The National Company Law Appellate Tribunal (NCLAT) on Tuesday granted partial relief to Meta Platforms and its messaging arm WhatsApp in the long-running competition case arising from the platform’s 2021 privacy policy update. While the appellate body upheld the Rs 213.14 crore penalty imposed by the Competition Commission of India (CCI), it set aside key findings related to dominance and overturned the five-year prohibition on user-data sharing with Meta group companies for advertising purposes.
A two-member bench comprising Chairperson Justice Ashok Bhushan and Technical Member Arun Baroka, in its order, struck down the portions of the CCI’s November 2024 ruling that had found Meta guilty of leveraging WhatsApp’s dominant position in the over-the-top (OTT) messaging market to protect its standing in online advertising.
Specifically, the tribunal set aside paragraph 247.1 of the CCI order that barred WhatsApp from sharing data with Meta for ad-related purposes. “We are setting aside the findings of the Commission in so far as it holds breach of Section 4(2)(e) and the corresponding directions in paragraph 247.1,” the bench said, while noting that the rest of the CCI’s directions would stand.
The CCI had, in November 2024, concluded that WhatsApp’s 2021 privacy-policy update, rolled out on a take-it-or-leave-it basis, amounted to abuse of dominance under the Competition Act, 2002. The regulator found that making data sharing with other Meta entities mandatory, and eliminating an earlier opt-out provision, unfairly restricted user autonomy and weakened competition in the digital advertising ecosystem. Along with the hefty penalty, the CCI had ordered WhatsApp to cease sharing user data with Meta for five years and to provide detailed justifications for each category of data collected.
Meta and WhatsApp had challenged the decision, arguing that the CCI had overstepped its jurisdiction by delving into data protection issues that fall under privacy regulation. During hearings, Senior Advocate Amit Sibal, appearing for Meta, contended that data sharing for advertising was limited to optional business interactions such as click to WhatsApp features and was not forced on users. The companies also maintained that the data-sharing restrictions could disrupt WhatsApp’s free-to-use business model.
In January this year, the NCLAT had stayed both the penalty and the five-year data ban, observing that such a blanket restriction could lead to the collapse of WhatsApp’s business structure. The stay on the penalty was conditional on Meta depositing half the amount.
Reacting to the latest order, a Meta spokesperson said the company welcomed the NCLAT’s decision and reiterated that the 2021 policy did not affect the privacy of personal messages, which remain end-to-end encrypted. The spokesperson added that WhatsApp’s optional business features “make people’s lives more convenient while supporting local businesses and furthering India’s digital economy”.
Till the time of going to the press, a detailed copy of the NCLAT’s judgment was not uploaded on its site.