The anti-trust body said that the online messaging platform has contravened the provisions of Section 4 of the Competition Act, 2002 through its “exploitative and exclusionary conduct” in the garb of policy update.
Noting that a thorough and detailed investigation is required to ascertain the full extent, scope and impact of data sharing through involuntary consent of users, the CCI order said: “The Commission directs the Director General (DG) to cause an investigation to be made into the matter under the provisions of Section 26(1) of the Act.”
The Commission also directed the DG to complete the investigation and submit the investigation report within a period of 60 days from the receipt of the order.
The CCI noted that given the pronounced network effects it enjoys, and the absence of any credible competitor in the instant messaging market in India, WhatsApp appears to be in a position to compromise quality in terms of protection of individualised data and can deem it unnecessary to even retain the user-friendly alternatives such as ‘opt-out’ choices, without the fear of erosion of its user base.
Moreover, the users who do not wish to continue with WhatsApp may have to lose their historical data as porting such data from WhatsApp to other competing apps is not only a cumbersome and time consuming process, but, as already explained, network effects make it difficult for the users to switch apps, it said.
“This would enhance and accentuate switching costs for the users who may want to shift to alternatives due to the policy changes,” it said.
The new WhatsApp privary policy, the implementation of which was postponed following huge uproar on privacy concerns, makes it mandatory for the users to accept the terms and conditions in order to retain their WhatsApp information. It also provides as to how it will share personalised user information with Facebook Inc and its subsidiaries.
Having considered the media reports and the potential impact of the policy and terms for WhatsApp users and market, the Commission, in its ordinary meeting held on January 19, decided to take suo moto cognisance of the matter.
In the meeting, the Commission deemed it appropriate to seek response from both WhatsApp and Facebook on certain queries, as specified in the order dated January 19. Pursuant to the said directions, WhatsApp filed confidential version of its response on February 3, 2021.
The Commission further observed that the response filed by WhatsApp is also not in compliance with Regulation 11 of General Regulations as the same is not signed in terms of the provisions contained therein. Then WhatsApp was directed to submit its response in compliance with the observations made in this order latest by February 25.
The CCI further observed that despite clear directions in the order dated January 19 passed by the Commission, Facebook neither responded to the queries raised by the Commission, nor did it move any application seeking extension of time to comply with the requisitions made by the Commission.
In these circumstances, the Commission directed Facebook to submit its response to the queries without any delay and in any event latest by February 25. WhatsApp and Facebook responded to the said directions of the Commission vide separate e-mails dated February 25.
“The Commission has gone through the response of WhatsApp also and is constrained to note that despite an opportunity having been granted by the Commission, WhatsApp has not only failed to comply with the directions of the Commission but has also taken the pleas which are ex facie untenable,” said the CCI bench headed by chairperson Ashok Kumar Gupta.