is examining the 2021 Policy purely through the prism of the Competition Act in discharge of its statutory function as the competition law regulator under Section 4 of the Competition Act." Through its order dated 25 August 2022 (LPA Judgment), the Division Bench of the Hon'ble Delhi High Court also dismissed the LPA. 25. Thereafter, on 14 September 2022, Meta filed a Special Leave Petition (SLP) before the Hon'ble Supreme Court challenging the LPA Judgment and on 14 October 2022, the Hon'ble Supreme Court issued a judgment dismissing the SLP (SLP Judgment) [Meta Platforms, Inc. v. Competition Commission of India, Special Leave to Appeal (C) No. 17121/2022 with Special Leave to Appeal (C) No17332/2022]. Hon'ble Supreme Court observed that "the [Commission] should not be restrained from proceeding further with the enquiry/investigation for the alleged violation of any of the provisions of the [Competition] Act." 26. The Appellant argues that the Commission has relied on ^6Sections 27 and 28 of the Competition Act to make the theoretical argument that neither the ^7Digital Pe....
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....d from proceeding further with the enquiry/investigation for the alleged violation of any of the provisions of the [Competition] Act." Furthermore, we note that DPDP Act and DPDP Rules (draft) may not be of any help to the Appellants. Competition law and data protection law operate as complementary, not exclusive, frameworks. While data protection laws like the SPDI Rules and the DPDP Act focus on safeguarding individuals' personal data and consent, competition law addresses how dominant firms may misuse personal or non-personal data to distort markets, limit consumer choice, or engage in exploitative or exclusionary conduct. We note that both frameworks can apply simultaneously since they answer different questions-privacy law asks whether consent was valid, while competition law asks whether market power was abused through coercive or anti-competitive data practices. The mere overlap in subject matter may not exclude CCI's jurisdiction, and furthermore, the Hon'ble Supreme Court and Hon'ble Delhi High Court, have already affirmed that CCI can examine competition harms even when privacy issues are also involved. 29. Therefore, the questions about the maintainability cannot be r....
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....f great damage to the open market and resultantly, country's economy cannot be ruled out." In view of the above, the CCI should not be restrained from proceeding further with the enquiry/investigation for the alleged violation of any of the provisions of the Act. The Special Leave Petitions stand dismissed. However, it is observed that all the contentions which may be available to the petitioners are kept open to be considered by the CCI in accordance with law and on its own merits and any observations made while initiating the proceedings recorded in para 43 and any observations made by the High Court be considered and treated as tentative/prima facie while initiating the proceedings under the Act and the proceedings shall be decided and disposed of in accordance with law and on its own merits. Pending applications stand disposed of." 12. The above order clearly supports the submissions of the CCI that suo moto proceeding initiated by the CCI was not to be interfered with. However, the Hon'ble Supreme Court has observed that the proceedings shall be decided and disposed of in accordance with law and on its own merits. The initiation....
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....on legislation coming into effect, WhatsApp shall be at liberty to approach this Court for modification and/or variation of this undertaking'. (iv) Direct Ministry the of Electronics and Information Technology, Government of India to issue necessary orders to WhatsApp to not to implement its new Privacy Policy and new Terms of Use for Indian Users from 08.02.2021, and to take necessary steps to ensure compliance with such orders, till further orders are passed by this Hon'ble Court." Mr. Kapil Sibal, learned senior counsel appearing for the respondent-WhatsApp would point out letter dated 22nd May, 2021 addressed to the Ministry of Electronics and Information Technology (Meity), Government of India. Therein our attention is drawn to the following portion: "We take seriously the feedback we have received from your agency and want to confirm that WhatsApp will not limit the functionality of how WhatsApp works in the coming weeks as previously planned. We will continue to display our update, from time to time, to people who have not yet accepted. In addition, we will display the update whenever a user chooses relevant optional features like when a us....
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....conscious of the fact that refusing to stay privacy policy in the year 2023 by the Hon'ble Supreme Court in SLP filed by Karmanya Singh Sareen at best can indicate that the privacy policy was not stayed by the Hon'ble Supreme Court. However, the Hon'ble Supreme Court had no occasion to consider the suo moto proceedings and breach of provisions of Competition Act 2002, and at best it can be noticed that the privacy policy was not stayed by the Hon'ble Supreme Court in spite of the prayers made before it. 15. Counsel for the Appellants also referred to the Digital Personal Data Protection Act 2023 Gazetted on 11.08.2023 which has not yet been enforced. Counsel for the Appellants submits that the provisions are likely to be enforced within six months as the above statement was made by the Hon'ble Minister." B. Privacy as a competition concern||Interplay of competition law with data-protection law (DPDP Act / SPDI Rules) || exclusivity or complementarity-Jurisdiction of CCI 31. Appellant contends that the Commission went beyond its jurisdiction and made findings on privacy and data protection issues. It is claimed by the Appellants in their arguments that the entire anal....
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....ghlighting its relevance in the digital age. The judgment made it clear that the right to privacy is not absolute; it can be restricted, but only if the state action is lawful, pursues a legitimate aim, and is proportionate and necessary. It was brought to our notice that the Puttaswamy judgment directly led to the creation of the Digital Personal Data Protection (DPDP) Act 2023, making privacy protections operational in Indian law and fully covers the issue raised in this case. Appellant argues that the DPDP Act builds upon Puttaswamy judgment by requiring informed consent, purpose limitation, and data minimization-key privacy principles identified in the judgment. It establishes rights for individuals (data principals) like access, correction, and erasure of personal data, seeking to uphold individual autonomy against state and private interference. The Act attempts to balance privacy interests against legitimate state aims like national security, echoing Puttaswamy's proportionality and necessity tests for privacy restrictions. We note that even though the DPDP Act, inspired by Puttaswamy, governs the collection and processing of personal data, prioritizing consent and autonomy.....
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....awaited the outcome of the ongoing matters) before the Supreme Court and before [the Delhi High) Court..." while allowing the Commission to initiate its investigation on this basis. 35. Appellant also argues that WhatsApp's position is consistent with the decision of the Hon'ble Supreme Court in ^15Bharti Airtel wherein it was held that Telecom Regulation Authority of India (TRAI) was to first decide whether mobile networks were giving Jio sufficient points of interconnect. Only after TRAI made its determination could the Commission examine whether any failure to provide such points of interconnect resulted from an anti-competitive agreement. This is precisely what the Commission should have done here; waited for the Courts or the privacy regulator to decide on issues of privacy and data protection before deciding the competition issues. However, the Commission did not wait for such a determination by the appropriate authorities. 36. Strongly rebutting these arguments of the Appellant (Meta and WhatsApp) the Commission argues that there is no conflict between its jurisdiction under the Competition Act and the authority of data protection regulators under the IT Act or pri....
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....r, the CCI's order was passed under Section 26(2)^17 of the Act, whereby the matter is closed at the initial stage without order investigation and purely based on the contents of the information received by the CCI. Being in the nature of an in limine dismissal, the CCI would not have occasion to delve deeply into the matter or have the benefit of a detailed investigation by the DG. On the contrary, the impugned order was a final order passed under Section 27 of the Act, after a detailed investigation which threw up cogent evidence and hence, cannot be compared to a preliminary order passed under Section 26(2) of the Act. Commission relies on ^18Flipkart Internet Pvt, Ltd. and Ors, V. Competition Commission of India and Ors., WA Nos. 562/2021 and 563/2021 (GM-RES) (Paras 42), a Hon'ble Division Bench of the Hon'ble High Court of Karnataka has held as under: "42. In the considered opinion of this Court, the order passed in the case of AIOVA does not help the present appellants. The order was passed by the CCI on 6.11.2018 directing closure of the case under Section 26(2) of the Act of 2002. The present order has been passed by the CCI under Section 26(1) of the ....
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....erent right in a party to demand the same. Consequently, we do not find any jurisdictional bar on the Respondent No. I compelling them to give reasons under Section 26(2-4), as contended by Mr. Khambata, whilst considering and entertaining the Respondent No.2's representation." 40. Commission further contends that the order of the CCI relied on by the Appellants is of 2017 and in this fast-changing digital market, a great deal would have changed by 2021. Hence, it would be inappropriate to bind the CCI for all times to come in the matter of investigating the Appellants' abusive conduct, based solely on 2017 order. 41. In its rejoinder the Appellants claim that the Commission has misunderstood WhatsApp's submissions on Vinod Kumar Gupta's case. This Tribunal in Vinod Kumar Gupta upheld WhatsApp's 2016 update to its Terms of Service and Privacy Policy (2016 Update), which covered both (i) existing users who were offered an opt-out, and (ii) new users who joined after August 2016 without an opt-out [Refer Paras 9(1), 9(m), 9(n), pp. 64-65, Vinod Kumar Gupta, Vol I, WhatsApp Case Compilation. Subsequently, WhatsApp announced the 2021 Update. The 2021 Update does n....
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.... autonomy, however, Competition law, enforced by the Competition Commission of India (CCI), prevents abuse of dominance and anti-competitive practices, which we have found in this case to include unfair data practices such as forcing users to consent to data collection as a condition for service. 45. Appellant has placed reliance on Vinod Kumar Gupta v. Competition Commission of India, Competition Appeal No. (AT) 13 of 2017 (Vinod Kumar Gupta) in which this AT had dismissed allegations of abuse of dominance by WhatsApp in relation to the 2016 Update at the prima facie stage itself and argues that CCI should have exercised judicial restraint in line with AT's own decision. We find that this judgement is of no help to the Appellants as the 2016 and 2021 policies are fundamentally different. The scope of data collection and sharing under the two policies is different, with the 2021 Policy being much more expansive. Moreover, CCI's order under Section 26(2) was preliminary, but the impugned order was a final order under Section 27 after detailed investigation 46. Appellant also places its reliance on the judgment of the Commission Winzo Games Private Limited v. Google LLC and....
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....d that the appellants should be out of bound for all times and no action can be taken against them only because at some point of time the matter has been looked into by the CCI." [Emphasis supplied] 49. The Commission also finds support for non-application of res judicata in a recently introduced Section 26(2A) in the Competition Act, wherein the Hon'ble High Court Judicature at Bombay in Asian Paints Limited vs. Competition Commission of India & Anr. Writ Petition (Civil) No. 2887 of 2025 (Paras 27 and 32-34), has reiterated the same: "34. A perusal of the impugned order indicates that Respondent No.1, despite being aware of the JSW representation and its dismissal, found substance in the representation of Respondent No.2 and, after recording prima facie observation, directed the DG to investigate the same. The object of Section 26(2-A) is not to create an embargo on the filing of a subsequent information, but to emphasize that an information founded on similar or substantially identical facts ought not to be entertained. The discretion is that of the CCI, whether or not to entertain a subsequent representation..." 50. We find that judicial precedents as note....
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.... Rules is an entirely academic exercise. We also find that even when the DPDP Rules are notified and implemented, the CCI would still continue to exercise jurisdiction of actions of dominant entities that concern their data related practices for reasons set out in the next section. 53. We can thus conclude that the Commission's jurisdiction encompasses not just overtly anti-competitive economic practices but also extends to unfair data practices that may affect competition dynamics, consumer choice, and market fairness. The DPDP Act's existence does not make the CCI redundant; rather, both frameworks operate complementarily, where competition regulation addresses practices influencing market power, irrespective of overlap with privacy laws. Moreover, each new policy or conduct (such as the much broader 2021 WhatsApp policy) can merit fresh investigation notwithstanding prior decisions or regulatory action, as markets and business conduct evolve rapidly. C. Zero-price market economics and appropriate analytical approach||Competition in zero-priced digital products - Privacy of data - as a non-price factor? 54. We note the pivotal role played by data in the operation of ....
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....rom competition analysis. If accepted, this would effectively remove all non-price based digital services from the scrutiny of competition law. We also note that the ubiquity of digital services and their impact on consumers as a whole are perhaps that regulators worldwide have been considering non-price factors such as privacy are valid for competition analysis. 57. Therefore, we don't find any disagreement with the argument that reduction of privacy as a non-price factor in competition at par with other non- price attributes would be fully in consonance with the letter and spirit of the Competition Act. We find argument convincing that privacy loss can be considered service quality reduction and excessive data collection amounts to degradation of service quality. 58. The sub-issue before us is the role played by data in the operation of digital platforms. Basis submissions of both sides and also material placed on record, in our appraisal, we find that business entities in the digital world are able to provide zero-priced products only because there is value attached to the vast amount of data that is collected from their users. The Tribunal's judgment in Google LLC and Anr....
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....inctions and overlaps between competition law and data privacy laws, it was argued by the Commission that data-related practices may breach both data privacy and competition law. On the one hand the Data privacy law focuses on personal data processing, safeguarding individual rights and building consumer trust and on the other hand Competition law addresses misuse of both personal and non-personal data, competition-sensitive data, preventing data-driven market dominance, ensuring fair pricing, innovation, and consumer choice. Since 'user data' also includes anonymised and aggregated data, a broader view is essential for assessing competition issues in digital markets. Seen as such, data protection and competition law address data concerns through distinct but complementary tools [Para 28.5 and 28.7 @pgs. 12-13 of Impugned Order]. 63. We also note that privacy law asks, "Was this consent valid under privacy standards?" Whereas competition law asks, "Did this conduct distort the competitive process or exploit market power?". Consumer choice is impaired if a dominant firm can unilaterally impose terms that consumers would avoid if they truly had options. 64. It was also ....
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....tion, and consumer choice. Since 'user data' also includes anonymised and aggregated data, a broader view is essential for assessing competition issues in digital markets. Seen as such, data protection and competition law address data concerns through distinct but complementary tools. 69. We find that Commission's jurisdiction cannot be excluded on the grounds that it is testing the competition issues on the grounds of privacy and data and they are entirely outside the realm of a competition regulator and would be covered either by the Information Technology (Reasonable Security Practices and Procedures and Sensitive Personal Data or Information) Rules, 2011 ('SPDI Rules')^23 or the Digital Personal Data Protection Act, 2023 ('DPDP Act') or draft DPDP Rules^24 framed thereunder. 70. Thus, we find no repugnancy between the Competition Act and the DPDPA/IT Rules. The regimes address different questions i.e., CCI targets anti- competitive conduct (unfair terms, leveraging, foreclosure), while data protection laws govern privacy compliance and thus, the two laws can operate in parallel. Mere commonality of subject matter does not oust a statutory regulator....
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....ed into a binary choice of accepting invasive terms or forfeiting a vital communication tool. Such conduct constitutes exploitative abuse and undermines competition by giving the dominant platform data and insights inaccessible to rivals, while eroding service quality through forced privacy loss. The Competition Commission is fully justified in its scrutiny and intervention, protecting consumer interests, service quality, and competitive fairness in the digital marketplace 74. We note here that a related issue whether such coerced consent amounts to an unfair condition under Section 4(2)(a)(i) of the Competition Act is being discussed separately herein after. F. Does Indian Legislative framework include both unfair price and unfair conditions? 75. During the arguments the Respondent-Commission took us through the Legislative framework to canvass their arguments that Section 4 captures all forms of abusive conduct. We also note that Section 4 capture all possible forms of abusive conduct -Section 4(2)(a) has two sub-sections, namely, Section 4(2)(a)(ii) dealing with unfair price and Section 4(2)(a)(i) dealing with unfair condition, which indicates the legislative intendment....
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....as emerged as critical competition factor and market power source. Following cases were presented to bring to our notice that the Commission has the jurisdiction: a. European Union: An identical question has been considered by the Grand Chamber of the Court of Justice of the European Union ('CJEU') in Meta Platforms & Ors. vs. Bundeskartellamt ECLI:EU:C:2023:537^26 (Bundeskartellamt Case; paras 48-51, 116-118, 123, 134 and 151) upholding the first instance decision of Bundeskartellamt (German competition regulator) in Facebook Inc. B6-22/16 (Paras 525-558 and 867). Therein, the Grand Chamber of the CJEU ruled that when competition authorities are assessing whether an undertaking abuses its dominant position, violation of data privacy rules or reduction of privacy by excessive data sharing can form part of the competition law assessment. The CJEU further noted that the 'scale of the processing of the data' and the significant impact of that processing on the users of that network, as well as the reasonable expectations of the users, are particularly important factors. We also note that in the present context of Appellants' submissions, the above case is ....
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....ata serves as main input. b. OECD and European Data Protection Board^31: Background Paper on 'Intersection between Competition and Data Privacy' notes competition law and data privacy laws share 'family ties', both pursuing an overarching objective of protecting individual welfare, whether as consumers or data subjects. c. European Data Protection Board's (EDPB) Position Paper on interplay between Data Protection & Competition Law (Paras 7 and 8) further states that the digital economy has put personal data at the heart of many business models. As a result, data protection has become an important parameter of competition. The European Commission ('EC') recognizes that when defining the relevant market, the protection of privacy and personal data offered to consumers is one of the parameters of competition to be considered. d. EC and the U.S. Federal Trade Commission ('FTC'), in various merger cases have held that data being a source of market power and privacy being a non-price factor, both are important considerations in competition law assessments (See: Apple/Shazam Case M.8788 assessment dt. 06.09.2018, Facebook/What....
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.... its statutory function as the competition law regulator under Section 4 of the Competition Act. As stated above, the Supreme Court and the Delhi High Court allowed the Commission's investigation based on the understanding that it would not be making findings on privacy and data protection. 83. From above submissions on international jurisprudence on data privacy and competition law we summarise few important cases: 83.1 European Union: The CJEU in Meta Platforms & Ors. vs. Bundeskartellamt held that excessive data sharing violating privacy can constitute abuse of dominance. 83.2 Turkey: The Turkish Competition Authority investigated and found that Meta's privacy policies and data practices distorted competition and constituted abuse. 83.3 United Kingdom: The UK's Competition Appeal Tribunal is examining abuse of dominance relating to data sharing and privacy practices by Meta. 83.4 France/Germany: The joint report confirms that data privacy practices by dominant firms must be scrutinized as part of competition law enforcement. 83.5 United States: U.S. regulators like FTC and DOJ recognize data as a source of market power and consider privacy violations as abu....
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.... Inc. & Others, Competition Appeal (AT) 22 of 2020^36. 88. Similarly, the erstwhile Competition Appellate Tribunal (COMPAT) also dismissed allegations of abuse of dominance, citing the absence of anti-competitive effects in the relevant market in ^37Schott Glass Decision. The Commission has offered no basis to deviate from this precedent and penalise WhatsApp based entirely on hypothetical effects. 89. Under Section 4 of the Competition Act, the Commission must examine whether a dominant player is abusing its position in ways that cause an anti-competitive effect in the market. The focus is not on the alleged conduct but on its actual effects. An effects analysis is indispensable when determining those effects. This was affirmed by COMPAT, which set aside Commission decisions on the basis that they failed to demonstrate the anti-competitive effects of allegedly abusive conduct. It is claimed that the Commission incorrectly asserts that it need not undertake an effects analysis and does not identify an actual anti-competitive effect. It attempts to bypass this requirement by arguing that it could simply find a violation based on the "potential impact" and "likelihood" of effec....
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....ion Appeal (AT) No. 01 of 2023 (Google NCLAT Decision) 93. Likewise, the Competition Appellate Tribunal and the Commission have dismissed allegations of abuse where an actual anti-competitive effect had not been shown. 94. Moreover, the legislative history of the Competition Act, supported by the Raghavan Committee (the High-Level Committee on Competition Policy and Law, whose report served as the basis for the abuse of dominance provisions), establishes that a Section 4 violation must be based on actual, not potential, anti-competitive effects. Parliament's ongoing efforts to introduce a digital competition law aimed at proscribing conduct based on potential anti- competitive effects (ex-ante regulation) also confirm that the current law requires violations to be based on actual harm (ex-post regulation). 95. In any case, even under its own flawed framework that ignores judicial precedent, the Commission fails to establish even the "potential impact" and "likelihood" of effects because it does not explain: (i) what threshold must be met to satisfy the "likelihood" criterion; or (ii) provide evidence of how any such threshold was met in this case. 96. Countering the arg....
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.... been examined by the CCI. Commission also contends it is neither practical nor required to conduct a referendum among millions of users (as WhatsApp/Meta suggest) to ask "Are you unhappy with this policy?". To say that CCI substituted its views for user will ignore that the CCI is an expert-led regulator that acted as a guardian of consumer welfare from a competition perspective, in a situation where users individually had little power to enforce their will. This is precisely the purpose of competition law enforcement against dominant firms. Commission also contends that as a corollary of the above, under Indian competition law there is no requirement to conduct a user survey to establish actual or potential anti- competitive harm, The CCI's task is to objectively evaluate whether the conduct of a dominant enterprise (in this case, rollout of the 2021 Policy) results anti- competitive harm. To this end, the CCI is required to evaluate and establish whether such conduct meets the statutory criteria under Section 4^38 of the Act. Section 4(2)(a)(i) of the Act has two ingredients-one, the element of imposition; and two, an "unfair condition'. Both elements have been comprehen....
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....itative effects analysis of the competitive harm caused to advertisers due to the sharing of WhatsApp user data by Appellants with various Meta companies/platforms. In this regard, statements of several Meta's competitors and digital advertising companies have also been considered. These have been noted in detail in herein after by us in effects analysis to specifically understand effects analysis of competitive harm in the display advertising market. The Commission has also brought to our notice that it has conducted an extensive qualitative effects analysis of the competitive harm caused to advertisers due to the sharing of WhatsApp user data by Appellants with various Meta companies/platforms. In this regard, statements of several Meta's competitors and digital advertising companies have been considered, in a summarised manner are being noted hereinafter. 98. Various 3rd party submissions (Inuxu, InMobi, OpenX, Affle, Ally Digital, Collectent) confirm that the 2021 WhatsApp Policy and its integration with Facebook enhances Facebook's already dominant position in digital advertising: 98.1 Data is the key driver of online display advertising: Advertisers seek to ....
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.... an unfair and commercially unviable playing field leading to possible market exits. [Paras 197.3, 198.1-198.3, 201.2-201.3 @pgs. 121-123 of Impugned Order) 99. Other submissions of Tyroo, Xapads, Snap, and LinkedIn underscored that scale and history of user data constitute the biggest entry barriers in digital advertising: 99.1 Walled gardens: Google and Facebook, by virtue of massive accumulated consumer data, operate as closed ecosystems with superior targeting and attribution tools. 99.2 Barriers to entry: Replicating such datasets requires prohibitive capital investment, making it infeasible for new or smaller players. 99.3 Competitive disadvantage: Rivals with limited data cannot offer comparable targeting or campaign optimisation, reducing advertiser preference for their services. [Paras 188, 197.2, 201.1, 203.2, 205.1-205.3 @ pgs. 121-123, 125 of Impugned Order] 100. Moreover, Taboola and LinkedIn further stressed Facebook's ability to combine on-platform and off-platform data to reinforce its competitive advantage: 100.1 Cross-platform tracking: Through plugins, pixels, and third-party apps/sites, Facebook aggregates extensive data beyond its own plat....
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....nderstand its users and provide more accurate targeting, improve user engagement with the platform and with ads; and offer advertisers clear measurement of ad performance, contributing to the perception that Facebook- served ads are superior to competitors' offerings. [Paras 205.5-205.6 @pg. 126 of Impugned Order] 103. Additionally, the Commission has also brought to our notice that it has taken note of Facebook's own admission from the filing of FORM 10-Q filed by Facebook for the quarter ending on 31.03.2021 Securities Exchange Commission (SEC) of the United States of America. In the said form, Facebook has admitted that the data-sharing between WhatsApp and Facebook aids Facebook in providing services as well as targeted ads to the users. [Para 206 @ pgs. 126-127 of Impugned Order] 104. The Commission has argued that given the foregoing submissions of third parties and Meta, it is clear that extensive data collection significantly enhances a digital advertising platform's ability to meet these objectives. [Para 207 @ pg. 127 of Impugned Order] 105. In its Rejoinder submissions WhatsApp Case claims that the Commission's submission that users should be tre....
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....has contended that (a) the fact that many users accepted the 2021 Update: and (b) Meta's alleged gains/benefits/advantages in the online display advertising market, as provided in table below Para 219, p. 435, Impugned Order, Vol II. Meta Appeal are sufficient to demonstrate the anti-competitive effects of the 2021 Update under Section 4 of the Competition Act. 107. Appellant claims that these are claimed to be contrary to evidence and findings on record. First, the acceptance rate data demonstrates no anti-competitive effects. The Commission says that the mere fact that many users had accepted by 7 May demonstrates abuse and effect. The Commission's submission is entirely without evidence. Further no users were contacted to determine their rationale of accepting the terms before 7 May 2021. The evidence that exists is to the contrary. Only 241,917.132 users that existed as of 4 January 2021 (or 40-45% (43.3%)) accepted the 2021 Update between 4 January 2021 and 7 May 2021. Almost as many users (40-45% (41%)) accepted the 2021 Update after 7 May 2021 (when there was admittedly no "take it or leave it condition), while approximately 15% have still not accepted the 2021 Up....
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....orated extensive market feedback and submissions from competitors and advertising companies (such as InMobi, Affle, Taboola, LinkedIn, Snap, Tyroo, and Xapads), which qualitatively demonstrate how WhatsApp's data sharing with Meta strengthens Facebook's dominant position in the digital advertising ecosystem and adversely impacts competition. User coercion and imposition of the Policy were evaluated qualitatively through patterns of user prompts, acceptance rates, and the market situation where users faced a take-it-or-leave-it choice, demonstrating effective loss of meaningful consent without reliance on user surveys. The CCI effectively balanced the qualitative evidence of anti-competitive harm against claimed pro-competitive benefits, including innovation and security features enabled by data sharing, to reach a reasoned conclusion on harm to consumer welfare and market competition. We also find that the CCI's approach aligns with accepted competition law principles that effects can be demonstrated from market structure, conduct, and qualitative evidence without requiring exhaustive quantitative user surveys especially in digital dominance cases where network effects and mark....
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....e contrary Commission claims that the mere fact that many users had accepted by 7 May demonstrates abuse and effect. We note that the exact numbers are not important in the above noted. We find Commission's argument to be convincing. And with respect to growth of Meta's ads revenue it is strong case of the Commission that effects may take place in the future. I. Relevant markets delineation? 111. Under Section 2(r) of the Act, the relevant market may refer to the product, geographic or both markets. The relevant product market (Section 2(t)) includes products or services that are interchangeable or substitutable based on characteristics, price, or intended use, with factors such as consumer preference and switching costs guiding the analysis (Section 19(7)). The relevant geographic market (Section 2(s)) refers to the area where competition conditions are homogenous, determined by factors like trade barriers, transport costs, and consumer preferences (Section 19(6)). 112. CCI framed the case by defining two relevant markets: OTT messaging apps on smartphones in India (i.e. WhatsApp's messaging service) (Market1) and Online display advertising in India (Market 2). We del....
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..... The Commission's sole reliance on user base as a proxy for market power overlooks factors such as multi-homing, switching costs, and presence of substitutes. The relevant market analysis is further flawed by the Commission's reliance on narrow interpretations of "functionality" and device distinctions, ignoring dynamic consumer preferences and technological convergence. 117. The Impugned Order incorrectly segments the market by app functionality and device-type, failing to acknowledge that most consumer communication platforms operate across devices and offer similar functionalities (including WhatsApp, FaceTime, iMessage, Discord, Slack, Telegram, etc.). It incorrectly excludes SMS and MMS from the relevant market, despite their functional parity with OTT messaging services in satisfying communication needs and user substitution behavior. It erroneously excludes proprietary apps like iMessage and FaceTime, overlooking their functional similarities and interoperability developments. The exclusion contradicts the Commission's own prior findings where proprietary messaging services were included in the same relevant market (see Paragraph 14, Vinod Gupta CCI). 118. The Impugne....
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....sage and Google Messages interoperable); and (iii) incorrectly limited the geographic market to India despite the fact that the services are inherently cross-border. 123. The Commission on the hand contends that relevant markets and dominance have been correctly assessed. The following relevant markets were delineated for the purposes of the present matter: a. Market for OTT messaging apps through smartphones in India; and b. Market for Online Display Advertising in India 124. In this Section we appraise whether relevant markets were appropriately delineated or not. Under Section 2(r) of the Competition Act, relevant markets include both product and geographic markets, defined by interchangeability or substitutability of products/services and by competitive conditions that are homogeneous respectively. We find that the CCI conducted a detailed assessment of user behavior, technological features, and market structure, recognizing the core market as OTT messaging apps through smartphones, in line with economic realities shaped by consumer preferences and switching costs. The CCI also analyzed functional substitutability and proximity of competitors, distinguis....
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....ing, Netflix, X, Snapchat all saw increases in user engagement. [Para 47.1 of the Impugned Order]. This is accentuated by fact of multihoming-most users have all kinds of apps on devices and therefore switch between different forms of engagement. Users regularly switch between various multi-functional online service providers (i.e., multihoming), and that new and existing online competitors are constantly evolving, innovating, and adopting new features (including rich communication services as well as other features) to attract and retain user interest. No demand-side study was done to analyse this. [Para 47.5 of the Impugned Order]. 129. While countering delineation of the market as per the Appellants, CCI argues that, defining the market broadly as a 'market for user attention' is akin to arguing that all goods and services a consumer can buy with their disposable income are substitutes simply because money is a common medium for purchase. Such an approach incorrectly suggests that everything a consumer spends their money on whether groceries, clothing. entertainment, or travel belongs to a single market, which contradicts established competition law principles of subs....
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.... excluded as not being substitutable on the grounds as explained hereinafter. 132. Email services are not same as OTT Messaging Apps via Smartphones. Email is typically used for more formal, structured communication and often involves longer messages with detailed content or attachments like documents and files. It is suited for professional or official exchanges and does not emphasize real-time interaction. In contrast, OTT messaging apps are designed for instant, real-time communication, favouring shorter, conversational messages with features like multimedia sharing, voice and video calls, providing a more dynamic and interactive communication experience. [Para 48.7 @pgs. 27-28 of Impugned Order]. 133. Video conferencing (VC) services are not same as OTT Messaging Apps via Smartphones. OTT apps lack the advanced capabilities that define video conferencing solutions like Zoom, Google Meet, Microsoft Teams, and Cisco Webex. Video conferencing apps are built for more structured, professional meetings and can support a larger number of participants, cross-platform compatibility (across phones, tablets, and computers), screen sharing, recording, and the ability to invite partic....
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....icantly change market dynamics since Meta's dominance with WhatsApp, due to its vast user base and smartphone-centric approach would remain largely unaffected. [Para 48.10 @ pgs. 29-30 of Impugned Order] 137. Messaging apps limited to single OS are not same as OTT Messaging Apps via Smartphones. Consumer communication apps that are proprietary and limited to a single operating system, such as Apple's Face Time and iMessage, are not substitutable for OTT messaging apps (interoperable across devices) because they restrict communication to users within a specific ecosystem, creating a "walled garden" effect. [Para 48.8 @ pgs. 28-29 of Impugned Order) 138. Bases above explanation, it was brought to our attention by the Commission that in essence, OTT messaging apps are unique. They allow users to engage in individual or group conversations without restrictions on the length of messages, enabling unlimited communication that is not constrained by character limits. Beyond just text, they support rich media communication, including the ability to share images, videos, audio messages, emojis, GIFs, and location information. They provide features like voice calls and video cal....
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....evant market as the "Market for Online Display Advertising in India" and the Commission committed errors in defining the relevant market. It fails to properly assess demand-side substitutability, even disregarding evidence that there is substitutability between: (i) offline advertising and online advertising; and (ii) online search and display advertising. The mistakes in the Commission's analysis were further compounded by its (i) misplaced reliance on the decisions of foreign competition authorities (which are inappropriate given the existence of applicable Indian law) and dated material; [Paragraphs 115 and 120, Impugned Order, enclosed at Annexure-1] and (ii) limiting the geographic market to India based on unverified assertions that conditions of competition are different in India relative to other parts of the world. [Paragraph 128, Impugned Order, enclosed at Annexure-1]. Respondent-Commission contends that the primary revenue generation activity of Meta is online display advertising. Therefore, it becomes necessary to examine various modes of advertising and the market dynamics involved therein to identify competitive constraints on Meta. [Paras 109@pg. 53 of the Impugned O....
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....ng and for businesses in modern times, relying entirely on offline advertising is not a practical option, as it lacks the reach and engagement capabilities that digital channels have. 145. Secondly Respondent-Commission contends that Appellants-Meta proposed that as an alternative, the relevant market should then be the 'market for online advertising services' without differentiating between online display advertising services and online search advertising services. Appellant relied on submissions of Collectcent, Xapads, and Affle, to argue that advertisers can switch between the two modes of online advertising (search and display) and therefore, the two are substitutable. It was further submitted by the Appellant that technical advancements in digital advertising enables substitutability between various mediums of advertising. For instance, Google not only runs ads on its search engine but also has a display advertising delivery system. Lastly, it was submitted that Google and Amazon, which are Meta's rivals, submitted that there is substitutability between various mediums of advertising. and these submissions were ignored by the DG without any reasoning being provi....
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....tion. 145.5 From a supply-side perspective, search advertising relies on advanced algorithms to match user queries with ads in real-time auctions, ensuring that the most relevant ads appear in response to specific searches. In contrast, display advertising is delivered through advertising networks that use data about users' browsing behaviour and interests to target them with appropriate ads across various websites. 145.6 Search advertising is primarily conducted on search engines, such as Google, where ads are displayed directly on the search results page based on user queries. In contrast, display advertising is distributed across a wide range of publishers, including websites, mobile apps, and social media platforms. 145.7 Switching from providing search advertising services to display advertising, or vice versa, would require significant changes in technology, audience engagement mechanisms, and ad-serving infrastructure. For instance, search advertising relies heavily on keyword-based targeting, while display advertising focuses on user behaviour and profile data to place ads across websites and apps. These differences create substantial barriers to supply-side su....
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....competition in the online display advertisement market are homogeneous within India, and thus the relevant market should be defined nationally, not globally. India has a unique regulatory environment that significantly impacts the operation of advertisement industry. 147.2 No concrete evidence that conditions of competition in the online display advertisement market are homogeneous across the globe has been provided. 147.3 Providing similar services across the globe or making of product decisions on a global basis, does not mean that competitive constraints are homogenous across the globe. 148. Therefore, the relevant market was finally defined as the 'market for online display advertising in India and we also don't find any infirmity in such delineation of the relevant market. L. Dominance in the OTT messaging market: Assessed or not in the relevant market? 149. Appellant claims that the Commission incorrectly finds WhatsApp dominant in the alleged market for OTT messaging apps through smartphones in India [Paragraph 108, Impugned Order]. This is incorrect because the Commission firstly ignored evidence demonstrating that WhatsApp is constrained by competition a....
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....ket, which is essential under Indian law. Merely identifying a position of strength is insufficient unless it is shown to have a material impact on competitive dynamics. 152. Appellant also claims that the Commission cherry-picks a few factors under Section 19(4): (i) market share, (ii) network effects/switching costs/entry barriers, (iii) consumer dependence, and (iv) size/resources/economic power. It fails to consider other relevant factors such as: (i) level of vertical integration, (ii) market structure/size, (iii) economic power, (iv) social obligations and costs, and (v) relative development advantage. Established jurisprudence and Supreme Court precedent require a holistic assessment, which the Commission does not undertake. The Commission's findings on dominance are therefore erroneous [see also paras 12.42-12.43, ^43Belaire Owners Assn. v. DLF Ltd., Case No. 19 of 2010]. 153. Appellant also claims that the WhatsApp is not dominant in the broader market for user attention, due to intense competition from global and Indian players (Google, YouTube, Snap, Telegram, Signal, Clubhouse, Spotify, ShareChat, Moj, and many more). Many of these rivals are rapidly growing, prec....
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....ment. High multi-homing and innovation by competitors (Telegram, Signal, Moj, Josh, etc.) indicate that WhatsApp cannot operate independently. 159. Appellant also contends that the Impugned Order overstates network effects and ignores that low switching costs, high multi-homing, and new entrants (e.g., Telegram, Moj, Josh) offset any entrenchment. The assertion of a "winner-takes-most" market is not supported given the evidence of user switching and competitor growth. 160. Telegram, Signal, Snapchat, ShareChat, Moj, Josh, LinkedIn, X (formerly Twitter), YouTube, Netflix, Zoom, Skype, Microsoft Teams, Google Meet, TikTok, Roposo and others have amassed significant user bases and continue to grow. These rivals' innovations (e.g., Telegram's group video and chat transfers) and the rise of new technologies demonstrate that WhatsApp faces constant competition and cannot sustain dominance. Rapid changes in consumer preferences (e.g., during the COVID-19 pandemic), new technologies (AI, AR/VR), evolving services from telecom operators (RCS, default messaging apps), further illustrate a highly competitive, changing environment. 161. Appellant also contends that the Impugned Order'....
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....extremely high, making them dominant [Paras 57-62 and 47.5 @pgs. 34-36 the Impugned Order]. DAU is a critical measure of competitiveness and success. Messaging involves frequent, often daily exchanges such as text, media, and group interactions that reflect how integral the app is to users' communication. High DAU levels therefore demonstrate strong engagement, network value, and a reinforced market position. [Para 59 @pg. 35 of Impugned Order]. 164. Appellants' stance with respect to Statista data is that it cannot be used, as it is not part of DG report and was never meant for purpose of assessment of dominance, was rather a broad-based international survey with its own objectives. On the other hand, CCI's Position is that Statista data indicating strong user preference for WhatsApp is being used to support other findings, if not the entirety of the analysis additionally, it is similar to the findings in the survey report filed by WhatsApp itself, and additionally WhatsApp too has sought to rely on parts of the Statista report. It is therefore germane and supports all the other data on this point. 165. Appellants' stance is that the download data of Telegram....
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....ontent creators, and crucially businesses, which consequently entrenches dominance. These indirect network effects allowed for launch of WhatsApp Business etc., further enhancing its utility and creating greater entry barriers for competitors. [Para 81 @ pg. 43 the Impugned Order] 167. Reliance is placed on order in Jio/Jaadhu by the Appellant, which observes consumer communication applications market does not exhibit significant entry barriers. Additionally, reliance was placed by the Appellant on Telegram's allegedly stating that it has not faced any entry barriers in India. [Para 82@pg. 44 of the Impugned Order]. CCI's contends that the Observation made in Jio/Jaadhu is no longer applicable in fast-evolving market, conditions can change and were anyway made in the distinct context of a forward-looking combination assessment, not a present-time dominance assessment. Moreover, Jio/Jaadku is a combination case. The decision under the Combination Regulations is a forward-looking exercise where potential market outcomes future market dynamics are predicted to gauge the potential appreciable adverse effect on competition. Abuse of dominance case assess the prevailing market....
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....rary CCI's claims that in terms of size, resources and economic power of Meta globally, no competitor even comes close. Jio is most comparable, but even so, its assets are not comparable to Meta's assets. [Paras 95-97 @pgs. 49-50 of the Impugned Order]. WhatsApp itself admits that financial resources are important to innovate and operate in the market, which will then naturally become a factor when it comes to dominance. [Paras 99-100 @ pg. 50 of the Impugned Order] 170. It was also brought to our notice that Meta operates a multi-sided ecosystem encompassing platforms like Facebook, Instagram, WhatsApp, and Messenger, connecting billions of users with advertisers, businesses, and developers. This ecosystem enables Meta to generate value from network effects, as users on one side (individuals) enhance the platform's attractiveness for the other side (advertisers and businesses). These companies also share data amongst themselves, and such functional integration enables Meta to enjoy economies of scale. Paras 102-103 @ pg. 51 of the Impugned Order] 171. The arguments of the Commission are summarized hereinafter: 171.1 Market Share [Section 19(4)(a)]: CCI relied ....
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....erational resources far exceed any of its competitors. Further, it was found that asset size, while not entirely determinative, is relevant to technological innovation market positioning and eventually establishing dominance, as admitted by Meta. 171.5 Meta's ecosystem integration [Section 19(4)(f)]: Meta's integration across platforms (Facebook, Instagram, Messenger, WhatsApp) and multi-sided ecosystem consisting of various products and services generates significant network effects and economies of scale, facilitates connecting various stakeholders like users and advertisers, and increases the lock-in effect on its platforms as users enhance the platform's attractiveness for advertisers and businesses. 172. Bases above arguments and also materials placed on record we note that as per Section 19(4)(a) of the Act the market share of the enterprise is a relevant factor, apart from entry barriers arising from the network effects that Meta enjoys, which can also be a relevant factor in terms of Section 19(4)(h) of the Act. Furthermore, dependence of consumers on Meta, is also a relevant factor in terms of under Section 19(4)(f) of the Act. We also note that the size, resourc....
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....mere downloads. We find that the CCI correctly prioritized DAU/MAU metrics over registered user counts and appropriately rejected appellants' reliance on generalized third-party reports, noting that WhatsApp itself used such data-showing a more accurate picture of active market dominance. 175. We also find that Network effects were found to reinforce WhatsApp's dominance, with a larger user base producing lock-in effects and a "winner- takes-all" dynamic that impedes competitors' ability to attract users, compounded by high switching costs and indirect network effects from business integrations and third-party developers. The appellants' reliance on unrelated precedent (Jio/Jaadhu case) was rightly rejected as irrelevant given it was a forward-looking merger case and not an assessment of present dominance, with market conditions having evolved substantially in a dynamic digital environment. We also note that the consumer dependence on WhatsApp remains high with limited multihoming effectiveness, confirmed by concentrated user activity on WhatsApp compared to rivals, and expert observations cited by the appellants were distinguished for lack of detailed investigation ....
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....ising in India: Assessed or not in the relevant market? 178. Appellant-Meta contends that the Commission fails to determine that Meta is dominant in the alleged market for "Online Display Advertising in India". To establish an abuse of dominance, the Commission must first find Meta dominant in the relevant market. Here, the Commission does not find Meta dominant in the alleged market for "online display advertising in India". Instead, the Commission only claims that Meta holds a "leading position" in the market. But a "leading position" is not the legal standard for an abuse of dominance analysis under Section 4. The Commission makes this finding based on: (i) advertisement impressions sold; and (ii) advertising revenue. However, these are not appropriate metrics to measure a company's position in the market. Further, the Commission failed to factor in the vibrant nature of competition in the market and the capabilities of competitors. Indeed, market realities and third-party submissions confirmed that Meta's rivals are aggressively competing for larger shares of the dynamic and ever-growing advertising market. 179. Refuting the arguments of the Appellant-Meta, the CCI submit....
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....t competitors, such as Google and Amazon, have a considerably lower share of both advertisement impressions served, and revenue generated. Smaller players such as LinkedIn, InMobi, Affle, and Twitter, hold an even more negligible share, making it clear that Meta's scale and reach are unmatched in this segment. 180. Thus in above backdrop we find that Commission has failed to determine that Meta is dominant in the market for "Online Display Advertising in India". N. Violation of Section 4(2)(a)(i) || Abuse of Dominance by Appellants - issue of imposition of unfair conditions on users 181. Appellant-Meta contends that the Commission has incorrectly found an abuse of dominance. Firstly, Appellant-Meta claims that the impugned order ignores that Meta and WhatsApp are separate legal entities when finding a violation under Section 4(2)(a)(i). The Impugned Order improperly imposes liability on Meta for WhatsApp's alleged conduct, disregarding that (i) Meta and WhatsApp are separate legal entities; (ii) WhatsApp, not Meta, offers and operates the WhatsApp service; and (iii) the subject of the investigation is the 2021 Update, which relates to the WhatsApp service. Courts have ....
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....olicy. This aspect will be dealt with in the next section on unfair conditions. d. Thereafter, on 15.01.2025 WhatsApp deferred the last date for accepting the 2021 Policy from 08.02.2021 to 15.05.2021, while repeating the above language of necessity of acceptance to continue usage of the WhatsApp services. The same was conveyed to users by way of a second in-app user notification dt. 19.02.2021. [Paras 137.4 and 137.5 @ pg. 77 of Impugned Order] e. This decision to extend the last date was not a suo moto decision, but one that arose out of the intervention of the relevant authorities in this regard, such as CCI. [Para 147.2 @pg. 84 of Impugned Order) f. Finally, on 07.05.2021, WhatsApp released an official statement on its website confirming that no account will be deleted functionality because of the 2021 Update. Few extracts from this statement are as follows: "...No one will have their accounts deleted or lose functionality of WhatsApp because of this update. The majority of users who have seen the update have already accepted. ... WhatsApp won't delete your account if you don't accept the update...." [Para 137.6 @pgs....
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....ine acceptance screen presented to users require mandatory acceptance as a pre-condition for continuing WhatsApp usage. WhatsApp could have amended its acceptance page to reflect non-mandatory nature thereof but has pointedly failed to do so. [Screenshots available in para 137.2, 137.5 and 137.7] 186. The Commission also claims that while the language makes it clear that acceptance of the privacy policy remains mandatory for new users, it should not be lost sight that this condition has also been implemented for users who had exercised the opt-out option while accepting the 2016 privacy policy due to following explanations: 186.1 While WhatsApp has throughout called the 2021 Policy as the "2021 Update", the policy itself does not term itself as either an update or an amendment to the 2016 policy. Contractually speaking, the 2021 policy is a fresh contract which would supersede and override all previous contracts including the 2016 policy. In this regard, the 2021 WhatsApp Terms of Service state that the said terms "make up the entire agreement [...] and supersede any prior agreements." The Terms of Service also include a reference to the 2021 policy and contain a hyperlink di....
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....users, and in the present case, DAU shows that 61% of daily active users had accepted the 2021 update before the 07.05.2021 announcement [Paras 69-70 and 144 @pgs. 38-39 and 82 of Impugned Order]. c. The approach of the CCI in using DAU data is supported by the 2019 judgment of the Bundeskartellamst (upheld by the CJEU in 2023 as discussed separately), which not only relies on the DAU data, but also gives an exhaustive explanation of why in assessing digital platforms like the Appellants, DAU data is preferable to both, Monthly Active Users (see: paras 406, 407 and 409) and registered user data (see: para 411). d. Significantly in para 409 and footnote 400, the Bundeskartellamst takes note of Facebook's (now Meta) 2017 Annual Report wherein Meta itself stated that "We view DAUs, and DAUs as a percentage of MAUs, as measures of user engagement; MAUs are a measure of the size of our global active user community." e. In the 07.05.2021 announcement, WhatsApp has itself admitted that a "majority of users" had accepted the update [Para 145 @pg. 83 of Impugned Order; Para 9 @pg. 245 of Annexure to DG Report]. 188. The Commission has also brought to our no....
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....ing available to WhatsApp, as well as the value of that data and where it's being sent. Therefore, user consent cannot be said to be informed consent. [Paras 167 and 169 @ pgs. 99-100 of Impugned Order] 192. The Commission has also brought to our notice status quo bias also strongly enhances the tendency of users to stick with default data protection settings, making active consent unclear. [Para 7.45 @ pg. 134 of DG Report]. 193. The Commission contends that WhatsApp's actions compelled users to accept the 2021 Policy along with its mandatory data sharing provisions. The Commission finally argues that the evil sought to be addressed by Section 4(2)(a)(i) of the Competition Act is the imposition of unfair terms. In the present case, the 2021 Policy was imposed on users as the same was mandatory and was implemented in a scenario where users were threatened with discontinuation of an important service with little time to consider their option. 194. The Commission has argued that the 2021 Policy imposes unfair conditions on users. It claims that they are vague and expansive terms that permit expanded data collection for non-WhatsApp purposes. The Commission has argued....
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....was no expansion of data being collected in the 2021 Policy as compared to the 2016 Policy, and any additional language in the 2021 Policy was merely a clarification issued in the interest of transparency. However, the Commission has argued that the defense that the changes in the 2021 Policy are merely clarificatory and meant to enable transparency does not hold water. The language in the 2021 Policy is vague, broad, and open-ended, relying on terms such as "includes," "such as," and "for example." This creates uncertainty regarding the specific categories of information being collected and shared. The use of non-exhaustive lists in the policy suggests that WhatsApp retains the flexibility to expand the scope of data collection at any time and justify it as being covered under previous policies. Data is the user-side consideration for WhatsApp services and therefore a non- exhaustive list of data points means that users are not aware of the actual cost of such services. [Paras 166-167@ pgs. 98-99 of Impugned Order). 198. The Appellants have further placed reliance on this Tribunal's Judgment in Shri 12Vinod Kumar Gupta vs. CCI & Ors. CA(AT) No. 13 of 2017 and the underlying....
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.... peculiar facts and circumstances of the case. The market place is by its very nature a constantly evolving and dynamic space. The market forces can evolve even in the course of a few months and therefore, by no stretch of imagination, it can be held that the appellants should be out of bound for all times and no action can be taken against them only because at some point of time the matter has been looked into by the CCI." d. Even after the recent introduction of a Section 26(2A)^46 in the Competition Act, the Hon'ble High Court Judicature at Bombay in Asian Paints Limited vs. Competition Commission of India & Anr. Writ Petition (Civil) No. 2887 of 2025 (Paras 27 and 32-34), has reiterated the non-application of res judicata in the following terms: "34. A perusal of the impugned order indicates that Respondent No.1, despite being aware of the JSW representation and its dismissal, found substance in the representation of Respondent No.2 and, after recording prima facie observation, directed the DG to investigate the same. The object of Section 26(2-A) is not to create an embargo on the filing of a subsequent information, but to emphasize that an infor....
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....mmission has also brought to our notice that the repercussions of this policy, and its anti-competitive nature with respect to data sharing, have been set out in detail in the impugned order and are summarised below: a. Privacy is a non-price factor in competition assessment: Privacy is an important non-price element of competition, as has been held by competition authorities the world over - WhatsApp's increased data collection and broader data sharing can thus be considered a reduction in the overall quality of service. This has two effects it impacts consumer welfare and competition, and it entrenches WhatsApp's dominance by creating insurmountable entry barriers for potential competitors. [Para 182.6-182.8 @ pg. 108 of Impugned Order] b. Expanded data collection under 2021 Policy: WhatsApp may share users' account registration information, transaction data, information on how users interact with businesses when using WhatsApp's services, mobile device information, IP addresses, and certain other data they define in the "Information We Collect section" with other Meta companies. [Para 175 @ pg. 103 of Impugned Order] c. WhatsApp user da....
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....he 2021 Policy can be also considered an imposition on users due to the absence of choice. The 2021 Policy compels users to either accept broad and ambiguous data sharing terms or risk losing access to essential features and functionalities of the platform (at least till 07.05.2021). This coercive approach leverages WhatsApp's dominance to impose data-sharing conditions that primarily benefit Meta's business. This combination of coercive imposition and unfair reduction in service quality (as outlined in preceding paragraphs) underscores the exploitative nature of WhatsApp's conduct which harms both consumer welfare and market competition. [Para 182.11 @pgs. 109-110 of Impugned Order] h. Users still being prompted frequently to accept the 2021 Policy: The 2021 Policy introduced by WhatsApp has not been revoked and continues to be the operative privacy policy for users. As of 28.03.2024, more than 84% of users have accepted it despite Meta saying it will no longer delete accounts for not accepting it in no small part because users are still being prompted to accept the 2021 update. Therefore, the update continues to influence user behaviour and data sharing pract....
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....in its affidavit before the Supreme Court in ^48Karmanya Sangh Sareen v Union of India & Ors.. SLP(C) No. 804 of 2017 (Refer Paras 58, 72 and 86). It is also claimed that the same categories of data mentioned in the 'usage and log information of the 2021 Update were present in the 2016 Update. The Commission wrongly inferred the additional textual detail in the 2021 Update to mean additional data collection rights. The purpose of the 2021 Update was merely to re-organize and provide users with (1) additional information about how WhatsApp collects, uses, and shares data, (il) additional information about how optional business messaging features work when they become available to users, and (iii) greater detail about the categories of information that may be shared with other Meta companies and more up-to- date examples of how WhatsApp partners with Meta to offer integrations across Meta's family of apps and products 205. In the Rejoinder, Appellant claims that there is no evidence that WhatsApp collected or shared user data that was not necessary to provide services/features that it offers. Data collected is not disproportionate or arbitrary as claimed by the Appellants:....
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....upta, that vagueness in the 2021 Update which is more detailed than the 2016 Update cannot be a basis for such a violation. Third, the Commission cites WhatsApp's terms and policies in the European Region being more transparent and concludes that the "differences demonstrate the scope and feasibility for providing greater transparency and choice for users in India". However, it does not explain how the differences between WhatsApp's policies in Europe (drafted to comply with the General Data Protection Regulation (GDPR)) and its policies in India and elsewhere amount to an abuse of dominance under Indian competition law. Europe follows a distinct data protection framework that requires a different level of disclosure. This cannot serve as the benchmark for what is "sufficient or fair under Indian competition law. The fact that the 2021 Update may be more detailed in Europe does not make its implementation in India abusive. Fourth, the Commission ignores that terms like "includes", "such as", and "for example are routinely used in privacy policies by several enterprises across jurisdictions. Notably, in jurisdictions with some of the largest WhatsApp user bases - including t....
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.... 2021 Update by 7 May demonstrates abuse and effect. This is claimed to be flawed, for several reasons. Firstly, the Commission's submission is entirely without evidence. The Commission admits that no users were contacted to determine their rationale for accepting the terms before 7 May 2021. Secondly, the evidence that exists is to the contrary. Only 241,917 132 users that existed as of 4 January 2021 (or 40-45% (43.3%)) accepted the 2021 Update. between 4 January 2021 and 7 May 2021. Almost as many users (40-45% (41%)) accepted the 2021 Update after 7 May 2021 (when there was admittedly no "take it or leave it condition), while approximately 15% had still not accepted the 2021 Update as of 28 March 2023. This belies any argument that the 2021 Update was "imposed" or that users were 'coerced to accept the 2021 Update due to any "urgency" or that users were coerced to accept the 2021 Update due to any "urgency". 210. Appellant claims that if nearly 60% of users did not feel compelled to accept the 2021 Update, the Commission cannot assume compulsion for the 40-46% (43.3%) who chose to accept the 2021 Update before 7 May 2021. 211. For better appreciation, we reproduce....
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....Meta companies and offers greater privacy rights to EU users than to Indian users, indicating discriminatory treatment. We also observe that due to user dependence on WhatsApp and limited ability to negotiate or understand the complex terms, users effectively had no alternative but to accept the update. Although Meta has suspended full implementation of the 2021 policy pending India's data protection law, users must still accept it to interact with business accounts. Therefore, basis the materials placed on record and submissions of both sides, we are inclined to agree with the arguments of the Commission that WhatsApp's 2021 Privacy Policy amounted to an abuse of dominance under Section 4(2)(a)(i) of the Competition Act because it imposed unfair and coercive conditions on users. We also find force in the arguments that WhatsApp compelled users to accept the policy on a "take-it-or-leave-it" basis by threatening loss of service access, thereby vitiating free consent. We also find that unlike the 2016 policy which allowed users to opt out of data sharing, the 2021 update mandated extensive and vague data collection and sharing with Meta and its subsidiaries for non- WhatsApp purpose....
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....osition in one relevant market to enter into, or protect, other relevant market." 215. Appellant-Meta also claims that the impugned order fails to correctly establish denial of market access under Section 4(2)(c) of the Competition Act. To establish denial of market access under Section 4(2)(c), the Commission must establish that (i) Meta is dominant in the relevant market; (ii) Meta is engaged in particular conduct; and (iii) that conduct resulted in denial of market access. None of these conditions have been satisfied here. First, the Commission did not find Meta dominant in the market where the denial of access allegedly occurred - i.e., the alleged market for online display advertising in India. Instead, the Commission claims that a Section 4(2)(c) violation can be based on dominance in another market. [Paragraph 233, Impugned Order]. That is incorrect as a matter of law. It would render Section 4(2)(e) meaningless, as Section 4(2)(e) addresses the use of dominance in one market to protect the enterprise in another market. Second, the Commission mischaracterised Meta's alleged conduct that resulted in the denial of access. It claimed that Meta integrated extensive WhatsAp....
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.... the WhatsApp service; and (ii) Meta does not integrate extensive user data from WhatsApp users for advertising purposes. Third, the Commission cannot demonstrate that the alleged conduct has resulted in any actual anti-competitive effects in the second market, i.e., the alleged online display advertising market, for the same reasons it failed to correctly establish a violation for denial of market access. 217. Meta has claimed that it only shares user data for ad purposes on two accounts: 217.1 Click to WhatsApp Ads (CTWA): These are ads shown on Facebook or Instagram that include a "Click to WhatsApp" button. When a user taps the ad, they are redirected to a WhatsApp chat with the business advertiser. 217.2 Cross-Posting WhatsApp status to Facebook stories: WhatsApp users often share their status updates (photos, videos, or text) directly as stories on Facebook, this is cross-posting across platforms. 218. The Commission refutes and contends that essentially, Meta argues that it only shares user WhatsApp data under the WhatsApp Policy if the users subsequently consents to the same. However, this submission is misplaced because the 2021 Policy does not contain any such....
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....brought to our notice, which is noted herein earlier that Appellants' gather extensive user data from WhatsApp through the 2021 Policy. This data is then shared with other Meta companies for non-WhatsApp purposes, including digital advertisements on Meta's various platforms. The Commission has thus argued that the Appellants (Meta through WhatsApp) have denied market access and leveraged dominance in Market 1^49 to enter and protect position in Market 2^50 and thus have violated Sections 4(2)(c) and 4(2)(e). The Commission has also emphasized that CCI conducted an extensive qualitative effects analysis of the competitive harm caused to advertisers due to the sharing of WhatsApp user data by Appellants with various Meta companies/platforms. In this regard, statements of several Meta's competitors and digital advertising companies have also been considered. These have been noted by us in detail in herein earlier in effects analysis. 221. The Commission has also brought to our notice Appellants' data collection practices qua WhatsApp business users. It brings to our notice that for an ordinary user to interact with a business user over WhatsApp, it remains mandatory....
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....nce of data in the digital advertising market. CCI claims that Appellants' ability to gather and utilise extensive user data through WhatsApp for digital advertising enables advertisers to create detailed profiles of potential customers and deliver targeted advertisements that align with users' preferences and interests. With access to detailed user profiles and data from multiple platforms, the Appellant (Meta) can promise advertisers the best returns in terms of clicks, engagement, and conversions per dollar spent. This advantage makes Appellant the preferred advertising partner for sellers, thereby leveraging its dominance in the OTT app market to reinforce its leading position in digital advertising market. It is informative to note the following observations of the CCI: 223.1 Data is the cornerstone of effective online display advertising, as it allows advertisers to target specific audience segments precisely, ensuring that their marketing spend is directed towards users with the highest likelihood of conversion. Every advertiser aims to maximize the return on investment within their advertising budgets. Without access to detailed user data, this level of precise t....
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....t competitive advantage in the market. The ability to offer better-defined target audiences enables Meta to capture a larger market share and attract more advertisers seeking to optimize their advertising spend. 223.6 The increase in numbers of such advertisers from 376,732 in 2015 to 2,207,459 in 2021 evidence the attractiveness of Meta ecosystem for the advertisers. The increase in number of advertisers also indicates strong indirect network effects with an increasing number of users on the WhatsApp platform. 223.7 Advertisers prefer platforms that can display ads to users who are most likely to be interested and willing to engage with the content and the product being advertised. The effectiveness of targeted advertising depends on the scope, size, and diversity of the data set held by the media provider. Meta has gained an advantage by collecting extensive first-party data directly from its users which is shared across services, as well as additional third-party data through various tools, giving it a comprehensive data set. This vast data pool is a key factor behind Meta's unassailable position in the online display advertising market and acts as a barrier to entry f....
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.... USD (2018), 0.0142 USD (2019), 0.0135 USD (2020), and 0.0135 USD (2021). # Revenue figures for 2016 denotes advertising revenue for financial year 2016-17, 2017 denotes 2017-18, and so on. ** Data for the financial year 2021-2022 226. Basis data collected by the Commission and as noted above we find that the Commission has clearly brought out that Meta leads in advertisement impressions and advertisement revenue in India in online display advertisement market and is way ahead of others: "222. A cumulative assessment of the available data on advertisement impressions and advertisement revenue clearly demonstrates that Meta is significantly ahead of its competitors in both categories. These comprehensive figures indicate that Meta not only generates far higher advertisement revenue compared to its competitors but also serves an overwhelming number of advertisement impressions in the Indian display advertisement market. Even the closest competitors, such as Google and Amazon, have a considerably lower share of both advertisement impressions served, and revenue generated. Smaller players, such as LinkedIn, InMobi, Affle, and Twitter, hold an even more neg....
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....gard, the Commission is of the view that there is no statutory or technical requirement that an enterprise must hold dominance in the market where the denial of market access is alleged. This is particularly relevant in multi- product platform markets that operate as ecosystems, where a dominant firm's conduct in one market can have exclusionary effects in another, related market. In multi-product ecosystems like Meta's, services are closely integrated in terms of functionality, data, and target groups. As already elaborated, Meta's dominance in the OTT messaging market (through WhatsApp) allows it to collect vast amounts of user data. This data is shared across its ecosystem, including its display advertisement services (Facebook, Instagram). By combining and using this data, Meta can offer highly targeted ads, which competitors in the display advertising market cannot easily match due to their lack of access to similar data. As a result, this creates a denial of market access for these rivals, who cannot compete effectively for advertisers. 234. In the instant case, denial of market access stems from Meta's dominant position in the OTT messaging space. By leveraging user....
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.... 4(2)(c) "there shall be an abuse of dominant position under sub-section (1), if an enterprise or a group,-- (c) indulges in practice or practices resulting in denial of market access in any manner." The above provision is very significant as Meta is a parent company and WhatsApp and Meta belong to the same group. Moreover, there is no provision that an enterprise or group has to be dominant for establishing denial of market access as per Section 4(2)(c) of the Act. Therefore, we find that the conclusions of the Commission to be not having infirmity regarding denial of market access by the conduct of the Meta group. 229. Bases above submissions of both sides and after perusal of materials placed on record, we find that Appellants' ability to gather and utilise extensive user data through WhatsApp for digital advertising enables advertisers to create detailed profiles of potential customers and deliver targeted advertisements that align with users' preferences and interests. With access to detailed user profiles and data from multiple platforms, the Appellant (Meta) can promise advertisers the best returns in terms of clicks, engagement, and conversions per dollar spent. ....
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....hus find violation of Section 4(2)(i) by WhatsApp by the introduction of WhatsApp Policy 2021 and its subsequent conduct. 232.2 Section 4(2)(c): Practices that limit or restrict market access of competitors - we find that cross-platform data sharing (between WhatsApp and Meta) enhanced Meta's advantage in the display advertising market, creating an entry barrier for rival firms in digital advertising that did not have equivalent access to WhatsApp data. We note that Meta is not dominant in 50Market 2 but a leading business entity (As seen by advertisement impressions and also advertisement revenue of meta as noted by separately) and by its conduct has created a situation of market denial and thus Meta has violated Section 4(2)(c). It needs to be noted that section 4(2)(c) gets attracted herein due to special circumstances existing in this case. We have a case in which Commission has concluded that "Meta has engaged in leveraging its dominant position in the OTT messaging apps through smartphones to protect its position in the online display advertising market and the same is in contravention of Section 4(2)(e) of the Act". We note that Section 4(2)(e) cannot be applied on Meta f....
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....conclude that there is a violation Sections 4(2)(a)(i), 4(2)(c) but not Section 4(2)(e) and by WhatsApp as an enterprise and Meta as a group. Q. Remedies by the CCI 234. In this Section we delve into remedial directions issued by the Commission with respect to abusive conduct of the Appellants contravening various sections of the Competition Act. 235. Before proceeding further, it will be instructive to note the remedies issued by the Commission: "247.1 WhatsApp will not share user data collected on its platform with other Meta Companies or Meta Company Products for advertising purposes, for a period of 5 (five) years from the date of receipt of this order. After expiry of the said period, the directions at para 247.2 (except para 247.2.1) will apply mutatis mutandis in respect of such sharing of data for advertising purposes. 247.2 With respect to sharing of WhatsApp user data for purposes other than advertising: 247.2.1 WhatsApp's policy should include a detailed explanation of the user data shared with other Meta Companies or Meta Company Products. This explanation should specify the purpose of data sharing, linking each type of data to its co....
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....m of a reasoned and speaking order. In the absence of cogent justification, the prescription of a five-year ban is manifestly arbitrary, disproportionate, and unsustainable. The only justification offered during oral arguments was a vague, unsupported assertion that such a period would revive competitive conditions. This statement, devoid of any evidentiary or analytical foundation, cannot meet the threshold required by law. The Commission does not explain further how it arrived at five years, why it would take that long to rectify any perceived harm, and why it cannot be done in a shorter timeline. 238. With respect to the remedy of the requirement to provide additional details on user data sharing with Meta in the WhatsApp privacy policy:(Remedy 2) [Para 247.2.1], Appellant claims that this prescribes the manner in which WhatsApp must provide information about the data it collects and shares. Such a direction squarely falls within the ambit of privacy and data protection issues. 239. On the remedies of prohibition on making the WhatsApp service conditional on user consent for data sharing for purposes other than providing the WhatsApp service (Remedy 3) [Refer: Para 247.2.2....
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....f the intended data usage. The same puts an obligation on the Appellant to compete on privacy standards, a critical non-price parameter of competition in digital markets. Bases the materials placed on record and submissions of both sides and our analysis on the issue of privacy and data protection law, we find that the arguments of the Commission to be convincing and we cannot accept the contentions of the Appellant that the impugned order imposes remedies on WhatsApp / Meta which are unnecessary, disproportionate, and squarely fall within the realm of privacy and data protection law. We thus confirm this remedy. 241.2 Remedy at Para 247.2.2: "Sharing of user data collected on WhatsApp with other Meta Companies Meta Products for purposes other than for providing or Company services WhatsApp shall not be made a condition for users to access WhatsApp Service in India." We were informed by the Commission that the above remedy addresses unfair conditions imposed on the users and preserves choice. It gives user gives opportunity to the user to choose sharing of data with free will and not under coercion. We need to note that the core principle is to remove exploitation by....
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....eed to note that the core principle is to remove exploitation by restoring user choice. Users must retain the right to decide what data is collected, for which purposes, and for how long. Any non-essential collection or cross-use (like advertising etc) can occur only with the concerned user's express and revocable consent. The Appellant cannot assert unilateral or open-ended rights over user data. This takes care of the abuse found in 2021 Policy i.e., coercive, take-it-or-leave-it consent by re- establishing opt-in/opt-out which will be with desired transparency, and purpose limitation, while still allowing lawful, user-approved uses. Thus, we uphold this remedy also. 241.4. Remedy at Para 247.1: "247.1 WhatsApp will not share user data collected on its platform with other Meta Companies or Meta Company Products for advertising purposes, for a period of 5 (five) years from the date of receipt of this order. After expiry of the said period, the directions at para 247.2 (except para 247.2.1) will apply mutatis mutandis in respect of such sharing of data for advertising purposes." We were informed by the Commission that the above remedy prevents leveraging of dominance in ma....
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....21 to 7th May 2021/ Also we don't see any firm commitment exists by WhatsApp for users to provide for opt-out option for the terms and conditions of WhatsApp Policy. In such a situation we don't find any infirmity in this requirement in the direction issued by the commission. R. Penalty imposed by CCI 242. After a detailed examination the Commission had imposed a penalty and the relevant paragraph is extracted as below: "263. Consequently, the Commission imposes a penalty of Rs. 213.14 crore only (Rs. Two hundred Thirteen Crores and Fourteen Lakhs only), upon Meta for violating Section 4 of the Act. Meta is directed to deposit the penalty amount within 60 days of the receipt of this order." 243. The Appellant contends that imposition of penalty on Meta cannot be justified. Only WhatsApp has been found dominant, and WhatsApp has allegedly abused its dominant position by forcing users to share data with Meta under the 2021 Update. Meta has vehemently opposed imposition of penalty on several grounds noted herein after. Meta claims that the Impugned Order fails to identify the relevant entity and, consequently, the relevant turnover for imposition of penalty. The Rele....
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....) WhatsApp, and not Meta, offers and operates the WhatsApp service (along with the 2021 Update), which is the subject matter of the investigation; (c) The Impugned Order's findings on alleged mandatory consent and excessive data collection relate to WhatsApp's conduct pertaining to the 2021 Update; and (d) Even the findings against Meta in relation to leveraging and denial of market access are predicated on WhatsApp's user data-sharing practices under the 2021 Update, rather than an independent violation of the Competition Act by Meta. 246. The Commission imposes a penalty based on the relevant turnover of both Meta and WhatsApp because Meta allegedly enjoys full control over the activities and operations of WhatsApp. The law is clear that this alter ego theory must satisfy a heightened threshold and be supported by evidence that the parent company dominates the subsidiary so fully that they are essentially the same company. Such a determination requires: (i) fraudulent intention; and (ii) complete domination of the affairs of the subsidiary by the parent [Paragraph 94, Cox & Kings Ltd. v. SAP India Private Limited, (2024) 4 SCC 1; Paragraphs 70-74,....
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....eta claims that the Commission has failed to demonstrate that WhatsApp and Meta are not separate legal entities. As a result, the Commission may not impose a penalty based on Meta's turnover, and the penalty should be set aside. We find strength in the arguments presented regarding Meta and WhatsApp being separate legal entity. 249. Furthermore, Meta claims that any penalty imposed on Meta is unjustified as the impugned order fails to establish any anti-competitive effects attributable to Meta's conduct. The Commission states that it is committed to ensuring that penalties are 'proportionate' and 'reflective of the impact of the violations' [Paragraph 253, Impugned Order]. In the absence of any established effects in the market, the impact of any (hypothetical) violation cannot be determined, and any penalty imposed is inherently disproportionate. The principle of proportionality while imposing penalties has been recognised by several courts. For instance, the Hon'ble Delhi High Court set aside a penalty imposed by the Commission for non-compliance with its order, observing that the order was passed by the Commission without any application of mind an....
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.... (2015) 8 SCC 410; Paragraphs 28-29, CIT v. Vatika Township Private Limited, (2015) 1 SCC 1; and Paragraph 26, ITC Limited v. Competition Commission of India, Competition Appeal (AT) No. 11 of 2018]. The Amendment Act, Turnover Regulations, and Penalty Guidelines do not specify that they have retrospective effect and, therefore, they should be considered prospective in nature. Furthermore, there is nothing in the legislative intent to even indicate that these provisions were intended to apply retrospectively. The 'Explanations' cannot be read as merely clarificatory. The Commission's rationale to retrospectively apply Explanation 2 of the amended Section 27(b) was that "the objective of explanation to a section is to clarify or elucidate the intent of the legislation without expanding or narrowing its original scope. It serves to make the meaning clear and consistent, aiding interpretation without altering or restricting the substantive provision itself" [Paragraph 252, Impugned Order]. This rationale is clearly inapplicable to the Amendment Act. Explanation 2 clearly expands the original scope of Section 27(b) and does not merely make its meaning clear. It introduces a....
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....m. Meta could not have foreseen that its conduct would be alleged to be in violation of the Competition Act, especially since its conduct was bona fide and aimed at providing new and innovative products and services to users in India and across the world. The Commission appears to claim that the issues in this case are not novel because competition authorities across jurisdictions have increasingly been addressing issues arising out of data, network effects, and leveraging in digital markets [Paragraph 248, Impugned Order]. However, the Commission fails to provide any examples where those other authorities addressed issues that were the same as the issues before the Commission in this case. To the contrary, the Commission concedes that "[o]f course, the exact nature and impact of issues vary on a case-to-case basis" [Paragraph 248, Impugned Order]. 252. Appellant further argues that the Commission's argument is undercut by its own reasoning. Specifically, when defining the relevant market and considering issues involved in the digital market, the Commission limits the geographic market to India, citing India's "unique" regulatory environment as compared to other global r....
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....g how the Commission arrived at the percentage for penalty. The Impugned Order concludes that the penalty should be 4% (four per cent) of the average total relevant turnover for Meta and WhatsApp. It claims that it arrived at this percentage based on the nature and gravity of the contravention as well as the nature of the industry or sector affected by the contravention. It gauges the nature and gravity of the contravention from the "sheer number of WhatsApp users affected by the 2021 Update" [Paragraph 261, Impugned Order]. However, this reasoning is vague and flawed because: (a) WhatsApp currently may share user data with Meta from optional features on the WhatsApp service for advertising purposes in limited scenarios; that is, users are not obliged to use these features; and (b) While the Commission claims that it considered the nature of the industry, there is no discussion of the same when calculating the penalty. There is no analysis of the nature of the online display advertising sector (which is relevant for Meta) or the sector for OTT messaging apps through smartphones, let alone why 4% is required to create a deterrent effect. 255. In short, Meta coun....
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....rom data, network effects and leveraging in digital markets have assumed huge significance, particularly in the last decade, and the Competition Authorities across jurisdictions have been intervening to address the same. Of course, the exact nature and impact of issues vary on case-to- case basis. As per Section 4 of the Act, every dominant entity is vested with the responsibility that it does not indulge in abusive conduct prohibited therein, such as imposition of unfair conditions, denial of market access, leveraging. Further, Competition Act being an independent statute in India, the conduct of the entities needs to be examined as per the provisions of the same and the plea taken that they are in compliance with existing data protection and privacy legislation does not absolve them of the contraventions found under the Competition Act." Perusal of the explanation reveals the justification to be without any infirmity. 258. With respect to amendment of Section 27(b) of the Act, it has been noted as follows in the impugned order: "... 252. The Hon'ble Supreme Court in plethora of judgements has clarified the intent, purpose and legal effect of an E....
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....mission, itself prescribes that the starting point for computation of penalty is linked to the relevant turnover, therefore, the contention of the OPs in this regard stands appropriately accounted for. Further, clause 2(1)(h) of the Penalty Guidelines provides that relevant turnover means the turnover derived by an enterprise directly or indirectly from the sale of products and or provision of services, to which the contravention relates and determined for the purposes of imposition of penalty. Thus. the relevant turnover is to be determined with reference to the products or services directly or indirectly linked to violation of the Act. 257. In relation to second contention of the OPs i.e., the penalty should be imposed on relevant turnover of WhatsApp alone and not Meta, the Commission notes that, as discussed in detail in the order, the contravention of the provisions of the Act relates to both the OTT messaging services provided by WhatsApp as well as display advertising services provided by Meta. Therefore, relevant turnover derived from both of these services offered by the OP's must be considered for determining penalty. Additionally, the Commission notes that W....
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..... 260. The Commission vide its order dated 18.10.2024 sought turnover data from all the three OPs for the CYs 2020, 2021 and 2022 within 7 (seven) days of receipt of the said order. This data was furnished by the OPs on 14.11.2024 after seeking an extension of three weeks. Based on the said data, relevant turnover of WhatsApp and Meta as determined above for the CYs 2020. 2021 and 2022 is tabulated hereunder: Year Relevant Turnover of WhatsApp (A) Relevant Turnover of Meta (B) Total Relevant Turnover WhatsApp (A+B) CY 2020 38.34 7.888.27 7,926.61 CY 2021 85.09 13,934.06 14,019.15 CY 2022 524.76 17,494.04 18,018.80 Total 648.19 39,316.37 39,964.56 Average of three years 216.06 13,105.46 13,321.52 261. The nature and gravity of the contravention can be gauged from the sheer number of WhatsApp users affected by the 2021 Update wherein an unfair condition was imposed upon them by Meta in coercing them to accept the said update. As a result of such coercion, approximately 264.50 million users had accepted the policy by May 2021. Further, as of March 2023, 594.50 million WhatsApp users have accepted the 2....
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....odified orders, we find that the amount of penalty will work out to be the same i.e. Rs. 213.14 crore only (Rs. Two hundred Thirteen Crores and Fourteen Lakhs only). 262. Meta is the parent company of WhatsApp. Apart from many other activities, Meta has been undertaking "online display advertising". Commission has found it be leading in this segment. Commission notes that Appellants collect extensive user data from WhatsApp through the 2021 Policy, and thereafter, shares this data with other Meta companies for non-WhatsApp purposes, including digital advertisements on Meta's various platforms. This causes, and has further potential to cause, immense anti-competitive harm to Meta's competitors in the online display advertising market. We have already concluded earlier that Meta is not dominant in the market for "online display advertising in India" but a leading player. But its conduct has caused anti- competitive effects in the market for "online display advertising in India" by denial in this market. We have determined earlier, it is the WhatsApp alone, which is dominant in relevant market of OTT messaging apps through smartphones in India and is also found to have abused i....
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....n Lakhs only) upon Meta is upheld. Order 265. In result, both the Appeals are partly allowed only to the extent of: (i) Setting aside the findings of the Commission in so far as it holds breach of Section 4(2)(e), and (ii) Setting aside the directions in paragraph 247.1, i.e. "247.1 WhatsApp will not share user data collected on its platform with other Meta Companies or Meta Company Products for advertising purposes, for a period of 5 (five) years from the date of receipt of this order. After expiry of the said period, the directions at para 247.2 (except para 247.2.1) will apply mutatis mutandis in respect of such sharing of data for advertising purposes." The rest of the Impugned Order is upheld. The order dated 18 November 2024 is modified accordingly. The parties shall bear their own cost. FOOTNOTES ^1 Karmanya Singh Sareen v. Union of India & Others, W.P. (C) 7663 of 2016, Delhi High Court upheld the 2016 Update and dismissed the petition vide its judgment dated 23 September 2016: SCC Online Del 5334 ^2 Supreme Court in Karmanya Sareen v. Union of India, SLP (C) No. 804 of 2017 (Karmanya, Hon'ble Supreme Court) 3 Vinod Gupta CCI: Vinod....
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.... prima facie stage itself : para 9 (w), pp. 71-72, Vol . WhatsApp Case Compilation ^13 Winzo Games Private Limited v. Google LLC and Others, Case No. 42 of 2022 (Winzo) In fact, as recently as 28 November 2024, the Commission refused to intervene on issues relating to Real Money Games, explaining that it would not be appropriate to do so since a regulatory framework for such games was expected to be established. [Paragraph 22] : Winzo, para 22, p. 2118, Vol IV. WhatsApp Case Compilation Karnataka Power Corporation Limited v. Coal India Limited (CIL) and Others, Case No. 11 of 2017 (Karnataka Power Corporation v. CIL) [See also: Paragraph 20] refusing to make findings about the quality of coal because there exists a forum to address such issues. The Commission had no reason to deviate from that approach here. ^14 WhatsApp LLC v Competition Commission of India. WP (C) No. 4378 of 2021, Para 33, p. 831, Annexure 27, Vol III, WhatsApp's Appeal ^15 Bharti Airtel: Competition Commission of India v Bharti Airtel, (2019) 2 SCC 521: Refer: paras 103-104, pp. 2102- 2103, Vol IV, WhatsApp Case Compilation ^16 The Competition Act 2002 and related Rules and Regulations ^17....
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....tion 19(4) need not be amended to include the term 'network effects' as it was already worded in an inclusive manner and hence provided CCI with enough flexibility to consider such factors while determining dominance of an enterprise (Chapter 8, Para 2.16 and Annexure I, Para 54). ^26 Grand Chamber of the Court of Justice of the European Union ('CJEU') in Meta Platforms & Ors. vs. Bundeskartellamt ECLI:EU:C:2023:537 ^27 Grand Chamber of CJEU in ND vs. DR ECLI:EU:C:2024:846 ^28 Decision No. 22-48/706-299 dated 20.10.2022 by TCA (Turkey), ¶ 2, 3 & 5651. ^29 Dr. Liza Lovdahl Gormsen vs Meta Platform Inc. & Ors. CAT 11; ¶ 20-22, 25 ^30 Joint Report on Competition Law and Data dated 10.05.2016 (Pgs. 24-27), issued by Autorite de la concurrence (French competition regulator) and Bundeskartellamt (German competition regulator) states that "Indeed, even if data protection and competition laws serve different goals, privacy issues cannot be excluded from consideration under competition law simply by virtue of their nature. Decisions taken by an undertaking regarding the collection and use of personal data can have, in parallel, implications on econom....
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....rotection authorities, but also for competition authorities. ^32 CJEU-Court of Justice of the European Union ^33 Appellant claims that there are issues on this CJEU Decision. Firstly, the CJEU Decision itself expressly requires European antitrust authorities and data protection authorities to "consult and cooperate with each other to observe their respective powers and competences, in such a way as to ensure that the obligations arising from the GDPR and the objectives of that regulation are complied with while their effectiveness is safeguarded." (Refer CJEU Decision, para 54 p. 1479, Vol IV, Commission's Case Compilation. Further "where a national competition authority considers it necessary to rule, in the context of a decision on an abuse of a dominant position, on the compliance or non-compliance with the GDPR of the processing of personal data by the undertaking in question, that authority and the supervisory authority concerned or, where appropriate, the competent lead supervisory authority within the meaning of that regulation must cooperate with each other in order to ensure the consistency of application of that regulation" [Refer: CJEU Decision, para 52, pp. 14....
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....tition; or (b) limits or restricts-- (i) production of goods or provision of services or market therefor; or (ii) technical or scientific development relating to goods or services to the prejudice of consumers; or (c) indulges in practice or practices resulting in denial of market access 4[in any manner]; or (d) makes conclusion of contracts subject to acceptance by other parties of supplementary obligations which, by their nature or according to commercial usage, have no connection with the subject of such contracts; or (e) uses its dominant position in one relevant market to enter into, or protect, other relevant market. Explanation.--For the purposes of this section, the expression-- (a) "dominant position" means a position of strength, enjoyed by an enterprise, in the relevant market, in India, which enables it to-- (i) operate independently of competitive forces prevailing in the relevant market; or (ii) affect its competitors 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 good....