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Competition Commission of India orders probe into new privacy policy of WhatsApp, says it is ‘abuse of dominance’

The CCI observed that the privacy policy terms on sharing of personalised data with other Facebook owned companies was “neither fully transparent nor based on specific, voluntary consent of users”.

The Competition Commission of India has ordered a probe into the new privacy policy of WhatsApp, which had raised concerns about data privacy and security risk. The CCI ordered the probe after finding that the new policy violates the Competition Act, 2000.

The CCI observed that the privacy policy terms on sharing of personalised data with other Facebook-owned companies was “neither fully transparent nor based on specific, voluntary consent of users”. The order issued by the CCI said that “WhatsApp has prima facie contravened the provisions of Section 4 of the Act through its exploitative and exclusionary conduct, in the garb of policy update”.

Section 4 of the Competition Act forbids abuse of dominance by an entity commanding dominant position in relevant market. According to the CCI, WhatsApp is in the dominant position in the messaging App market for smartphones in India.

The Commission has directed the Director General to initiate a probe against the company under the provisions of Section 26(1) of the Competition Act. The Commission has asked the DG to complete the probe and submit the report with 60 days.

On a careful and thoughtful consideration of the matter, the conduct of WhatsApp in sharing of users’ personalised data with other Facebook Companies, in a manner that is neither fully transparent nor based on voluntary and specific user consent, appears prima facie unfair to users. The purpose of such sharing appears to be beyond users’ reasonable and legitimate expectations regarding quality, security and other relevant aspects of the service for which they register on WhatsApp,” the CCI order said. It further added that “one of the stated purposes of data sharing viz. targeted ad offerings on other Facebook products rather indicates the intended use being that of building user profiles through cross-linking of data collected across services. Such data concentration may itself raise competition concerns where it is perceived as a competitive advantage.”

Competition Commission of India observed that prima facie these acts by WhatsApp violates the Section 4 of the Competition Act. “The impugned conduct of data-sharing by WhatsApp with Facebook apparently amounts to degradation of non-price parameters of competition viz. quality which result in objective detriment to consumers, without any acceptable justification. Such conduct prima facie amounts to imposition of unfair terms and conditions upon the users of WhatsApp messaging app, in violation of the provisions of Section 4(2)(a)(i) of the Act”, the commission said.

The CCI has overserved that the terms and conditions set up by the messaging platform is “unfair and unreasonable”, as it does not give the users much information and forces the users to accept the new rules, without which the users can’t use the service. It said that such “consent” can’t be considered as voluntary agreement for use of their personal data. The CCI said that the users have not been provided with appropriate granular choice to to object to or opt-out of specific data sharing terms, which prima facie appear to be unfair and unreasonable for the WhatsApp users.

The CCI observed 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 order was issued by a CCI bench comprising Chairperson Ashok Kumar Gupta and members Sangeeta Verma and Bhagwant Singh Bishnoi.

The union government has also opposed the new policy of WhatsApp. The Ministry of Electronics and Information Technology approached the Delhi High Court on Friday to restrain WhatsApp from rolling out its new privacy policy. The ministry has said that the WhatsApp privacy policies do not align with appropriate standards of security and data protection, and the company must be stopped from implementing the same.

The new policy and terms of service of the Facebook-owned messaging platform are to take effect from May 15, after it was postponed earlier following massive outrage against it. Earlier it was to be implemented from February 8. The new policy makes it mandatory for users of WhatsApp to share their data with its parent company Facebook. The company has not provided an opt-out option, means the users have to agree to the new policy if the want to continue using the service. This means, after May 15, users who don’t click agree on the new policies will not be able to use WhatsApp.

Update: WhatsApp reached out to OpIndia after the publication of this report, saying that they look forward to engaging with CCI. A statement sent by a WhatsApp spokesperson said, “We look forward to engaging with the CCI. WhatsApp remains committed to protecting people’s personal communications with end-to-end encryption and providing transparency about how these new optional business features work.”

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