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WHATSAPP AND THE COMPETITION CONUNDRUM

Author: Priyanka Priyadarshini, II year of LL.B. from Campus Law Centre, Delhi University


Whatsapp updated its privacy policy which significantly alters the ways in which it will process user data. It will allow the app to share extensive metadata and business chats with its parent company Facebook. This is not only a violation of the Right to Privacy as guaranteed under Part-III of the Constitution of India (Justice KS Puttaswamy & Ors. v. Union of India & Ors) but is also a clear abuse of the dominant position of the company in violation of section 4 of the Competition Act, 2002.

Section 4 of the Competition Act, 2002 states that no enterprise shall abuse its dominant position.. In Harshita Chawla v. Whatsapp and Facebook (Case No 15 of 2020), which challenged the introduction of Whatsapp Pay under Section 4, CCI had held the tech-giant to be a dominant player in the market for Over The Top messaging apps through smartphones in India. The commission, however, stopped short of calling it an abuse of dominant position in this case as the customers had the option to opt or not opt for the payment service. The introduction of the new privacy policy makes a departure from this very aspect and requires the Commission to take a fresh look at the matter in the current context.

The Competition Commission in the Harshita Chawla case, as well as the Delhi High Court in Chaitanya Rohilla v. UOI & Ors, based their decisions on a mirage of choice or consent that customers supposedly have. The view taken by the concerned authorities is myopic. Firstly, 97% of smartphone users in India use the app for daily communication which amounts to approximately 400 million users. This makes Whatsapp the most popular messaging app with deep market penetration. It has already been held as the dominant player in the relevant market.

Secondly, the massive market penetration causes a network effect which forces customers to stick with the app even though they might not like it. It makes it difficult to shift to other apps. Various business communication and Whatsapp groups which serve important professional and commercial purposes leave customers with no option but to remain on the app. Alternatives will become a real possibility only if every user shifts to another app. Personally, being a college student who communicates regarding classes on Whatsapp class groups, it is impossible to shift to another app until the entire university shifts as well. The network effect allows Whatsapp to work independently of other competitive forces in the market while also favouring its usage among the masses above all other competitors.

The third important factor is the ‘take-it-or-leave-it’ approach taken by the company. The user does not have the option to opt-out of the services or experience provided by the new privacy policy. If one chooses to reject the policy, their access to the app ceases. This is a departure from the approach taken in the introductory phase of Whatsapp Pay where no such condition applied. Therefore, the element of free consent has been negated which goes against the Right to Privacy under Article 21 of the Constitution while being a complete abuse of the dominant position that it enjoys in the market.

Fourthly, Facebook, the parent company, is well known worldwide for its aggressive vertical integration, acquisitions and leveraging its capital base strategies to put up entry barriers that kill competition. European Union as well as the United States have already taken steps in order to inquire and control the monopolistic tendencies of the company. Similar awareness among the Indian authorities at this stage would go a long way in protecting excellent but still a nascent Indian tech industry.

Fourthly, Facebook has been notorious for data breaches and unauthorized data disclosures. Facebook was imposed with a fine of £500,000 under GDPR by the United Kingdom for the Cambridge Analytica data breach. Several European nations have taken strict action against Facebook for breaches, unauthorized access and violations. Moreover, serious questions have been raised regarding Facebook’s advertising policy which has the potential to spread misinformation and derail democracies as witnessed by the United States of America as well as here closer home.

Fifthly, authorities, as well as privacy laws, have to take into account the relative unawareness of the masses regarding the privacy laws, terms of use and the implication of intrusion in the private sphere by corporates. An average Indian rarely goes through the complex privacy policies of the applications that it uses on the smartphone. Therefore, the conversations regarding privacy have to move forward from just free consent and informing the user regarding data collected via a long drawn privacy policy. The governments all over the world have to take an approach that prevents the corporate and authorities from having a 360-degree view of a person’s life and to benefit from such information in violation of the citizens' right to privacy.

Whatsapp has a different privacy policy for Europe because of GDPR. The data of European citizen’s enjoy far more protection than that of an Indian citizen. There is an urgent need for a data protection law in the country. The proposed Personal Data Protection Bill, however, needs a good discussion and certain deletion and additions before it becomes efficient enough to tackle the threats posed by the big corporations to the citizens of this country. The Parliament should, without any further delay, discuss the bill in its entirety and give this country the much-needed law. It is the utmost responsibility of the Indian government to protect its citizens from being reduced to mere consumers by recognizing their right to privacy.

REFERENCES

1. Bhalla, Tarush. “Plea filed against Facebook, WhatsApp at NCLAT.” mint, mint, 24 November 2020, https://www.livemint.com/companies/news/case-against-whatsapp-facebook-moves-to-nclat-11606150708197.html. Accessed 17 January 2021.

2. Mandavia, Megha. “WhatsApp may face CCI heat over privacy policy changes.” WhatsApp may face CCI heat over privacy policy changes, The Economic Times, 19 January 2021, https://m.economictimes.com/tech/technology/whatsapp-may-face-cci-heat-over-privacy-policy-changes/amp_articleshow/80338361.cms. Accessed 25 January 2021.

3. Nishith Desai. “No Abuse of Dominance by WhatsApp and Facebook: A Shot in the Arm for WhatsApp Pay?” The National Law Review, The National Law Review, 30 January 2021, https://www.natlawreview.com/article/no-abuse-dominance-whatsapp-and-facebook-shot-arm-whatsapp-pay. Accessed 17 January 2021.

4. Pahwa, Nikhil. “Here’s Why Whatsapp Won An Antitrust Case In India.” Medianama, Medianama, 5 June 2017, https://www.medianama.com/2017/06/223-whatsapp-antritrust-india/. Accessed 17 January 2021.

5. S.S. Rana & Co. Advocates. India: Abuse Of Dominant Position An Anti‐Competitive Practice, Mondaq, 29 January 2018, https://www.mondaq.com/india/antitrust-eu-competition-/668306/abuse-of-dominant-position-an-anti8208competitive-practice. Accessed 15 January 2021.


Author's Biography

Priyanka Priyadarshini is a second-year law student at Campus Law Centre, Delhi University. She was graduated in Political Science from Lady Shri Ram College for Women with a diploma degree in Conflict Transformation and Peacebuilding from ASSK Peace Centre. Corporate compliance and commercial dispute resolution are her areas of interests. She regularly researches and writes about these topics.