NCLAT admits Meta, Whatsapp pleas against CCI's Rs 213 crore penalty over abuse of dominance

New Delhi: Appellate tribunal NCLAT on Thursday admitted the petitions filed by Meta Platforms and Whatsapp against an order passed by fair trade regulator CCI which imposed a penalty of Rs 213.14 crore for abuse of market dominance.

After hearing the initial submissions from Meta and CCI (Competition Commission of India), a two-member bench of the National Company Law Appellate Tribunal (NCLAT) said the issue requires consideration.

"We find that the submission raised by the parties needs consideration. We admit both the appeals," said the NCLAT bench which also comprised its Chairperson Justice Ashok Bhushan.

However, over the interim relief to stay the CCI order, NCLAT said it will decide next week.

During the proceedings, the counsel appearing for Whatsapp and Meta Platform requested the appellate tribunal to stay the CCI order. However, this was opposed by the counsel appearing for the Competition Commission of India.

On November 18, the CCI imposed a penalty of Rs 213.14 crore on social media major Meta for unfair business ways with respect to the WhatsApp privacy policy update done in 2021.

Meta Platforms and Whatsapp have challenged this order before the NCLAT, which is an appellate authority over the orders passed by the CCI.

Senior Advocates Kapil Sibal and Mukul Rohatgi, appearing for Meta and WhatsApp, contended that the CCI had overstepped its jurisdiction by ruling on WhatsApp's privacy policy as the matter is sub-judice before a Constitution Bench of the Supreme Court.

"CCI has gone into the entity's privacy policy. It is before 5 judges of the Supreme Court. It has no jurisdiction to deal with it," he said.

Moreover, there is no complaint in this case and CCI has come to an "erroneous conclusion" on dominance, but it did not take into account 'effect analysis' of that.

"Without an effect analysis, you cannot come to the conclusion," said Sibal, adding the CCI has not even examined what is the data that is being shared.

He further said CCI has barred WhatsApp from sharing data collected on its platform with other Meta companies or Meta company products for advertising purposes for five years and alleged: "they are trying to destroy the business model."

"No app can survive without monetisation," he said, adding the similar platforms as Telegram and Signal have their own models of monetisation. Moreover, search apps also monetise in their own ways.

He further sought an immediate stay on the CCI order, which was directed to be implemented by February 19.

Sibal said: "Let the Supreme Court decide on the privacy policy and let the statutory rules come, then you can (NCALT) take up the matter and decide. Moreover balance of convenience in our favour as we have been operating this for years."

While Mukul Rohatgi, representing WhatsApp, said its usage is free and everybody is sending messages from 'Good Morning to Good Night' including videos and nobody is charged.

"How can anybody survive on a free model? This is not a sinister sharing... This is just a business model. Facebook and WhatsApp today are under one ownership. They started in 2016. This is a benign kind of sharing not a sinister," he said.

However, advocate Samar Bansal, appearing for the CCI, opposed these arguments and submitted that there was no overlap between the case in the Supreme Court and the investigation conducted by the CCI.

Replying to a query from the bench, he said data privacy law will only look at personal data, while the competition law looks at business data.

Moreover, unlike in Europe, Indian users do not have the choice to opt-out, Bansal said. In the European Union region, privacy policy of WhatsApp provides users option to right to access, rectify, port and erase user information, as well as the right to restrict and object to certain processing of user information.

In its 156-page order, the CCI had on November 18, 2024, directed Meta to cease and desist from anti-competitive practices.

According to the CCI order, Meta and WhatsApp have also been asked to implement certain behavioural remedies within a defined timeline to address the anti-competition issues.

The regulator has called for implementing various remedial measures, including barring WhatsApp from sharing data collected on its platform with other Meta companies or Meta company products for advertising purposes for five years.

Among other directions, CCI has said that sharing of user data collected on WhatsApp with other Meta companies or Meta company products for purposes other than for providing WhatsApp services shall not be made a condition for users to access WhatsApp services in India.