NCLAT reserves verdict in Meta, WhatsApp challenge to ₹213 crore CCI penalty over 2021 privacy policy

The National Company Law Appellate Tribunal (NCLAT) on Thursday reserved judgment in appeals filed by Meta Platforms Inc and WhatsApp challenging the Competition Commission of India’s (CCI) verdict that ordered them to pay ₹213.14 crore for abuse of dominance through their 2021 privacy policy update. (Meta, WhatsApp v. CCI).In today's hearing, Senior Advocate Arun Kathpalia, appearing for WhatsApp, told the Tribunal that the CCI had proceeded on “factual inaccuracies” in holding that the 2021 update enlarged WhatsApp’s ability to collect and share data. “My 2016 and 2021 policies give me the same ability to collect. My 2021 policy is more transparent and detailed,” Kathpalia argued. He took the Tribunal through side-by-side extracts of the two frameworks to show that account details, profile photos and usage logs were already covered under the 2016 policy. The later update merely provided illustrations of categories already in place, he said.“Merely because illustrations are being given has not expanded my capacity,” he stressed..Senior Advocate Amit Sibal, appearing for Meta, said that the Commission’s findings were based on exaggerations and speculation. “These embellishments are factually wrong,” he told the Bench, referring to claims that WhatsApp shared sensitive categories of data with Meta for advertising. He argued that user data was not shared with Meta for advertising purposes except in limited, optional contexts such as “Click to WhatsApp” features. Even there, he noted, users were shown a transparency screen and were not compelled to engage with businesses through that feature..Senior Advocate Balbir Singh, appearing for the CCI, had earlier submitted that Meta’s size, resources and integration across Facebook, Instagram, Messenger and WhatsApp entrenched its dominance in the messaging app market. “No other player comes close in terms of user dependence, network effects and cross-platform synergy,” he argued.Singh said that WhatsApp exploited this dominance by imposing the 2021 privacy policy on a “take it or leave it” basis. Mandatory notifications created what he described as a manufactured sense of urgency, leaving users fearful of losing access to a vital communication tool. The policy also removed the limited opt-out safeguard available under the earlier framework, compelling even those who had rejected cross-platform data sharing in 2016 to now accept it, he argued..In November 2024, the CCI imposed a ₹213.14 crore penalty on Meta, finding that WhatsApp’s 2021 privacy policy update amounted to abuse of dominance. The regulator concluded that the “take-it-or-leave-it” approach imposed unfair conditions on users, undermined autonomy and violated provisions of the Competition Act, 2002.The CCI directed WhatsApp not to share user data with Meta or its affiliates for five years, and further required the platform to specify the purposes of every category of data collected and prohibit making data sharing a precondition for accessing its services in India..WhatsApp and Meta challenged the order before the NCLAT. In January 2025, the NCLAT stayed both the penalty and the five-year data sharing ban, observing that such a ban could “lead to the collapse of the business model of WhatsApp LLC since the platform is free.” The penalty was stayed subject to WhatsApp/Meta depositing 50 per cent of the amount. .Earlier, Senior Advocates Kapil Sibal and Mukul Rohatgi had appeared for Meta and WhatsApp. .Follow Bar and Bench channel on WhatsAppDownload the Bar and Bench Mobile app for instant access to the latest legal news.