The Delhi Bench of National Company Law Appellate Tribunal (NCLAT) has partially stayed the order passed by the Competition Commission of India (CCI) restraining WhatsApp from sharing data with Meta.
The bench of Justice Ashok Bhushan (Chairperson) and Arun Baroka (Technical Member) has observed that the ban of five years imposed need to be stayed. However, the directions issued by the CCI need not be stayed and they need to be complied with. The only limited interim order which was stayed was the direction by which a five years’ ban had been imposed.
WhatsApp LLC published its Terms of Service and Privacy Policy in 2012. In April, 2016, WhatsApp announced its end-to-end encryption system for all types of WhatsApp messages and calls. On 20.02.2018, WhatsApp updated its Terms of Service and Privacy Policy of 2016 which was challenged in Delhi High Court by Writ Petition- “Karmanya Singh Sareen vs. Union of India”.
WhatsApp announced 2021 Terms of Service and Privacy Policy (2021 update) applicable to users of India and several other countries. On 19.01.2021, CCI took suo moto cognizance of 2021 update and registered Suo Moto Case No.01 of 2021. CCI passed an order on 19.01.2021 under Section 19(1) seeking information from WhatsApp LLC and Meta Platforms.
WhatsApp challenged the proceeding initiated by CCI by means of Writ Petition in Delhi High Court “WhatsApp LLC vs. CCI” which Writ Petition came to be dismissed by a learned Single Judge, LPA was also dismissed on 25.08.2022 and SLP against the order dated 25.08.2022 also came to be dismissed by the Hon’ble Supreme Court on 14.10.2022 filed by Meta Platforms.
The Director General initiated an investigation against the WhatsApp 2021 update and submitted a report. WhatsApp sent a letter to the Ministry of Electronics and Information Technology on 22.05.2021 undertaking that it will not limit the functionality of how WhatsApp works for users who have not yet accepted the 2021 update and will continue to display the update to users who have not accepted the 2021 update from time to time and will maintain the same until data protection law comes into effect.
Two cases were also subsequently clubbed with the suo moto case. On 11.08.2023, Digital Personal Data Protection Act 2023 received presidential assent and was published in the Official Gazette of India (the Act has not yet been enforced). After hearing the parties and other interveners, the CCI passed an order on 18.11.2024 holding breach of Section 4(2) of the Competition Act, 2002.
The Commission in exercise of powers under Section 27(a) of the Act issued various directions in consequence of contravention of the provisions of Section 4 of the Act. The Commission also impose monetary penalty of Rs.213.14 Crores on the Meta directed to deposit the penalty within 60 days.
The Commission further directed for making necessary changes within a period of three months. WhatsApp and Meta aggrieved by the said order have come up in these Appeals.
Whatsapp contended that the Commission failed to identify actual anti-competitive effects and instead relied on potential and likely effects whereas law is well settled that actual anti-competitive effects is a prerequisite for a Section 4 violation.
The Tribunal noted that the ban of five years which was imposed in paragraph 247.1 may lead to the collapse of the business model which has been followed by WhatsApp LLC. It is also relevant to notice that WhatsApp is providing WhatsApp services to its user free of cost.
The tribunal noted that the Commission has imposed penalty of Rs.213.14 Crores only. The 25% penalty has already been deposited. The NCLAT held that subject to deposit of 50% of penalty (after taking into consideration 25% already deposited), the direction need to be stayed.
Case Details
Case Title: Whatsapp LLC Vs. Competition Commission of India & Ors.
Case No.: Competition App. (AT) No. 1 of 2025
Date: 23/01/2025
Counsel For Appellant: Kapil Sibal, Ld. Sr. Advocate with Mr. Tejas Karia, Mr. Naval Chopra, Ms. Supritha Prodaturi, Ms. Akshi Rastogi, Ms. Parinita Kare, Mr. Aatmik Jain, Ms. Ritika Bansal and Ms. Aparajita Jamwal, Advocates.
Counsel For Respondent: Mr. Samar Bansal, Mr. Manu Chaturvedi, Mr. Vedant Kapur, Mr. Kaustubh Chaturvedi, Advocates for R1/ CCI.