1. Background 

1. On 18 November 2024, the Competition Commission of India (“CCI”) imposed a penalty of INR 213.14 crore (approx. USD 25 million) on Meta Platforms, Inc. (“Meta”) for contravening the Competition Act, 2002 (“Competition Act”) by abusing its dominant position in the ‘market for OTT messaging apps through smartphones in India’ (“Order”).

2. The matter pertains to the introduction of certain policy changes by Meta’s subsidiary, WhatsApp LLC (“WhatsApp”) in January 2021 (“2021 Update”). The 2021 Update was allegedly introduced in a ‘take it or leave it’ manner that mandated users of WhatsApp to share extensive data with Meta and its subsidiaries.

3. In March 2021, the CCI directed investigation against WhatsApp and Meta, which in its prima facie view, had “in the garb of its policy update” contravened the Competition Act through exploitative and exclusionary conduct (“PFO”).

(II) CCI Findings  

      Relevant market and dominance 

4. The CCI delineated the following relevant markets in the course of its investigation:

(a) market for OTT messaging apps through smartphones in India (“OTT Messaging Market”); and

(b) market for online display advertising in India (“Display Advertising Market”).

5. The CCI found WhatsApp to be dominant in the OTT Messaging Market given its significant market position (based on the number of daily and monthly average users), network effects, high entry barriers, and dependence of users. It further noted that Meta was a ‘leading player’ in the Display Advertising Market although it did not arrive at a finding of dominance.

      Abusive conduct 

6. In particular, the CCI found Meta to have abused its dominance in the OTT Messaging Market on account of the following:

(a) The 2021 Update was imposed upon WhatsApp users in an unfair manner: 

(i) The ‘take it or leave it’ policy forced users to accept the pre-condition of expansive data collection and sharing with Meta in order to continue using WhatsApp’s services. Unlike the earlier update (introduced in 2016), there was no ability to opt out of the data sharing mechanism which renders the conditions one-sided and exploitative. The policy effectively reduces the level of privacy accorded to users, thus diminishing consumer welfare. Further, the data sharing policy consolidates Meta’s market power by allowing it to access more user data, creating a competitive disadvantage for its competitors in the Display Advertising Market.

(ii) The nature of data sought to be collected under the 2021 Update, such as through cookies, location information, device information, etc., is disproportionate and not essential to provide the OTT messaging services. This indicates that the user data is being leveraged for commercial purposes unrelated to the services provided by WhatsApp. Further, the use of vague, broad and open-ended language creates uncertainty regarding the specific categories of information being collected and shared; this also suggests that WhatsApp retains flexibility to expand the scope of data collection at any time.

(b) Meta denied market access and leveraged its position in the market to protect its market position in the Display Advertising Market:

(i) The extensive data obtained through WhatsApp was shared across Meta’s platforms, enabling it to strengthen its position in the Display Advertising Market and the overall digital ecosystem. The smaller players in both the OTT Messaging Market and Display Advertising Market faced high entry barriers without access to such data thereby resulting in denial of market access for Meta’s competitors.

(ii)  The dominance of WhatsApp in the OTT Messaging Market and Meta’s access to significant user data created a ‘lock-in’ effect where users and advertisers are drawn deeper into Meta’s ecosystem. Meta also employed a strategy where user data is bundled across services via privacy policies that allow data sharing across markets. This cannot be replicated by its competitors who lack the same breadth of services or the same level of user engagement. Accordingly, Meta leveraged its dominance in the OTT Messaging Market to entrench and consolidate its market position in the Display Advertising Market. 

     Remedies 

7. The CCI highlighted the need for dynamic remedies to overcome the challenges posed by data-driven digital markets. Interestingly, the CCI observed that remedies should not only rectify past behaviour but also prevent future abuses. On this basis, Meta / WhatsApp were directed to implement the following remedies within a period of three months:

(a) No sharing of WhatsApp user data with Meta or other Meta Company Products for advertising purposes for five years;

(b) Sharing of WhatsApp user data with Meta or other Meta Company Products for purposes other than advertising is permitted but subject to:

(i)  WhatsApp clearly explaining the type of data shared with other Meta companies, linking each data type with its specific purpose;

(ii)  No obligation being imposed upon users to share their data for any purpose other than providing WhatsApp services. Further, providing users with the choice to manage the nature of data shared and opt out of such data sharing altogether.  

    Challenge before NCLAT & Interim Stay 

8. Aggrieved by the remedies, particularly the five-year prohibition on data-sharing for advertising purposes, Meta and WhatsApp challenged the Order before the National Company Law Appellate Tribunal (“Tribunal”). The appellants contended that advertising is a major source of revenue for the companies, and such a prohibition would severely impact their business model, which relies on providing free services to end users.

9. Recognizing the impact on WhatsApp’s business model, the Tribunal, vide an order dated 23 January 2025, issued an interim stay on the five-year data-sharing prohibition for advertising purposes. The Tribunal observed that the ban could lead to the collapse of WhatsApp’s existing business framework. The appellants were however required to comply with the other remedies imposed by the CCI. In addition, the Tribunal directed the appellants to deposit 50% of the penalty imposed by the CCI within two weeks (accounting for the 25% statutorily deposited for filing the appeal) and stayed payment of the remaining 50%.

10. Interestingly, Meta and WhatsApp were granted liberty by the Tribunal to seek modification of its order in the event of enforcement of the Digital Personal Data Protection Act, 2023 (“DPDP Act”) or any other statutory provisions regulating data protection and data sharing. The final ruling on the appeal remains to be seen.

III. Key takeaways 

11. Data and privacy laws no bar for CCI jurisdiction: The CCI asserted its jurisdiction to review the data collection and sharing undertaken by Meta through the 2021 Update, especially given “[t]he competitive strength of enterprises in these markets is now increasingly measured by the amount, diversity, and quality of the data they control.” The CCI’s assertion of its jurisdiction reflects a growing concern that digital markets require supervision, including but not limited to areas of consumer welfare, data protection and competitive harm. Parties with significant market position must therefore ensure that their data collection / sharing policies are also in compliance with the Competition Act in addition to data protection and privacy norms. If indeed, the DPDP Act is enforced prior to the Tribunal’s final ruling on the appeals by Meta and WhatsApp, it will be interesting to see how appellants seek to modify the interim order of the Tribunal. This signals that the jurisdictional tussle – which was previously seen between CCI and the Telecom Regulatory Authority of India – can be seen once more.

12. Actual effects not necessary to arrive at a finding of abuse: Interestingly, the CCI did not consider it essential to demonstrate the actual effects of the alleged abusive conduct to arrive at a finding of contravention; an evaluation of potential impact and the likelihood of the anti-competitive effects was sufficient.

13. First penalty order under the new regime: This is the first penal order under the new regime introduced under the Competition (Amendment) Act, 2023. The quantum of penalty and basis for its determination were guided by the Competition Commission of India (Determination of Monetary Penalty) Guidelines, 2024. The CCI appears to have adopted a lenient approach, with a penalty of INR 213.14 crore (approx. USD 25 million) based on only 4%, out of a permissible 30%, of Meta’s total average relevant turnover (along with a reduction to account for certain mitigating factors).

Related Link(s):

The final order of the CCI and the interim order of the Tribunal can be accessed here (https://www.cci.gov.in/antitrust/orders/details/1156/0) and here (https://efiling.nclat.gov.in/nclat/order_view.php?path=L05DTEFUX0RvY3VtZW50cy9DSVNfRG9jdW1lbnRzL2Nhc2Vkb2Mvb3JkZXJzL0RFTEhJLzIwMjUtMDEtMjMvY291cnRzLzEvZGFpbHkvMTczNzYyMTM3NjU0NDc0NzU3Njc5MWZmODA5MTFhNS5wZGY=) respectively.

Authors – Sonam Mathur – Partner; Dhruv Dikshit- Managing Associate and Devika Dhawan –  Associate

Disclaimer: This article only highlights key issues and is not intended to be comprehensive. The contents of this article do not constitute any opinion or determination on, or certification in respect of, the application of Indian law by Talwar Thakore & Associates (“TT&A”). No part of this alert should be considered an advertisement or solicitation of TT&A’s professional services. This communication is confidential and may be privileged or otherwise protected by work product immunity.