CCI overstepped jurisdiction by ruling on privacy issues: WhatsApp to NCLAT

Global messaging app WhatsApp and its parent company Meta on Friday told the National Company Law Appellate Tribunal (NCLAT) that the Competition Commission of India (CCI) “overstepped its jurisdiction” by ruling on data privacy issues rather than competition issues.

 

A bench of Justice Ashok Bhushan (Chairperson) and Member (Technical) Barun Mitra was hearing Meta Platforms and WhatsApp’s application 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. It had earlier stayed a part of the CCI order, which had imposed a five-year ban on the company’s data-sharing practices in India. 

“CCI itself gave an undertaking to the Delhi High Court that it will not get into data privacy issues. That is the concern of the legislature and (the matter) is pending before the Supreme Court and High Court. However, all they have done in their entire report is privacy regulation,” counsel appearing for WhatsApp told the appellate tribunal.

 

The appellate tribunal in March this year had deferred the hearing in the case, citing the upcoming Digital Personal Data Protection (DPDP) Rules. The government has released the draft rules for consultation, with notification expected by this year.

 

Defending the storage of data of its users, WhatsApp’s counsel asked the appellate tribunal if using tools to improve their services would qualify as a distortion, as alleged by CCI. The analysis of abuse of dominance by the market regulator is incomplete, he said.

 

“Have I coerced my users? Fifty-five per cent (of our users) accepted the update (2021). Where is the grave sense of urgency?... Diverse data collected improves overall user quality and is better aligned with user preferences,” the lawyer told the tribunal.

 

He also argued that his competitors, such as Telegram and Signal also keep a track of their DAU (Daily Active Users) and MAU (Monthly Active Users). 

 

“Are they also required to disclose these numbers?” the counsel for WhatsApp asked.

 

DAU refers to the number of unique users who engage with a product or app in a single day, while MAU counts the number of unique users who engage within 30 days. Both are key metrics for measuring user engagement, with a higher DAU/MAU ratio indicating that a larger proportion of monthly users are returning to the product daily. 

 

On Thursday, Meta told the appellate tribunal that user data collected by it from WhatsApp is its private property to enhance the platform’s technology.

 

“By leveraging user data from WhatsApp, Meta can enhance its technology. It’s (user data) collected by me, it’s my personal property. Shall I give it to my competitors?” Meta had argued.

 

The appellate tribunal will continue hearing the arguments next week, when CCI will also present its arguments.

 

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 Rs 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.