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The Competition Law Case Against Whatsapp’s 2021 Privacy Policy Alteration

Posted by Aman Nair and Arindrajit Basu at Dec 31, 2020 12:00 AM |
Having examined the privacy implications of Whatsapp's changes to its privacy policy in 2021, this issue brief is the second output in our series examining the effects of those changes. This brief examines the changes in the context of data sharing between Whatsapp and Facebook as being an anticompetitive action in violation of the Indian Competition Act, 2002.


Executive Summary

On January 4, 2021, Whatsapp announced a revised privacy policy through an in-app notification. It highlighted that the new policy would impact user interactions with business accounts, including those which may be using Facebook's hosting services. The updated policy presented users with the option of either accepting greater data sharing between Whatsapp and Facebook or being unable to use the platform post 15th May, 2021. The updated policy resulted in temporarily slowed growth for Whatsapp and increased growth for other messaging apps like Signal and Telegram. While Whatsapp has chosen to delay the implementation of this policy due to consumer outrage, it is important for us to unpack and understand what this (and similar policies) mean for the digital economy, and its associated competition law concerns. Competition law is one of the sharpest tools available to policy-makers to fairly regulate and constrain the unbridled power of large technology companies.

While it is evident the Indian competition landscape will benefit from revisiting the existing law and policy framework to reign in Big technology companies, we argue that the change in Whatsapp’s privacy policy in 2021 can be held  anti-competitive using legal provisions as they presently stand. Therefore, in this issue brief, we largely limit ourselves to evaluating the legality of Whatsapp’s privacy policy within the confines of the present legal system. 

First, we dive into an articulation of the present abuse of dominance framework in Indian Competition Law. Second, we analyze whether there was abuse of dominance-bearing in mind an economic analysis of Whatsapp’s role in the relevant market by using tests laid out in previous rulings of the CCI

The framework for determining abuse of dominance as per The Competition Act is based on three factors:

1. Determination of relevant market

2. Determination of dominant position

3. Abuse of the dominant position

In two previous orders in 2016 and 2020, CCI has held that Whatsapp is dominant in its relevant market based on several factors which we explore. These include:

  1. Advantage in user base, usage and reach,

  2. Barriers to entry for other competitors

  3. Power of acquisition over competitors.

However, in both orders, CCI held that Whatsapp did not abuse its dominance by arguing that the practices in question allowed for user choice. We critique these judgments for not reflecting the market structures and exploitative practices of large technology companies. We also argue that even if we use the test of user choice laid down by the CCI in its previous orders concerning Whatsapp and  Facebook, the changes made to the privacy policy in 2021 did abuse dominance,and should be held guilty of violating competition law standards.

Our analysis revolves around examining the explicit and implicit standards of user choice laid out by the CCI in its 2016 and 2020 judgements as the standard for evaluating fairness in an Abuse of Dominance claim.We demonstrate how the 2021 changes failed to meet these standards. 

Finally, we conclude by noting that the present case offers a crucial opportunity  for  India to take a giant step forward in its regulation of big tech companies and harmonise its rulings with regulatory developments around the world.

The full issue brief can be found here