The National Company Law Appellate Tribunal (NCLAT) on Tuesday set aside the Competition Commission of India's (CCI's) direction debarring Meta and WhatsApp from sharing user data with other Meta group entities for advertising purposes for five years.
The tribunal, however, retained the penalty of Rs 213.14 crore on the company, along with the other directions issued by the CCI.A two-member Bench -- of NCLAT Chairperson Justice Ashok Bhushan and Technical Member Arun Baroka -- also struck down the CCI's finding that Meta had abused its dominant position in the messaging market to strengthen its hold on online advertising.It had earlier, in January, granted interim relief to the tech companies by staying the five-year data-sharing ban, noting that such a restriction could disrupt WhatsApp's free-to-use business model.The dispute dates back to January 2021, when WhatsApp rolled out its updated privacy policy mandating data sharing with Meta group firms.
The CCI took suo motu cognizance, observing that the update effectively removed users' choice to opt out of data sharing. The regulator said the 'take it or leave it' approach took away users' autonomy and violated the Competition Act, 2002.In its order last year in November, the CCI fined Meta and WhatsApp Rs 213.14 crore, prohibited them from sharing user data with Meta or its affiliates for five years, and directed them to disclose the specific purpose behind each category of data collected.Meta Platforms and WhatsApp then challenged the CCI order.
Experts say the NCLAT judgment removes one of the key charges of abuse of dominance.
The NCLAT's ruling significantly weakens the CCI's core finding of 'abuse of dominant position', a charge that carries far greater regulatory and reputation weight than a procedural breach, said Raheel Patel, partner, Gandhi Law Associates.
The NCLAT ruling is likely to temper the CCI's treatment of digital platforms, he said.
"It underscores that competition enforcement must rest on demonstrable market harm, not on speculative concerns about data or privacy," Patel added.
B Shravanth Shanker, advocate-on-record in the Supreme Court, said the NCLAT decision's strength lay in clarifying evidentiary standards and analytical frameworks essential for coherent digital regulation.
-- Bhavini Mishra, Business Standard
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