How WhatsApp’s 2021 Policies Hint Market Domination



Image Credits: Business Today



Competition Commission of India (CCI)has initiated a suo moto case against WhatsApp and its parent company Facebook Inc. concerning privacy policy change of the WhatsApp app. The CCI has ordered the Director-General to investigate probable monopoly creation by WhatsApp. With Indians being largely dependent upon WhatsApp for instant communication, it has been considered as a step in right direction. It will also widen the horizon of competition and privacy laws in India.


INSIGHTS FROM COMPETITION COMMISSION SUO MOTO CASE


· Right to Choose - If WhatsApp to be considered as a service-provider, then users play the role of consumers. In India, Consumer Protection Act, 2019 provides consumers the right to choose independently, but this policy takes away from the user the freedom to choose. If users do not accept to data-sharing conditions, it will restrict services to consumers. Before this, WhatsApp has also changed its policy in 2016 and 2019, thus respected the consumers’ right to choose. Then why not to respect this time?


The 2021 policy is 'take-it-or-leave-it', but these strategies have a huge impact on the privacy rights of individuals and the data localization policy of the country. WhatsApp has been arguing that its metadata continues to be shared with its sister companies like Facebook since 2016. This argument can be easily refuted: firstly, the policy-change of 2016 was accepted because it had provided the option to 'opt-out' from sharing the data with Facebook. Secondly, the market condition has changed dramatically in the past four years. Because at that time data localization, e-commerce, internet, e-payments were not readily used by market leaders to target customers as it is done in 2021.


· Monopoly over data –In its new policy, WhatsApp has mentioned that it will be sharing data of business accounts with Facebook. This will allow parent company to act as data monopolistic in Indian market, where it can easily exploit consumers as well as business owners. In India, WhatsApp has more than 15 million (July 2020) business accounts. The number has surely increased due to online business and the push for the digital economy. With this much capacity of the network, the company will surely enjoy a dominant position in the market concerning data and will be easily able to cut the competition even at the cost of users' privacy.


WhatsApp, to save itself, has cited the precedents of the Harshita Chawla v. WhatsApp and Facebook, where the subject of data localization was considered as the subject out of the purview of competition laws. In the Vinod Kumar Gupta v. WhatsApp Inc., The Honourable Competition Commission held that breach of information and technology does not come under the jurisdiction of the Information and Technology Act, 2000.


But to make it clear for WhatsApp, the facts and impact of the case laws are substantially different. The matter of data localization, means the data to be collected, processed and stored within the geographical boundaries of country. still does not come under the ambit of the Competition Commission, but when the data is used to create a monopoly in the market by curbing the competition, then the case of WhatsApp is maintainable the before Competition Commission.


· Post-facto analysis of domination – WhatsApp claims in its reply to notice provided by Competition Commission that the company has not used its data to dominate the market. As provided in the judgment of Harshita Chawla, WhatsApp is not liable because the allegation for the domination over the market is premature.

To handle this situation, the Commission has section 33 of Competition Act, 2002 which provides that 'if such acts are about to be committed then it has the power to restrain the party from carrying out such act'. In the provided situation, WhatsApp through its payment app and a large amount of data can easily dominate the market. It has already influenced the market passively with the maximum number of users.

It also enjoys the second-largest share in the market for instant messaging only after its parent company Facebook messenger. In January 2021, when consumers started downloading Signal and Telegram, there was not much loss in the user base of WhatsApp because the contacts of users need to be shifted to alternate platforms and it is not easy for users to leave WhatsApp. Due to the above-mentioned reasons, the dominance of the company is crystal clear.


WHAT IF DATA GETS SHARED?


· Market Domination – Facebook merged with WhatsApp in 2014 and competition regulators across the globe were not able to stop this acquisition. During the pandemic, Facebook held a shareholding of 9.99% in Reliance Jio, India's largest telecom company, and in return got an investment in JioMart via WhatsApp. What can be deduced is that corporate giants are establishing a monopoly and curbing the competitors on price and non-price factors such as data, innovation, and targeted advertisement.


· Data Protection – In the 21st century, data have the potential for countries to dominate others in passive manner. It can stop governmental, economic or social activities on a mere click of the mouse. Storage is one of the essential factors to share the data. The storage is a matter of concern for two reasons - India does not allow for data globalization and at present it lacks sound infrastructure to store within its territories.

At the same time India cannot fully trust Facebook infrastructure. It has been infamous for the data leaks, whether it is the Cambridge-Analytica scandal (2018) or the recent data-leak revealed by Hudson Rock which had data of more than 2 lakh Indian Facebook users. Due to lack of local infrastructure on one hand and data localization on another, data of million of users is at risk to be misused.


THE ROAD AHEAD


WhatsApp has privacy and data sharing policies all over the world. Presence of General Data Protection and Regulations (GDPR) in European countries restricts WhatsApp to share data with third parties including Facebook. Netherlands and Germany are exploring to introduce ex-ante measures in digital market. It means action can be taken sensing the harm and not waiting for it to become tangible. However, India cannot restrict companies to share data due to the absence of statutory laws and rules. Since 2019, the Data Protection Bill has been with parliamentary committee to review it and waiting the clearance from the houses.

Such delays are costing privacy rights of Indians. Adding on to this, there is an urgent requirement to make users aware of the terms and conditions before providing the acceptance. Large-scale informative video advertisement should be sponsored by the government in local language. This will ensure informative decisions by ultimate users.

To derive benefit in long run, government need to introduce data protection and privacy in the school curriculums. The Joint participation of the government and private sector is required to increase human, financial and technical resources. It can be used to establish dedicated research and educational institutes, which will provide rich legal and commerce insights.










REFERENCES:

1. Competition Commission of India, Suo Moto Case No. 01 of 2021

2. The Competition Act, 2002

3.https://thefederal.com/analysis/embedded-in-whatsapps-new-privacy-policy-is-a-competition-issue/

4. https://vidhilegalpolicy.in/blog/embedded-in-whatsapps-new-privacy-policy-is-a-competition-issue/

5. https://www.business-standard.com/article/finance/whatsapp-pay-clearance-rbi-raises-data-localisation-concerns-with-npci-119110701722_1.html

6. https://www.thehindu.com/opinion/editorial/privacy-and-surveillance-the-hindu-editorial-on-whatsapp-user-policy-change/article33629357.ece

7. https://indianexpress.com/article/explained/facebook-data-leak-explained-7268515/#:~:text=The%20leaked%20data%20also%20contained,more%20than%2039%2C000%20from%20Chennai.&text=Earlier%20this%20year%2C%20personal%20information,countries%20had%20been%20leaked%20online.

8. https://indiacorplaw.in/2021/04/cci-on-whatsapp-privacy-policy-some-inspirations-some-questions.html

9. https://indianexpress.com/article/technology/social/whatsapp-new-privacy-policy-delayed-signal-telegram-7148374/

10. https://www.businesstoday.in/technology/news/whatsapp-updates-privacy-policy-asks-users-to-accept-terms-of-service-to-continue-using-messaging-app/story/427144.html



ARTICLE BY: SHREYA MALOO, BALLB, BATCH OF 2025, THE RAJIV GANDHI NATIONAL UNIVERSITY OF LAW, PATIALA, PUNJAB


EMAIL: shreyamaloo001@gmail.com