INTRODUCTION
The price, output, and quality are three primary parameters that competition law has traditionally focused on. The advent of zero price digital services, however, has changed this classical framework. Consumers in the digital economy do not use money to obtain anything, but rather their personal data, which serves as the business model for online platforms. This shift raises a critical legal question; can a reduction in privacy itself constitute an anti-competitive act?
A decisive response, according to the recent ruling of the National Company Law Appellate Tribunal (Hereinafter referred to as “NCLAT”) in WhatsApp LLC and Meta Platforms Inc. v. Competition Commission of India (Competition Appeal No. 1 and 2 of 2025), is a noteworthy answer. In support of the findings of the Competition Commission of India (Hereinafter referred to as “CCI”), the Tribunal acknowledged privacy as a non-price competition factor, strengthening the intersection between data protection and the competition law in India.
BACKGROUND OF THE DISPUTE – A PRIVACY POLICY UNDER THE COMPETITION LENS
In January 2021, WhatsApp LLC presented a new Privacy Policy, requiring people to accept changed terms that further broadened the range of shared data with Meta, its parent company. The new policy eliminated the opt-out clauses that were present in the 2016 version and offered the users a take-it-or-leave-it offer of either accepting the terms of the data sharing or breaking off the service.
This led to an investigation by CCI which was a Suo motu investigation under Section 26(1) of Competition Act, 2002 (hereinafter referred to as “the Act”). The CCI also noted that WhatsApp had a dominant position in the pertinent market in relation to offering OTT messaging services using smart phones in India and that forcing users to accept data sharing as a pre-condition to further use of the service was an attempt to impose unfair terms on them and this was contrary to Section 4(2)(a)(i) of the Act.
The CCI issued its final order on 18 November, 2024 with the following findings:
- Meta, via WhatsApp, had misused its monopoly by offering unreasonable terms as per Section 4(2)(a)(i) of the Act.
- It had deprived competition in online advertising as given under Section 4(2)(c) of the Act.
- It had used its advantage in messaging to fortify the position of Meta in online adverts as per Section 4(2)(e) of the Act.
The CCI, therefore, fined WhatsApp a total of Rs 213.14 crore and ordered it to stop selling the user data to advertisers within a period of five years. WhatsApp and Meta appealed this order to the NCLAT because they believed that the question of data privacy comes under the Digital Personal Data Protection Act, 2023 (Hereinafter referred to as “DPDP Act”) and the IT (Intermediary Guidelines and Digital Media Ethics Code) Rules, 2021 (“the Rules”) and therefore the CCI had no jurisdiction.
KEY FINDINGS OF THE NCLAT: DECODING THE JUDGMENT
- Jurisdiction Affirmed – Complementary, Non-Exclusive Frameworks
The NCLAT firmly denied the jurisdictional claim of WhatsApp, and believed that competition law and data protection law should not be viewed as mutually exclusive. The Tribunal observed that the DPDP Act and SPDI Rules ensures the privacy of every individual and regulates the legality of the processing of data, whereas the Competition Act evaluates whether the actions of a dominant enterprise distort the market or infringe the choice of consumers.
The Tribunal noted that the CCI did not decide whether the data processing by WhatsApp was illegal or otherwise, but determined whether the anti-competitive effects of such a move to compel the user to accept data sharing as the condition to use the service were.
It stated -“Competition law is concerned with market power and consumer choice. The mere overlap of subject matter with privacy does not oust the CCI’s jurisdiction.”
This philosophy is consistent with the international practice observed in such jurisdictions as the European Union where regulators acknowledge that data-based dominance is no less damaging to competition than conventional price-based behavior.
- Privacy as a “Non-Price Factor” of Competition
The most valuable input of the Tribunal is the identification of privacy as a non-price competitive parameter. In the zero price online markets, the Tribunal noted, the consumers transmit their personal information in order to access the services, and consequently, the privacy protection becomes the crucial component of the quality of the services. The act of forcing users to hand over their data by a powerful company on some restrictive conditions is simply an act of taking away service quality hence competitive disadvantage.
The NCLAT concurred and quoted the reasoning of the CCI that-
“A reduction in privacy or excessive data collection amounts to a degradation of service quality, constituting an unfair condition under Section 4(2)(a)(i).”
This argument puts privacy right in the consumer welfare perspective. Privacy loss is regarded as non-monetary damages which is equal in severity to high pricing or quality deterioration. The Tribunal once again stated that the freedom of choice and control of personal information users play the key role in ensuring good competition and avoiding exploitative superiority.
- A Nuanced Verdict – What Was Upheld and What Was Set Aside
The NCLAT took a moderate and discriminating stand on the findings and punishment of the CCI.
- Upheld – The Tribunal affirmed the finding that WhatsApp had abused its dominance under Section 4(2)(a)(i) of the Act by imposing unfair terms by its 2021 privacy policy. It also upheld the penalty amount of Rs. 213 crore, indicating that anti-competitive impacts of the conduct of the company were of a tangible nature and undermined the user choice.
- Set Aside -The NCLAT rejected the ruling made under the provision of Section 4(2)(e) because WhatsApp and Meta are separate legal persons, and the evidence that sharing data contributed to the advertising power of Meta in any direct manner was scarce. The Tribunal also suspended a five-year data-sharing ban on advertising use by the CCI, on the basis that this one would interfere with the WhatsApp business model, and the order did not have sufficient consideration to justify that duration.
However, the Tribunal upheld the CCI’s instructions, which required opt-out options and transparency in data sharing practices. This subtle result supported the strike balance between regulation and business feasibility, without undermining the main conclusion of privacy-related abuse of dominance.
AMLEGALS REMARKS
The decision in WhatsApp LLC v. CCI marks a milestone in Indian competition law. It solidifies the fact that privacy is not just a constitutional right or a statutory right but also as a measure of competition quality. The decision means that digital markets require two types of accountabilities, that is, firms need to be accountable in terms of complying with data protection and complying with competition. According to the DPDP Act, 2023, the collection and processing of the data should be relying on the free, informed, and specific consent.
According to the Act, the dominant entities are bound to avoid coercing a consent through their data policies, lessen privacy or misfit consumer choice. The approach adopted by the NCLAT unifies these frameworks and there is no unchecked privacy violation that has market implications, as a result of jurisdictional boundaries. To companies, the message is simple: competition scrutiny may be initiated by anti-competitive business data practices, despite its adherence to privacy legislation. Dominating digital platforms should then establish data policies, which are voluntary, transparent and not exploitative.
To regulators, this ruling points to a need to have institutional collaboration between CCI and the Data Protection Board of India (“DPBI”). This line of logic by the Tribunal promotes a concerted regulation where data protection values enlighten competition regulation, and vice versa. In the case of the digital economy, this ruling provides a mighty precedent privacy has become a measure of healthy competition.
The competitive differentiator of the new world where consumers pay with data is the quality of privacy offered. The confirmations of NCLAT that privacy must be degraded with the degradation of services would make the consumer autonomy to be safeguarded even in the markets where the services are free.
With the judicial promotion of privacy as a factor other than price, the Tribunal has reshaped the boundaries of abuse of dominance in digital Indian and has cleared the way to a more responsible and rights-oriented market order.
For any query, please feel free to reach out to mridusha.guha@amlegals.com