CCI order flawed, offers no reason for 5 year ban for data sharing: Meta to NCLAT

Both Meta and WhatsApp concluded their arguments before the National Company Law Appellate Tribunal (NCLAT).

New Delhi: Meta on Tuesday argued before appellate tribunal NCLAT that the CCI had provided no reasons for imposing a 5-year ban on the sharing of data between Meta and WhatsApp for advertisement purposes, as its counsel alleged "flawed approach" and “seven misses” by the fair trade regulator in its order.

Senior Advocate Amit Sibal, appearing for Meta, submitted that in a dynamic and fast-moving industry, the necessity of a five-year term is "entirely unexplained".

Sibal argued CCI initiated proceedings against Meta and WhatsApp "on the basis of misinformation" in 2021, including that the new privacy policy would break WhatsApp’s end-to-end encryption and provide Meta with access to the content of users’ chats.

He asserted that the 2021 Update did not impact the privacy of users’ personal messages at all.

"The CCI failed to contact a single user or advertiser to assess the impact of the 2021 Update, still declaring the update to be coercive. There is also no evidence of any competitors being harmed or foreclosed as a result of the limited data sharing from WhatsApp to Meta on account of the 2021 Update," Sibal submitted.

Citing misapplication of law, Sibal submitted that CCI issued findings based on "speculative conduct and hypothetical scenarios".

"On the issue of denial of market access, the CCI erroneously asserts that there is no requirement to establish dominance in the market where the denial of access has occurred. This is contrary to past legal practice and precedent," he said.

On the issue of leveraging, the CCI has failed to show how the limited data sharing from WhatsApp to Meta causes foreclosure or harm to Meta’s competitors.

"In fact, the evidence on record shows intense competition, new entrants and thriving incumbents like Snapchat, Google, Amazon, Affle, Twitter (now, X) etc," he said.

While Senior Advocate Arun Kathpalia, appearing for WhatsApp, submitted that under the competition law, remedies must be proportionate and necessary. However, the remedies imposed by the CCI are arbitrary.

Both Meta and WhatsApp on Tuesday concluded their arguments before the National Company Law Appellate Tribunal (NCLAT).

NCLAT was hearing a petition by the tech giant, which challenged a penalty of Rs 213.14 crore on the social media major for unfair business ways with respect to the WhatsApp privacy policy update done in 2021.

The CCI will start its arguments on September 18 and 19 in this matter.

The appellate tribunal, in January this year, had stayed the five-year ban imposed by the competition watchdog CCI on data-sharing practices between WhatsApp and Meta for advertising purposes, offering a breather to the tech giant.

In November, the CCI imposed a penalty of Rs 213.14 crore on Meta for unfair business practices with respect to the WhatsApp privacy policy update done in 2021.

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