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Probe into WhatsApp’s privacy policy: Delhi HC nixes plea by Facebook’s Indian subsidiary against CCI order

The Delhi High Court dismissed a plea by Facebook India Online Services Private Ltd challenging an order of the Competition Commission of India (CCI) which directed an investigation against it with respect to WhatsApp’s 2021 privacy policy.

The CCI had, in an October 2021 order, clubbed the petitioner in a suo motu case investigating issues that arose from the updated privacy policy and terms of service for WhatsApp users and had sought information from the petitioner. Facebook India Online Services Private Ltd challenged this clubbing order stating that the CCI did not give any reasons while asking it to join the investigation.

Recognising the association between the petitioner and Facebook Inc, a single judge bench of Justice Yashwant Varma on September 28 observed that the scope of CCI’s investigation is not “merely limited to the operations and conduct of business by WhatsApp and Facebook Inc alone” but also extends to the subsidiaries and other companies incorporated by the latter.

The petitioner is admittedly a sister concern of Facebook Inc (now Meta Inc) providing sales and marketing services relating to advertising in India as well as other support services to it. “If that be the scope of the matter which is envisaged to be investigated by the Director General, the court fails to appreciate how the petitioner could possibly contend that its clubbing in the suo motu case was unjustified,” the HC observed.

“In view of the above, the impugned order of the Commission clubbing the information received in respect of its activities with the suo motu case was not only justified but also imperative for the purposes of the investigation,” the court held while dismissing the petition.

Previously, WhatsApp LLC and Facebook Inc – of which the petitioner is a subsidiary – had challenged this investigation order before the high court which was dismissed in April 2021. The two companies then appealed against it, which was also dismissed by a division bench of the high court on August 25 this year.

The CCI, in its April 2021 suo motu order directing the investigation, had observed that the new policy contained provisions pertaining to sharing of users’ personal information with “Facebook Inc and its subsidiaries”. The terms required users to “mandatorily accept the same in its entirety” including the sharing of their data across all the information categories with other Facebook companies.

The CCI noted that users were owners of their personal data and are entitled to be informed about the extent, scope and sharing of such data by WhatsApp “with other Facebook companies”. It went on to observe that prima facie the conduct of WhatsApp in sharing the personalized data of its users with other Facebook companies appeared to be lacking in “transparency, unfair to users and not based on a voluntary and specific user consent”. The CCI then proceeded to frame directions for the commencement of an investigation.

The petitioner argued before the high court that there must be a prima facie case for initiating an investigation under Section 26(1) of the Competition Act, and the clubbing order does not record this anywhere. The petitioner argued that the clubbing could have been justified if CCI had come to the conclusion that the activities of the petitioner per se required investigation and that a prima facie case stood made out against it.

The counsel for the respondent had argued that the subject matter of the CCI’s investigation were the various issues which arose out of the Privacy Policy framed by WhatsApp LLC and the sharing of data of its users amongst Facebook and its related companies. The petitioner had been called upon to “join the investigation” and that its rights had not been adjudicated at this stage.

The high court further held that the CCI was not adjudicating upon the rights of the petitioner and had merely called for the commencement of an inquiry. “While passing a direction to investigate under Section 26(1) the Commission is merely calling upon the Director General to assist it in evaluating whether an infraction of the Act has been made out… the court comes to the conclusion that the instant challenge is misconceived and clearly lacks merit,” the Court held.

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