No player close to WhatsApp in terms of revenue, assets: CCI to NCLAT

CCI argued before NCLAT that WhatsApp's dominance stems from its vast user base and unmatched revenues, defending its Rs 213.14 crore fine on Meta over the 2021 privacy policy

The Competition Commission of India (CCI) on Monday told the National Company Law Appellate Tribunal (NCLAT) that no internet intermediary could come close to WhatsApp in terms of revenues as well as the assets the company had.

 

The NCLAT is hearing WhatsApp and Meta’s plea challenging the CCI order, imposing a fine of ₹213.14 crore on the tech giant for alleged abuse of its dominant position related to WhatsApp’s 2021 privacy policy.

 

The market regulator, while presenting its side of the arguments, told the bench of Justice Ashok Bhushan (chairperson) and Member (Technical) Barun Mitra that the main reason for the acquisition of WhatsApp by Meta (then Facebook) was its huge user base. 

 

“In April 2012, Facebook bought Instagram, an iPhone application of the year in 2011, for a billion dollars. In February 2014, Facebook announced a deal with the WhatsApp founder... (redacted). WhatsApp was internationally available, freeware, cross-platform, centralised instant messaging and voice over internet protocol services. The main motivation for the acquisition of WhatsApp is the huge user base. This is the intent,” the counsel for the market regulator argued.

 

It said that the objective of a dominant player is to ensure that no other disruptor emerges in the market. “These are called short acquisitions that don’t let the competition grow and acquire them in the beginning itself. Nip it in the bud,” CCI argued.

 

It also said the sharing of data by WhatsApp to Meta is ultimately monetised by Meta, making it a disrupting dominant entity.

 

“There should be no disruption to the line of business which is being carried out by a dominant player, if anyone standing on either a developing entity or a communication creating entity, or a content creating entity, or the market network, which can bring the market network that entity before it can gain a traction or a size of a significance that can act as a competitor is immediately acquired by the entity in question. That’s WhatsApp,” CCI’s counsel argued. The CCI is likely to continue its arguments on Tuesday.

 

WhatsApp had earlier told the appellate tribunal that the CCI overstepped its jurisdiction by ruling on data privacy issues rather than competition issues.

 

In January, the appellate tribunal had said that the five-year ban by CCI may lead to the collapse of the business model of WhatsApp since it is a free platform.

 

“The ban of five years, which was imposed in paragraph 247.1 (of CCI order), may lead to the collapse of the business model which has been followed by WhatsApp LLC. It is also relevant to notice that WhatsApp is providing WhatsApp services to its users free of cost,” the order had said.

 

At the same time, the NCLAT refused to stay the fine of ₹213.14 crore imposed by CCI and told Meta, which owns WhatsApp, to deposit 50 per cent of the fine amount within two weeks for a stay to be effected.