Scrutinising the policy, CCI held that because the users had an option to opt-out from the policy while still be able to continue using the platform, the terms imposed were not unfair.
—WhatsApp argued that since writ courts have already taken cognizance of the matter, the facts in issue are sub-judice and CCI mustn’t run parallel proceedings. CCI rejected this argument at the very threshold—holding that CCI being a market regulator is within its power to examine the policy from the perspective of competition lens, and the fact that writ courts are also looking into the same for possible violation of fundamental rights is no bar on its jurisdiction. Moreover, recent reports suggest that even the Government of India has filed an affidavit in the writ court stating that WhatsApp must scrap its new policy till the disposal of the writ petition.
—In its earlier decision in Harshita Chawla v. WhatsApp Inc., Case No. 15 of 2020—CCI had concluded that WhatsApp is a dominant player in the market for over-the-top messaging apps. Relying on its decision, CCI in the instant case too held WhatsApp to be the dominant entity in the market for OTT messaging apps.
—CCI on a prima facie view found WhatsApp’s terms to be unfair under S. 4(2)(a)(i) on two grounds – a. by imposing a “take-it-or-leave-it” contract, WhatsApp has coerced the user into consenting to its data-sharing practice, thereby leaving no actual control of user over its data. CCI has noted that the relevant market is heavily dominated by network effects and due to the lock-in effect created by the network effect, the Users have nowhere else to go and hence are forced to share their data; b. the terms imposed are opaque, vague, open-ended and doesn’t give a true picture of what and how much of data will be shared by WhatsApp with the third parties.
—CCI also noted that WhatsApp’ data sharing with Facebook will not only bolster Facebook’s market strength in digital advertising as it would now have access to larger data sets to track and analyse, but would also lead to the creation of large entry barriers because of data concentration. This, according to CCI, is potentially abusive as it leads to denial of market access and leveraging.
A massive step forward
At a time when regulators all across the world are grappling with the conduct of the big technology players, CCI’s suo-moto cognizance of potentially abusive practice by WhatsApp is a laudable step in the right direction. In this order, CCI has for the first time, analysed various aspects of data protection, collection and sharing from an antitrust lens.
CCI’s suo-moto cognizance of the conduct indicates that CCI recognises the importance of timely intervention in digital markets. This also goes on to show that CCI would want to intervene, understand and perhaps remedy the practices of big-tech. CCI’s discussion on network effects prevailing in the market for OTT messaging and subsequent lock-in created due to such network effects goes on to show that CCI acknowledges that it has a greater role to play in markets that are heavily dominated by network effects.
CCI’s interpretation of unfair terms under S. 4(2)(a)(i) to include coercive, broad, vague and unintelligible terms is welcoming as it sets the stage to scrutinise the arbitrary terms and conditions imposed by other dominant players on their users—who mostly have no or insufficient countervailing buyer power.
CCI rightfully highlights the importance of “control” in data-driven markets as it observes that in a competitive market condition, users should have sovereign rights and control over decisions related to the sharing of their personalised data. However, WhatsApp’s take-it-or-leave-it policy takes away such control as they are coerced into giving their consent to an arbitrary policy. This, according to CCI, on a prima-facie view amounts to an abuse of dominant position.
CCI’s order is also in line with the actions of various antitrust regulators across the globe. In a similar antitrust case against Facebook, the German Federal Court held Facebook to be abusing its dominant position by forcing users to share their data with other Facebook-owned services like WhatsApp and Instagram. In the United States too, the Federal Trade Commission is scrutinising various practices adopted by Facebook and WhatsApp.
CCI through this order has made clear that even if data is the new raw material, the Act is well equipped to deal with changing market conditions and it has all the powers to intervene and remedy the market distortion in a timely fashion. Although it is only a prima-facie order under S. 26(1) of the Act, it is still going to have widespread implications for all companies across the globe that collect user data for providing personalised experiences.