2022 (8) TMI 154 - AT - Indian Laws

Anti-competition - Appellant has alleged the anti-competitive conduct of WhatsApp for which he has submitted certain information, particularly, relating to the privacy policy of WhatsApp - changes in privacy policy resulting into the social network join to keep enjoying the services of WhatsApp - abuse of dominant position enjoyed by the group in the matter and such changes are thus in violation of Section 4(2) of the Act or not - cross border economic terrorism - HELD THAT - It is also very much clear that the 2012 Privacy Policy of WhatsApp, allowed WhatsApp to amend its privacy policy and share user s information with a third-party service provider to the extent it is reasonably necessary to maintain or improve the WhatsApp service and to protect the security or integrity of the WhatsApp site or servers. WhatsApp has not also washed off its hands for keeping the users unaware in case of data breach, if it comes to their notice as was confirmed by the Ld. Sr. counsel for R2. WhatsApp has ensured that all users received clear and prominent notice of the 2016 update including the revised privacy policy and an opportunity to consent to the 2016 update by accepting the same within 30 days by clicking agree for existing users and agree and continue for new users - WhatsApp has also implemented a use control that has helped the existing users the additional choice not to allow their account information to be used by Meta to improve their Meta advertisements and products experiences without their consent. This is over and above the 2012 WhatsApp Privacy Policy. What the Appellant has failed to prove that the Opposite party/Respondent is abusing its dominant position in the relevant market by introducing privacy policy which compels its users to share their account details and other information with Facebook as the Respondent has provided the users opt out of sharing user accounts information with Facebook within 30 days of agreeing to the updated of service and privacy policy. It also reveals that they have updated the policy for improving infrastructure and delivery system alongwith tools for securing systems and fighting with spam, abuse or such negative activities. This Tribunal is to do the judicial scrutiny of the orders passed by R1. While examining the issue, the citations available within Indian jurisdiction are primarily to be relied and if, no reference, is there then only, we can opt for the judgment in foreign jurisdiction. Each countries statute has its own nuances. We have already seen that Italian Competition Authority looks at consumer protection as well as Competition Law whereas Indian Competition Act is primarily concerned with preventing practices having adverse effect on Competition, to promote and sustain competition in market etc. The facts brought out in foreign jurisdiction may be different from the facts what has been brought for Indian jurisdiction so all these reliance on foreign proceedings is misplaced and needs to be disregarded as they have no relevance insofar as the present case is concerned. There are no inconformity in the findings of Competition Commission of India and hence, the Appeal deserves to be dismissed and accordingly is dismissed.

Summary

Issues Involved:
1. Anti-competitive conduct of WhatsApp.
2. Alleged abuse of dominant position by WhatsApp.
3. Breach of Information Technology Act, 2002.
4. Unfair terms and conditions imposed by WhatsApp.
5. Jurisdiction and governing law of California.
6. Data protection and user privacy concerns.

Issue-wise Detailed Analysis:

1. Anti-competitive Conduct of WhatsApp:
The appellant alleged that WhatsApp's changes to its privacy policy post its acquisition by Facebook constituted anti-competitive conduct. The appellant claimed these changes forced users to share their account details with Facebook, amounting to an abuse of WhatsApp's dominant position and violating Section 4(2) of the Competition Act, 2002. The appellant argued that this practice adversely affected competition within India.

2. Alleged Abuse of Dominant Position by WhatsApp:
The appellant contended that WhatsApp's privacy policy changes led to an abuse of its dominant position. As per the appellant, WhatsApp holds substantial market share in India, installed on 95% of Indian Android devices, and has more than 70 million users in India. The appellant claimed that the removal of subscription fees and the resultant increase in user base were tactics of predatory pricing, aimed at eliminating competition and recouping losses through advertising revenue.

3. Breach of Information Technology Act, 2002:
The appellant argued that WhatsApp's new privacy policy breached the Information Technology Act, 2002. The appellant highlighted that WhatsApp's terms and conditions allowed it to change its privacy policy without user consent, which was unfair and contrary to the earlier promises of data privacy.

4. Unfair Terms and Conditions Imposed by WhatsApp:
The appellant claimed that WhatsApp imposed unfair terms and conditions on users, including:
- High discretion in changing terms without informing users.
- Pre-selection of opt-in for new terms, giving users only 30 days to accept or delete their accounts.
- Termination of services without reason.
- Jurisdiction limited to California, making legal redressal impractical for Indian users.
- Lack of policy for minimum data protection standards.

5. Jurisdiction and Governing Law of California:
The appellant argued that WhatsApp's terms, which restricted jurisdiction to California and limited liability to USD 100, were unfair to Indian users. This made it practically impossible for Indian users to seek legal redressal.

6. Data Protection and User Privacy Concerns:
The appellant raised concerns about data protection, alleging that WhatsApp's new privacy policy allowed it to share user data with Facebook, including users' contacts who were not using WhatsApp. The appellant argued that users were not adequately informed about the extent of data collection and usage, and that WhatsApp did not have a duty to inform users in case of data breaches.

Tribunal's Observations and Judgment:

A. Dominance and Market Position:
The tribunal agreed with the Competition Commission of India's (CCI) finding that WhatsApp was in a dominant position in the relevant market. However, being dominant does not automatically imply abuse of that position.

B. Abuse of Dominant Position:
The tribunal found no evidence that WhatsApp abused its dominant position. The tribunal noted that WhatsApp provided users with the option to opt-out of sharing information with Facebook within 30 days of agreeing to the updated terms. The tribunal also observed that WhatsApp's end-to-end encryption ensured that neither WhatsApp nor third parties could access user messages.

C. Predatory Pricing:
The tribunal dismissed the allegation of predatory pricing, noting that many other communication apps were available for free. The tribunal observed that WhatsApp's removal of subscription fees was likely a response to industry practices and competitive pressures.

D. Breach of Information Technology Act:
The tribunal held that issues related to the Information Technology Act, 2002, were outside its purview and should be addressed by the appropriate authorities. The tribunal noted that the Delhi High Court had already examined the matter and found no infirmity in WhatsApp's 2016 update.

E. Unfair Terms and Conditions:
The tribunal found that the appellant failed to prove that WhatsApp imposed unfair or discriminatory conditions. The tribunal noted that users were free to discontinue using WhatsApp if they disagreed with the updated terms and conditions.

F. Jurisdiction and Governing Law:
The tribunal acknowledged the appellant's concerns about jurisdiction and governing law but found no evidence that these terms were unfair or discriminatory under the Competition Act.

Conclusion:
The tribunal dismissed the appeal, finding no contravention of the provisions of Section 4 of the Competition Act by WhatsApp. The tribunal upheld the CCI's order, concluding that WhatsApp did not abuse its dominant position, and the allegations of predatory pricing and unfair terms were unsubstantiated. The tribunal also noted that issues related to the Information Technology Act should be addressed by the relevant authorities.