NCLAT Temporarily Lifts Five-Year Ban on WhatsApp's Data Sharing with Meta

The National Company Law Appellate Tribunal (NCLAT) has temporarily halted a five-year ban imposed by the Competition Commission of India (CCI) on data-sharing between WhatsApp and its parent company, Meta, for advertising. This decision provides some relief to the tech giant. Meta had contested the CCI's directive from November 2024, which prohibited data sharing for advertising and included a Rs 213 crore fine for abusing its dominant position.

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Meta's Challenge and Tribunal's Decision

Meta challenged the CCI's order before the NCLAT, which acts as an appellate authority over CCI decisions. The tribunal also paused the Rs 213.14-crore penalty, requiring Meta to deposit 50% of the penalty amount within two weeks, considering 25% was already deposited. The tribunal noted that the five-year ban could disrupt WhatsApp's business model, which offers free services to users.

The CCI had determined that WhatsApp's 2021 privacy policy update forced users to consent to extensive data collection and sharing within the Meta group. The regulator demanded that WhatsApp stop sharing user data with other Meta entities for advertising for five years. It also required behavioural changes from Meta and WhatsApp to address anti-competitive concerns.

Implications of Privacy Policy Update

In November, CCI fined Meta Rs 213.14 crore for unfair practices related to WhatsApp's 2021 privacy policy update. The regulator insisted that data sharing should not be a condition for accessing WhatsApp services in India. The tribunal observed that the Supreme Court had not stayed the 2021 privacy policy and noted the passage of the Digital Personal Data Protection Act 2023, which may address data protection issues.

Meta expressed satisfaction with NCLAT's partial stay on the CCI order. A spokesperson stated, "While we will evaluate next steps, our focus remains on finding a path forward that supports millions of businesses that depend on our platform for growth and innovation as well as providing high-quality experiences that people expect from WhatsApp."

Expert Opinions on Regulatory Framework

Murugavel Janakiraman, CEO & Founder of Matrimony.com, commented on NCLAT's decision regarding Meta’s appeal against CCI’s ban. He highlighted the limitations of current competition laws and stressed the need for ex-ante regulations. Janakiraman stated that ex-ante rules could prevent large digital platforms from misusing their dominant positions to disadvantage end-users.

The tribunal has scheduled the next hearing for March 17. It acknowledged that new legislation might cover data protection and sharing issues. This ongoing case underscores the evolving landscape of digital privacy regulations in India and their impact on global tech companies operating in the country.