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The Competition Commission of India (CCI) on Wednesday ordered an investigation into WhatsApp’s new privacy policy for breaching The Competition Act, 2002.
The regulator noted that the existing policy allows users to choose whether they want to share their data with WhatsApp and Facebook, but the latest version mandates that they agree to such data sharing mechanism with Facebook.
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It appears the consent to sharing user data with other Facebook companies has been made a precondition for availing WhatsApp service, it added.
“Users are required to accept the unilaterally dictated ‘take-it-or-leave-it’ terms by a dominant messaging platform in their entirety, including the data sharing provisions therein, if they wish to avail their service,” CCI said in a statement.
The regulator alleged that WhatsApp has breached provisions of Section 4 of the Act, and data collection by the company appears to be unduly expansive and disproportionate. It seeks to capture payments data, language and time zone information, device operation and location information. These data would be shared with Facebook and other third party companies.
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In a response submitted to the CCI, WhatsApp said that the 2021 update raises no concerns from a competition perspective, but aims to provide more transparency by explaining collection, usage and sharing of data. The messaging app further requested the commission to refrain from starting an investigation into its new privacy policy.
CCI said WhatsApp has a dominant position in the Indian market and due to the network effect, the messaging app has grown in strength and this limits its substitutability. It further causes a lock-in effect for users as switching to another platform only makes sense if all or most of a user’s social contacts also switch to the same platform.
This can be validated from the fact that despite an increase in downloads of competing apps like Signal and Telegram, user base of WhatsApp did not suffer much loss. The absence of any credible competitor in the messaging market allows WhatsApp to compromise quality in terms of protection of data and can deem it unnecessary to provide users with a choice of opting out of such policies.
The commission questioned the explanation of WhatsApp in Terms of Service and FAQs, calling it broad, vague and unintelligible.
“Such opacity, vagueness, open-endedness and incomplete disclosures hide the actual data cost that a user incurs for availing WhatsApp services,” CCI said.
The regulator explained that reduction in consumer data protection and loss of control over their personalised data by the users can be taken as reduction in quality under the antitrust law. Besides, lower data protection by a dominant firm can lead to consumer exploitation and exclusionary effects in neighbouring or even in unrelated markets.
The investigation has been ordered under Section 26(1) of the Competition Act, 2002. The regulator asked its investigation arm, the Director General to carry out the investigation and submit a report within 60 days from the receipt of order.