NCLAT Stays 5-Year WhatsApp Ban Imposed by CCI Over Data Sharing
On Thursday, the National Company Law Appellate Tribunal (NCLAT) temporarily halted the five-year ban imposed on WhatsApp by the Competition Commission of India, which had directed the messaging platform not to share data collected with its parent company, Meta.
The NCLAT bench, comprising Chairperson Justice Ashok Bhushan and Technical Member Arun Baroka, said that the imposition of the five-year ban could lead to a collapse of the business model of WhatsApp.
The NCLAT also stayed the penalty of Rs 213.14 crore that was imposed by CCI as part of its order but directed WhatsApp to deposit 50% of it within two weeks. It, however, did not put a stay on the entire order of CCI.
Welcoming the NCLAT’s decision to grant a partial stay on the CCI order, a Meta spokesperson said, “While we will evaluate next steps, our focus remains on finding a path forward that supports millions of businesses that depend on our platform for growth and innovation as well as providing high-quality experiences that people expect from WhatsApp”.
In an order on November 18, 2024, India’s anti-trust regulator, the CCI had imposed a monetary penalty of Rs 213.14 crore on Meta for anti-competitive practices relating to the privacy policy update by its messaging app WhatsApp in 2021.
WhatsApp had made data sharing with Meta mandatory for all users, removing the earlier option to opt out. Users had to accept the new terms to continue using the platform, which is almost synonymous with messaging on smartphones.
CCI directed WhatsApp not to share user data collected on its platform with other Meta Companies or Meta Company Products for advertising purposes for five years. For purposes other than advertising, WhatsApp’s policy should include a detailed explanation of the user data shared with other Meta Companies or Meta Company Products, it further directed.
At the time, experts had called it a landmark development with repercussions on data privacy and competition in the fast-evolving digital economy.
However, concerns have been raised by some industry players who believe that the CCI's involvement in issues related to user privacy overlaps with the Digital Protection Data Protection Act, 2023. Additionally, there were views that the five-year ban imposed on WhatsApp was excessively harsh and would likely have limited impact, other than disrupting its operations.
