Competition Commission of India orders a probe into WhatsApp's new privacy policy

Competition Commission of India orders a probe into WhatsApp's new privacy policy
Source: 24.03.2021 166

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.

The new terms of service imply that users' data, including that of those who are not users of any other service within the Facebook family of companies, will now be shared across Facebook Companies for a range of purposes, including marketing and advertising, has been made a precondition for availing WhatsApp service. WhatsApp provided its users with an option " 'opt-out of sharing user account information with 'Facebook' within 30 days of agreeing to the updated terms of service and privacy policy". However, no such option has been granted to the users under the present policy update.

The Indian Ministry of Technology sent a letter to Facebook asking to withdraw the WhatsApp messenger's new privacy policy. The ministry says the new conditions deprive Indian users of choice. The letter states that "the proposed changes raise serious concerns regarding the impact on Indian citizens."

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.

Having considered the overarching terms and conditions of the new policy, the Commission decided that the 'take-it-or-leave-it nature of privacy policy and terms of service of WhatsApp and the aforementioned information sharing stipulations call for a detailed investigation given the market position and market power enjoyed by WhatsApp.
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.

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