tl;dr
In October 2021, IFF submitted expert information in the Competition Commission of India’s (CCI) suo moto investigation into potential anti-competitive practices of WhatsApp Inc. (‘WhatsApp). In our information, we highlighted how WhatsApp’s 2021 Privacy Policy enabled it to share user data with Facebook Inc. and its subsidiaries including Facebook India Online Service Private Limited (‘Facebook India’). CCI in its order dated October 12, 2021, tagged the information IFF provided with ongoing proceedings against WhatsApp and Facebook Inc. and made Facebook India a party to those proceedings. Facebook India challenged this CCI order before the Delhi High Court. Facebook India’s petition was dismissed by Justice Yashwant Verma of the Delhi High Court on September 28, 2022. An SLP filed by Facebook and WhatsApp has also been dismissed by the Supreme Court.
Why should you care?
Facebook Inc is one of the biggest conglomerates in the world. We have previously explained why the anti-competitive conduct of WhatsApp in imposing its aggressive privacy policy, ought to be investigated. But any such investigation necessarily requires an inquiry into how much data WhatsApp shares with Facebook Inc. and its subsidiaries, which includes Facebook India. Delhi High Court in its order dated September 28, 2022, has recognised this principle. Similarly, the Supreme Court has dismissed WhatsApp and Facebook Inc.’s efforts to block CCI’s investigation into its Privacy Policy.
History of the Proceedings
In January 2021, WhatsApp rolled out its revised Privacy Policy and tried to force users to accept it. In March 2021, the Competition Commission of India (‘CCI’) directed an investigation into whether WhatsApp was abusing its dominant position through its Privacy Policy. WhatsApp and Facebook Inc. filed a petition in the Delhi High Court against CCI’s decision to investigate. In April 2021, a single judge of the Delhi High Court dismissed the petition. On appeal, another bench of the Delhi High Court comprising two judges upheld the order of the single judge, and dismissed WhatsApp and Facebook Inc.’s appeal.
Here, Facebook India filed an impleadment application arguing that it should not have been made a party, since it had nothing to do with WhatsApp’s Privacy Policy, or even with Facebook Inc. Facebook India claimed that the entity has been incorporated to carry out business in India relating to online support services, software development and providing technical support, and that it is not operating the social media website.
Facebook India had also contended before the Division Bench that it was only impleaded upon an information being filed by Internet Freedom Foundation. These contentions were rejected on the basis that the DG made a decision that the presence of Facebook India is necessary for a thorough investigation.
The Delhi High Court further stated that an impleadment application of this nature ought not to be made at the appellate stage, and that Facebook India ought to file a petition before a Single Judge of the Delhi High Court.
It appears that it is on the basis of these observations by the Division Bench of the Delhi High Court, that Facebook India filed W.P.(C) 14059/2022, which was decided by Justice Yashwant Varma on September 28, 2022.
Separately, WhatsApp and Facebook Inc. also filed an SLP before the Supreme Court of India challenging the order of the Division Bench of the Delhi High Court.
Supreme Court Dismissed WhatsApp’s and Facebook’s SLP
On the first day of hearing, after hearing counsels for all parties, the Supreme Court came to the conclusion that its interference in the CCI investigation was not called for. The Supreme Court held that the CCI has come to a prima facie opinion and then initiated the proceedings.
The Supreme Court also held that any arguments and contentions that WhatsApp and Facebook Inc. may want to make in this behalf, may be made before the CCI instead.
Delhi High Court also dismissed Facebook India’s attempt to remove itself from the investigation
Counsel for Facebook India raised the same argument before the Single Judge as it had before the Division Bench of the Delhi High Court, i.e. that a) Facebook India has nothing to do with the proceedings, since its role is limited to providing advertising services in India as well as other support services to Meta Platforms, Inc.; b) To begin an investigation, the CCI must conclude that a prima facie case warrants an investigation, whereas a reading of the impugned order shows that no such satisfaction was either recorded or arrived at by the CCI.
In response, Mr. Samar Bansal, Adv., representing the CCI argued that the CCI formed its opinion based on “subject matter” of the information (i.e. the issues arising out WhatsApp’s Privacy Policy and the data sharing across Facebook group of companies), and not necessarily any particular entity, for which the CCI has already recorded detailed reasons. He further argued that Facebook India was only called upon to join the investigation and no rights have been decided, and thus, no prejudice has been caused.
After hearing arguments, the Court held that Facebook India is undisputedly a subsidiary/sister concern of Facebook Inc, and that the CCI’s investigation is not merely limited to the operations and conduct of business by WhatsApp and Facebook Inc., alone but also extends to the whole Facebook group of companies.
The Delhi High Court held that the CCI’s Director Generalis required to investigate the affairs of the Facebook Inc. and WhatsApp, and also other companies which may fall under their umbrella of control and influence. Live reporting from the Courtroom indicates that the Delhi High Court stated that the ‘luxury to litigate’ that is available to large tech companies has to end. On these terms, the Delhi High Court dismissed Facebook India’s petition, and ordered it to participate in the CCI’s investigation.
While this litigation was commenced on the basis of information that was filed by IFF before the CCI, we were not parties before the Delhi High Court in Facebook India’s petition. We welcome this decision of the Delhi High Court, because we believe that WhatsApp’s and Facebook’s data sharing practices arising out of the 2021 Privacy Policy require investigation, as they unjustifiably intrude into the user privacy of millions of Indians. We will continue to provide assistance to the CCI throughout this investigation.