NCLAT partially relieves Meta, WhatsApp in data sharing dispute with CCI

The National Company Law Appellate Tribunal (NCLAT) has granted partial relief to WhatsApp LLC and Meta Platforms Inc. in their appeal against an order by the Competition Commission of India (CCI). The CCI had found both companies in breach of Section 4(2) of the Competition Act, 2002, and imposed a monetary penalty on Meta, along with other directives.  
The case originates from the CCI's suo moto cognizance of WhatsApp's 2021 update to its Terms of Service and Privacy Policy. This update drew scrutiny over potential anti-competitive practices.  
 
WhatsApp's 2021 update to its Terms of Service and Privacy Policy was not the first time the company had faced legal challenges regarding its policies. Earlier, in 2016, WhatsApp had updated its Terms of Service and Privacy Policy, which was challenged in the Delhi High Court.   WhatsApp challenged the CCI's proceedings in the Delhi High Court, but its writ petition was dismissed. A subsequent appeal (LPA) was also dismissed by the Delhi High Court, and the Supreme Court also dismissed a Special Leave Petition (SLP) filed by Meta Platforms. The Supreme Court, however, allowed that the CCI had the jurisdiction to take up the case.

  The CCI eventually passed an order on November 18, 2024, finding WhatsApp and Meta in violation of the Competition Act.  
  The NCLAT's recent decision comes after hearing arguments from both the appellants and the CCI. The tribunal has stayed the implementation of a five-year ban on WhatsApp sharing user data for advertising purposes, a key part of the CCI's original order.   However, the tribunal has directed WhatsApp and Meta to comply with other directives issued by the CCI, specifically those related to sharing user data for purposes other than advertising.     In addition to the partial stay on the data sharing ban, the NCLAT has also addressed the monetary penalty imposed on Meta. The tribunal has directed Meta to deposit 50% of the penalty amount within two weeks.  

The NCLAT's order also acknowledges the Digital Personal Data Protection Act 2023, which has been passed but is yet to be enforced. The tribunal has granted both parties the liberty to seek modification of the current order if the new data protection act or any other statutory provisions related to data protection and sharing come into effect.
 
  The tribunal has emphasized the need for an early decision in the appeals, directing the parties to complete necessary pleadings within six weeks and scheduling the hearing for March 17, 2025.    
This decision by the NCLAT provides partial relief to WhatsApp and Meta while underscoring the ongoing scrutiny of data privacy and competition concerns in the digital space. The case highlights the complex interplay between competition law and data protection regulations, and its implications for major tech companies operating in India. Also Read: NCLAT defers hearing on Zee-Sony merger petitions filed by IDBI Bank, Axis Finance