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Background
In January 2021, WhatsApp introduced an updated privacy policy. The said privacy policy caused widespread concern among its users especially in India. This new policy required users to agree to expanded data-sharing terms, allowing WhatsApp to share certain information such as device details, business interactions, and app usage data with its parent company, which also owns Facebook and Instagram. WhatsApp explained that the change was meant to help businesses communicate more effectively with customers and to improve personalized advertising services on Meta’s platforms.
However, the real issue was that users were not given a genuine choice. The app made it clear that anyone who did not accept the new terms could lose access to WhatsApp. Since WhatsApp had become a daily necessity for communication, most users felt pressured to accept the new terms even if they were uncomfortable with how their data would be used. This “take-it-or-leave-it” approach led to outrage and confusion. Many people accused WhatsApp and Meta of forcing users into giving up their privacy rights.
The CCI’s Intervention and Investigation
India’s competition watchdog, the Competition Commission of India, took note of the controversy and decided to investigate whether WhatsApp and Meta had violated the Competition Act, 2002. The CCI’s main concern was that WhatsApp was using its dominant position in India’s messaging market to impose unfair conditions on users. It also wanted to examine whether Meta was benefiting unfairly in the digital advertising market by using data collected from WhatsApp users.
During its investigation, the CCI identified two relevant markets. The first was the market for Over-The-Top messaging applications, which included platforms like WhatsApp, Telegram, and Signal. The second was the market for online display advertising, where Meta is already a major player through Facebook and Instagram. The CCI observed that WhatsApp had an overwhelmingly dominant position in the messaging market because of its vast user base and the strong network effect that keeps users tied to the app. Once most of any user’s friends, family, and work contacts are on WhatsApp, switching to another platform becomes extremely difficult. This dominance gave WhatsApp significant power over its users.
Findings of the CCI: Abuse of Dominance and Privacy Concerns
After completing its inquiry, the CCI concluded that WhatsApp and Meta had abused their dominance in violation of Section 4 of the Competition Act. It found that the 2021 privacy policy was coercive because users were forced to accept it without a real option to refuse. The Commission said that such a policy imposed unfair conditions on consumers. It also pointed out that WhatsApp had failed to explain clearly what types of data were being collected, how they would be used, and for what specific purpose. The vague and broad language of the policy left users with little understanding of how their data might be shared across Meta’s platforms.
The CCI emphasized that privacy is not just a personal right but also an important factor of competition in digital markets, especially when the service is offered for free. In a market where users do not pay money, they “pay” through their data and privacy. Therefore, if a dominant company reduces privacy protections, it effectively reduces the quality of its service, harming consumer welfare. The Commission further found that WhatsApp’s data-sharing arrangement strengthened Meta’s advertising business. Now by accessing WhatsApp data, Meta could improve its ability to deliver targeted ads on Facebook and Instagram, making its advertising services more appealing to businesses. This created a feedback loop that made it harder for smaller companies to compete with Meta, thereby increasing Meta’s market power across its ecosystem.
The CCI’s Penalty and Directions
In November 2024, the CCI announced its decision and imposed a penalty of ₹213.14 crore on Meta and WhatsApp jointly. The fine was based on their revenue in India, particularly from the messaging and digital advertising businesses. Along with the fine, the CCI issued several corrective measures. It imposed a five-year ban on sharing WhatsApp user data with Meta and its other companies for advertising purposes. It also ordered WhatsApp to be more transparent about the data it collects and why it collects it, linking each category of data with its specific purpose. Furthermore, WhatsApp was directed to give users a real choice to opt out of any data sharing that was not directly related to providing the core messaging service. These directions were seen as an important move toward treating privacy as part of fair competition, rather than only as a data protection issue.
Meta’s Appeal Before the NCLAT
Meta and WhatsApp were unhappy with the CCI’s order and challenged it before the National Company Law Appellate Tribunal. Meta argued that the CCI had misunderstood the nature of the case. According to Meta, the issue was not about competition but about privacy, and therefore, it should have been dealt with under data protection laws, not competition law. The company also insisted that the 2021 update did not actually expand data collection compared to its 2016 policy but simply clarified how data was used. It said that personal messages remained private and end-to-end encrypted, meaning they could not be accessed by WhatsApp or Meta.
Meta also argued that the CCI’s data-sharing ban would harm small businesses that rely on personalized advertising through Facebook and Instagram. It said that such ads help businesses reach customers and that banning data sharing would make its services less effective, ultimately hurting the digital economy. Meta further claimed that CCI had failed to show any actual harm to competition or consumers and ignored the fact that WhatsApp has competitors like Telegram, Signal, and Apple’s iMessage.
CCI’s Defense of Its Order
The CCI strongly defended its decision before the tribunal. It said that WhatsApp and Meta are part of the same corporate group and operate under common ownership and control, which justified a joint penalty. The regulator also pointed out that Indian users had been treated unfairly compared to European users. Under the European Union’s GDPR, users have stronger rights, including the ability to control, delete, or correct their personal data. Indian users, on the other hand, were forced to accept WhatsApp’s new terms without similar protections. The CCI argued that this demonstrated Meta’s deliberate choice to deny Indian users the same level of control and transparency.
Rejecting Meta’s claim that privacy concerns are outside the scope of competition law, the CCI stated that privacy and data control directly affect how companies compete. When a dominant company uses its power to take away user choice or misuse data, it not only harms individual users but also prevents fair competition in the market. Therefore, the CCI maintained that its actions were justified.
The NCLAT’s Verdict: A Balanced Outcome
In November 2025, the NCLAT delivered its final decision. The tribunal agreed with the CCI that WhatsApp’s 2021 policy was coercive and violated competition law. It upheld the ₹213 crore fine. It upheld that the CCI had correctly established abuse of dominance under Section 4(2)(a)(i) of the Competition Act. The NCLAT also agreed that Meta and WhatsApp could be penalized together, as both operated under the same ownership and control.
However, the tribunal disagreed with one major part of the CCI’s order, which is, the five-year ban on data sharing. It found that this ban lacked sufficient reasoning and was legally unjustified. The NCLAT held that once users are given a genuine choice to opt in or opt out of data sharing, the coercive element of the 2021 policy is addressed. Therefore, a complete ban on data sharing was unnecessary. The tribunal concluded that giving users real control and informed consent was a more balanced and practical solution.
Our Opinion:
In our opinion, the NCLAT’s decision in the Meta–WhatsApp case strikes the right balance between protecting users and allowing digital innovation. The CCI was right to hold WhatsApp accountable for its 2021 privacy policy, which left users with no real choice but to share their data with Meta. When an app as dominant as WhatsApp uses its power to force consent, it goes beyond a privacy concern, it becomes a competition issue. Upholding the ₹213 crore fine was therefore justified. The fine categorically reminds powerful tech companies that user trust and transparency are not optional.
At the same time, the NCLAT was sensible in removing the five-year data-sharing ban. Completely blocking Meta from integrating WhatsApp data could have harmed small businesses that rely on digital advertising and cross-platform communication. The tribunal rightly focused on giving users real control through opt-in and opt-out choices instead of
