Big Opportunity! CCI accepts IFF’s expert information in its investigation of WhatsApp’s 2021 Privacy Policy

tl;dr

In the Competition Commission of India’s (CCI) suo moto investigation into potential anti-competitive practices, we have submitted expert information before the Director-General in charge of the investigation. In our information, we have highlighted how WhatsApp has a dominant position in its relevant market, and how WhatsApp’s 2021 Privacy Policy abuses such dominant position. On October 12, 2021, the CCI issued an order tagging the information with the ongoing investigation. As a result, we are now a formal party before the Director-General and will participate as such in the investigation proceedings. This is a huge opportunity to present the user’s point of view to the Commission!

Background

In January 2021, WhatsApp released an in-app notification forcing users to accept its revised privacy policy (the “Privacy Policy”) by February 8, 2021 or stop using its service entirely. On March 24, 2021, the Competition Commission of India (“CCI”) in Suo Moto Case No. 01 of 2021 directed the Director General (“DG”) to investigate WhatsApp’s Privacy Policy. The CCI issued this direction after reaching a prima facie view that WhatsApp’s data sharing terms appear to be unfair and unreasonable for WhatsApp users. The CCI, in para 29 of its decision, noted that users are required to accept the unilaterally dictated ‘take-it-or-leave-it’ terms by a dominant messaging platform in their entirety, including the data sharing provisions therein, if they wish to avail their service. Such “consent” cannot signify voluntary agreement to all the specific processing or use of personalised data, as provided in the present policy. Users have not been provided with appropriate granular choice, neither upfront nor in the fine prints, to object to or opt-out of specific data sharing terms.

The CCI further noted, in para 31 of its decision, that given the pronounced network effects it enjoys, and the absence of any credible competitor in the instant messaging market in India, WhatsApp appears to be in a position to compromise quality in terms of protection of individualised data and can deem it unnecessary to even retain the user-friendly alternatives such as ‘opt-out’ choices, without the fear of erosion of its user base.

Accordingly, an investigation was ordered.

The Information

In September 2021, to represent the interests of the public we filed expert information with the DG (the “Information”). In the Information, we submitted that WhatsApp has a dominant position in the relevant market of OTT messaging applications in India, on the basis of its significant user base, and the strong network effects associated with WhatsApp’s platform. WhatsApp’s network effect is strong, because it requires not just a user to migrate to another platform, but also that user’s entire network of friends, family, colleagues, and other acquaintances to migrate to another platform simultaneously. The difficulty of this task puts WhatsApp in a dominant position in the market. Imagine asking your entire family WhatsApp group of 60 aunts, uncles, and grandparents to uninstall WhatsApp, download a new messaging platform, and make an entirely new group!

We further submitted that WhatsApp’s conduct of imposing its Privacy Policy puts unfair/discriminatory conditions upon its user base, since there was no effective consent from the users for the Privacy Policy. This conduct of WhatsApp is abusive of its dominant position, and has a direct nexus to the strong network effects enjoyed by WhatsApp. Basically, WhatsApp is mistreating its users because it knows that users have no option but to go along with it.

We also pointed out that WhatsApp’s and Facebook’s conduct of data collection and data sharing under the Privacy Policy denies market access to any competitors. We explained the scope of data collected by the Facebook group of companies and the manner in which the Facebook group shares user data across the platforms owned by Facebook. We further the manner in which the user’s data itself is monetised by Facebook, once such data is cross linked across the platform. This conduct is also abusive in nature.

The CCI has tagged our Information with the main case

On October 12, 2021, the CCI issued an order noting that the Information submitted by us was on the same issues that are being investigated by the DG. Accordingly, the CCI has tagged the matter together with Suo Moto Case No. 01 of 2021, i.e. the DG’s investigation of WhatsApp anti-competitive Privacy Policy.

This means that we will now be a formal party to the proceedings, and can assist the DG with our expertise at every step of the investigation. We will also be able to submit our comments, inputs and observations to the DG’s report, once the report is finalised. We will also be able to respond to the comments that Facebook and WhatsApp provide to the DG’s final report. And finally, we will be involved in any appellate proceedings that stem from this investigation.

We believe that Competition Law is an underexplored facet of the larger issue of abusive practices by Big Tech companies, and is a necessary aspect of ensuring that large social media platforms act responsibly with user data. It is undeniable that large social media platforms carved out a dominant position in the market, and so it is absolutely essential to ensure that this dominant position is not abused. This is particularly true of WhatsApp since it has such a massive user base in India.

This is our first matter before the Competition Commission of India, and we thank the legal team at Sarvada Legal, led by Mr. Abir Roy, and comprising Mr. Vivek Pandey, for leading the matter. This is a major opportunity for the Indian user of WhatsApp to be heard by the Competition Commission of India and explain how data sharing across Facebook group of companies takes advantage of the Indian users.

We have previously intervened in a Supreme Court matter that relates to how the Privacy Policy violates the privacy of its users - and we have also disclosed this in the Information to the CCI. The present matter relates to specific Competition Law and Antitrust related issues, i.e. abuse of market dominance and denial of market access. We will continue to explore the anti-competitive practices by Big Tech companies, particularly as relates to user data in other instances.

Important Documents

  1. Previous Post dated January 11, 2021 titled “Explainer: WhatsApp Privacy Policy Changes #SaveOurPrivacy” (link)
  2. CCI’s order dated March 24, 2021 ordering the investigation (link)
  3. CCI’s order dated October 12, 2021 accepting our Information and tagging it with the main case (link)