WhatsApp Privacy Case: CCI Can’t Be Asked To Hold Its Hands, Delhi High Court Says
(Photographer: Roy Liu/Bloomberg)

WhatsApp Privacy Case: CCI Can’t Be Asked To Hold Its Hands, Delhi High Court Says

In directing an investigation into WhatsApp LLC’s privacy policy and the data that gets shared with its parent Facebook Inc., the competition regulator hasn’t exceeded its jurisdiction, said the Delhi High Court in its order.

The messaging platform had challenged the initiation of an anti-trust investigation against its privacy policy which was updated this year. In March, the CCI had made a prima facie finding that WhatsApp has contravened competition law provisions through its “exploitative and exclusionary conduct” in the garb of the policy update.

CCI Well Within Its Powers To Investigate, High Court Says

WhatsApp and Facebook had approached the high court against the CCI’s direction. They argued that the regulator couldn’t have ordered an anti-trust investigation since a challenge to the privacy policy is pending before the Supreme Court and Delhi High Court.

Relying on the Supreme Court’s ruling in Bharti Airtel Ltd.’s case, WhatsApp and Facebook questioned the CCI’s decision to order an investigation when two courts are already examining the platform’s privacy policy. In the Bharti Airtel judgment, the apex court had stopped the CCI from looking into a telecom sector issue since the sector regulator was already examining the matter.

But a single judge bench of Justice Navin Chawla dismissed this argument.

It pointed out that in spite of having come to the conclusion that Telecom Regulatory Authority of India is the expert regulator of the telecom sector, the apex court had stated it would not be sole repository of the jurisdiction to deal even with competition law violations. Similarly, pending cases on the privacy issue does not mean that the CCI is completely denuded of the jurisdiction vested in it under the Competition Act, 2002, or it must necessarily await the outcome of such proceedings.

“….mere pendency of a reference before the larger bench doesn’t denude the other courts of their jurisdiction... Similarly, merely because of the pendency before the Supreme Court and before this Court, CCI cannot be said to be bound to necessarily hold its hands and not exercise the jurisdiction otherwise vested in it under the statute.” —Delhi High Court  

In a lot of cases, parties are challenging CCI’s jurisdiction on grounds that some other statutory authority or court is seized of the matter, Abir Roy, partner at Sarvada Legal, pointed out. For instance, Amazon, Flipkart, Monsanto.

But the high court has now made it clear the Supreme Court is examining the policy from the lens of fundamental right to privacy while the issue before the CCI is much broader, Roy said.

The Director General, CCI will now examine whether WhatsApp’s take-it or leave-it privacy policy is abusive since it’s a dominant entity in over-the-top messaging apps market. Also, whether the data that’s being shared is to improve WhatsApp’s quality of service or to enable Facebook to monetise it.
Abir Roy, Partner, Sarvada Legal

Also, the language of the policy, which the CCI had termed as “opaque” in its prima-facie order as it used terms like “includes”, “such as’’ in the context of data that’ll be shared with Facebook, Roy said.

In directing this investigation, the CCI has joined its global counterparts in Germany, Italy and Turkey to examine whether data sharing between WhatsApp and Facebook violates competition law.

Last year, Germany’s Federal Court of Justice concluded that Facebook is dominant in the social media networks market and is abusing this position through its terms of use. The German competition authority has termed Facebook’s data-sharing practices as abusive and barred it from combining user data collected from its subsidiaries like WhatsApp, Oculus, Masquerade and Instagram without free consent- a decision that’s now being reviewed by the European Court of Justice.

In 2017, the Italian competition authority imposed a fine of €3 million on WhatsApp for having forced its users to share their personal data with Facebook.

And earlier this year, Turkey’s competition board initiated an investigation into WhatsApp new privacy policy and whether obligations under it violate the country’s anti-trust rules.

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