National Company Law Appellate Tribunal (NCLAT) has put a stay on the five-year ban imposed by the Competition Commission of India (CCI) on WhatsApp for its data-sharing practices. The ban, which could have disrupted WhatsApp’s business model in India, was deemed potentially harmful by the NCLAT bench led by Justice Ashok Bhushan. WhatsApp, owned by Meta, has over 500 million monthly active users in India, making it a crucial market for the social media giant.
The CCI had imposed a penalty of Rs 213 crore on Meta for abuse of dominant position and had directed WhatsApp not to share user data collected on its platform with other Meta products or companies for advertising purposes for a period of five years. The NCLAT, however, has now directed Meta to deposit 50 per cent of the penalty within two weeks. It’s worth noting that Meta has already paid 25 per cent of the fine.
The CCI’s order was challenged by Meta and WhatsApp, leading to the NCLAT reserving its order on their plea last week. The tribunal has suggested that the upcoming data protection law in India could address concerns related to data privacy. WhatsApp’s 2021 Privacy Policy, which allows for user data to be shared with group companies like Meta and Instagram without an “opt out” option, has been a point of contention.
Meta had moved the NCLAT against the CCI order earlier this month. The company argued that the CCI order has wide ramifications for the industry as a whole and therefore, an urgent hearing in the matter was required. Last year, after the CCI directed WhatsApp not to share user data collected on its platform with other Meta products or companies for advertising purposes for a period of five years, the social media platform said it disagreed with the CCI’s decision and planned to appeal.
This is not the first time that tech giants have faced regulatory scrutiny over data privacy concerns. In the past, companies like Google and Amazon have also been fined for violating data protection laws. For instance, in 2018, Uber was fined $148 million for violation of state data breach notification laws. Similarly, in 2022, Morgan Stanley agreed to pay $60 million to settle a legal claim relating to its data security.
The NCLAT’s decision comes at a time when countries around the world are grappling with the challenges of regulating tech giants and protecting user data. The upcoming data protection law in India is expected to provide a comprehensive framework for data privacy and could potentially address many of the concerns raised in this case.
