Recently, WhatsApp published information about new terms of service and a policy for processing user data, which had to be adopted by February 8, but due to the massive churn of users, the adoption of the new rules was postponed until May 15.
Having considered the media reports and the potential impact of the Policy and Terms for WhatsApp users and market, the Competition Commission of India decided to seek a response from both WhatsApp and Facebook on specific queries, as specified in the order dated 19.01.2021.
WhatsApp and Facebook responded to the said queries of the Commission on 25.02.2021.
After analysing the responses from Facebook and WhatsApp, the CCI concluded that given the pronounced network effects it enjoys, and the absence of any credible competitor in India's instant messaging market, WhatsApp appears to be in a position to compromise quality in terms of the protection of individualised data.
Data and data analytics have immense relevance to the competitive performance of digital enterprises. Cross-linking and integrating user data can further strengthen data advantage besides safeguarding and reinforcing the market power of dominant firms. For Facebook, the processing of data collected from WhatsApp can be a means to supplement the consumer profiling that it does through direct data collection on its platform by allowing it to track users and their communication behaviour across a vast number of locations and devices outside the Facebook platform. Therefore, the impugned data-sharing provision may have exclusionary effects in the display advertising market, which can undermine the competitive process and create further barriers to market entry, thus competition concerns in other markets.
After reviewing both companies' response, the competition commission concluded that for the aforementioned reasons, the introduction of new terms and conditions by WhatsApp requires closer inquiry and has ordered an investigation to be made into the matter under the provisions of Section 26(1) of the Act. The Commission also ordered to complete the study and submit the investigation report within 60 days from the receipt of this order.