The Competition Commission of India (CCI) has imposed a hefty fine of ₹213.14 crore ($25.4 million) on Meta for its controversial 2021 privacy policy update on WhatsApp. The policy requiring users to share data among Meta companies was deemed unfair, thus violating competition laws.

What was the controversy about

In January 2021, WhatsApp released new terms of service and a revamped privacy policy, prompting mass outcry. Many users were informed that starting February 8, 2021, they would need to accept the new terms if they wanted to remain on the app. This policy made compulsory that users should share data with Meta companies, unrequired in the earlier policy released in 2016 that granted users a choice.

This kind of "take-it-or-leave-it" approach forces the user into compliance, undermining autonomy and making things unfair in the bargain.

According to the CCI, Meta-controlled WhatsApp has a dominant position in the Indian market for over-the-top (OTT) messaging apps. The commission also highlighted Meta’s leading role in India’s online display advertising market.

"Given the network effects and lack of effective alternatives, the 2021 update forces users to comply, undermining their autonomy, and constitutes an abuse of Meta's dominant position," said the CCI in its order.

The CCI has said that WhatsApp cannot share user data with other Meta companies for advertisement or non-WhatsApp-related purposes for the next five years. WhatsApp will not share user data collected on its platform with other Meta Companies or Meta Company Products for advertising purposes, for five years from the date of receipt of this order," the commission clarified.

The watchdog also raised competition-related fears about how sharing data could harm competition. 

The CCI explained that when WhatsApp shares user data with Meta companies for purposes unrelated to WhatsApp services, it makes it harder for other companies to compete. This is because Meta gets access to a huge amount of user information, giving it an unfair advantage in online advertising. This creates obstacles for smaller companies or new players trying to enter the market, effectively limiting competition.

"Sharing of WhatsApp users' data between Meta companies for purposes other than providing WhatsApp Service creates an entry barrier for the rivals of Meta and thus, results in denial of market access in the display advertisement market," the CCI said.

This ruling is yet another example of increased regulatory oversight regarding tech giants in India. With this setback, Meta's case underlines the significant need for fair competition and data privacy in the digital age.