CCI jumped the gun with its investigation, WhatsApp tells court

The Competition Commission of India shouldn’t have ordered a probe into the platform’s privacy policy when two courts are already seized of the issue, WhatsApp told the Delhi High Court on Tuesday.

The messaging platform has challenged the initiation of an anti-trust investigation against its privacy policy which was updated this year. According to the new policy, WhatsApp users will no longer have the option of opting out of sharing information with the company’s parent, Facebook Inc.

Last month, the CCI had made a prima facie finding that the messaging platform has contravened competition law provisions through its “exploitative and exclusionary conduct” in the garb of the policy update. It had also noted that users will have to mandatorily accept the new terms and policy in their entirety, including the terms with respect to sharing of their data across all the information categories with other Facebook companies.

WhatsApp and Facebook have now challenged this CCI order before the Delhi High Court.

Arguing for WhatsApp, Senior Advocate Harish Salve told court the competition regulator has “jumped the gun” by ordering the investigation. Salve cited two main reasons to support his arguments:

That the 2021 update doesn’t anyway change the privacy policy. The policy is not altered and is only an amplification of existing privacy policy.

The competition regulator couldn’t have ordered an investigation on this issue since the high court and Supreme Court are already hearing cases on it.

Similar to the 2016 policy update, users will get the choice to opt out. This, however, will be limited to those users who chose to opt out from accepting the privacy policy in 2016, Salve clarified. The issues in the case are related to privacy, which have to be decided by a constitutional court, and not competition law, Salve told the bench.

Can’t be made party to the investigation, Facebook argues

Senior Advocate Mukul Rohatgi argued for Facebook and questioned the exercise of the CCI’s jurisdiction against the social media company.

Rohatgi also referred to the Bharti Airtel Ltd. judgment to question the CCI’s decision to order an investigation when two courts are already examining the platform’s privacy policy. In the Airtel judgment, the top court had stopped the CCI from looking into a telecom sector issue since the sector regulator was already examining the matter.

In the present case, Rohatgi said, their case stands on an even better footing as it’s the Supreme Court and the high court which are seized of the matter. The regulator should have respected the comity of court principle, he said.

Rohatgi also told the bench that nobody approached the regulator and the investigation was initiated on a suo-motu basis. “When there is a challenge before the Constitutional bench, can a statutory authority say that we will start suo-motu action?” Rohatgi said.

Issue pertains to access to data; not privacy, CCI responds
Arguing for the regulator, Additional Solicitor General Aman Lekhi opposed the argument that the CCI had overstepped its powers by ordering this investigation.

Lekhi made a distinction between cases pending before the apex court and high court and the issue on which the CCI has ordered an investigation. The cases before courts relate to the issue of privacy whereas the CCI is looking into the impact of the metadata being collected by the companies and its impact on the competition landscape, he stated.

Lekhi told the court that information such as who is calling whom, the device being used, the time and purpose—all qualify as metadata. These, he said, qualify as metadata which could be used for customer profiling and consumer preferences, and could be monetised, leading to network effects. Both WhatsApp and Facebook would be able to dominate and abuse the market, Lekhi pointed out.

The question of monetisation, targeted advertising and its impact on the competition landscape can be looked into by the regulator, Lekhi told the court.

A month before the WhatsApp order, the CCI had released its market study of the telecom sector in which it had said privacy can take the form of non-price competition. In the era of data aggregation, competition analysis must also focus on the extent to which a consumer can “freely consent” to action by a dominant player. Abuse of dominance can take the form of lowering the privacy protection and therefore fall within the ambit of antitrust as low privacy standard implies lack of consumer welfare, the regulator had pointed out.

WhatsApp’s updated policy: Court challenges so far
Two petitions have been filed in the Delhi High Court. The division bench of the high court has issued notice in the petition filed by Seema Singh. The central government has filed its response saying the policy isn’t in line with Indian rules. The government has requested for directions that the policy shouldn’t be given effect until the court rules on the matter.

The Supreme Court, too, has sought the government’s response in an application filed by Karmanaya Singh Sareen, the petitioner who had earlier challenged the 2016 privacy policy of the messaging platform. The challenge to the 2016 policy is currently pending before a constitution bench. Bloomberg