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2021 (4) TMI 1385 - HC - Indian LawsExamination of WhatsApp's 2021 Update to its Terms and Privacy Policy - Violation of Section 4 of Competition Act, 2002 - directing the Director General of the respondent no.1 to cause an investigation to be made into the WhatsApp 2021 Update to its Terms and Privacy Policy - whether the respondent no.1 should, in deference to the petitions pending before the Supreme Court and before this Court, not have taken suo moto cognizance and directed an investigation to be made by the Director General? HELD THAT - In the present case, the issue as to whether the 2016 Update/2021 Update announced by WhatsApp in any manner infringes upon the Right of Privacy of the users guaranteed under Article 21 of the Constitution of India is pending adjudication before the Supreme Court and this Court. The question regarding the 2016 Update/2021 Update not giving an option to opt-out is also an issue before the Supreme Court and this Court. However, the same cannot necessarily mean that during the pendency of those petitions, the respondent no.1 is completely denuded of the jurisdiction vested in it under the Competition Act, 2002 or that it must necessarily await the outcome of such proceedings. Therefore, it is not a question of lack of jurisdiction of the respondent no. 1, but rather one of prudence and discretion. It must be remembered that any finding by the respondent no. 1 on any of the issues would always be subject to the findings of the Supreme Court or of this Court in and would be binding on the respondent no. 1. Such is the case in every proceeding before the respondent no. 1. Nevertheless, while such issues are being determined by the Supreme Court or by the High Court, it cannot be stated that the respondent no.1 has to necessarily await the outcome of such proceedings before acting further under its own jurisdiction. The respondent no.1 has to proceed within its own jurisdiction, applying the law as it stands presently. In this regard, it is noted that the submission of the learned ASG appearing for the respondent no. 1 that the scope of inquiry before the respondent no. 1 is not confined only to the issues raised before the Supreme Court or before this Court, but is much vaster in nature. Similarly, in P. Sudhakar Rao Ors. vs. U. Govinda Rao Ors. 2013 (7) TMI 1231 - SUPREME COURT , the Supreme Court observed that the pendency of a similar matter before a larger Bench did not prevent the Supreme Court from dealing with the issue on merit. As far as the submission of Facebook on its impleadment in the investigation is concerned, the same is only stated to be rejected. A reading of the Impugned Order passed by the respondent no.1 itself shows that Facebook shall be an integral part of such investigation and the allegations in relation to sharing of data by Whatsapp with Facebook would necessarily require the presence of Facebook in such an investigation. There are no merit in these present petitions. The same are dismissed.
Issues Involved:
1. Challenge to the order dated 24.03.2021 under Section 26(1) of the Competition Act, 2002. 2. Examination of WhatsApp's 2021 Update to its Terms and Privacy Policy. 3. Jurisdiction of the Competition Commission of India (CCI) amidst pending judicial challenges. 4. Prima facie opinion on potential violation of Section 4 of the Competition Act, 2002. 5. Involvement of Facebook in the investigation. Detailed Analysis: 1. Challenge to the Order Dated 24.03.2021 under Section 26(1) of the Competition Act, 2002: The petitions challenged the order dated 24.03.2021, where the respondent no.1 (CCI) formed a prima facie opinion on the violation of Section 4 of the Competition Act, 2002, by the petitioners and directed an investigation into WhatsApp's 2021 Update to its Terms and Privacy Policy. The petitioners argued that the CCI should refrain from taking suo moto action as the issues were already pending before the Supreme Court and the High Court. 2. Examination of WhatsApp's 2021 Update to its Terms and Privacy Policy: WhatsApp updated its Terms of Service and Privacy Policy on 4th January 2021. It claimed that the 2021 Update aimed at providing users with further transparency about data collection, usage, and sharing, without expanding WhatsApp's ability to share data with Facebook. The petitioners argued that the 2021 Update did not negate user choices made under the 2016 Update. 3. Jurisdiction of the Competition Commission of India (CCI) Amidst Pending Judicial Challenges: The petitioners contended that the CCI should refrain from investigating the 2021 Update due to pending judicial challenges in the Supreme Court and High Court. The court, however, held that the CCI's jurisdiction was not ousted merely because similar issues were pending before higher courts. The court emphasized that the CCI could proceed with its investigation within its jurisdiction and that its findings would be subject to the Supreme Court's and High Court's decisions. 4. Prima Facie Opinion on Potential Violation of Section 4 of the Competition Act, 2002: The CCI formed a prima facie opinion that WhatsApp is dominant in the relevant market for OTT messaging apps through smartphones in India. The CCI noted the "take-it-or-leave-it" nature of the 2021 Update, the opacity and vagueness in the privacy policy, and the potential anti-competitive implications due to data concentration. The CCI concluded that the 2021 Update might degrade non-price parameters of competition, such as quality and data protection, and could amount to an imposition of unfair terms in violation of Section 4(2)(a)(i) of the Act. 5. Involvement of Facebook in the Investigation: Facebook argued that it should not be involved in the investigation as the 2021 Update was related to WhatsApp alone. However, the court rejected this argument, stating that Facebook, being the parent company and involved in data sharing with WhatsApp, was integral to the investigation. Conclusion: The court dismissed the petitions, holding that the CCI had the jurisdiction to investigate the 2021 Update despite pending judicial challenges. The court emphasized that the CCI's findings would be subject to the Supreme Court's and High Court's decisions. The court also upheld the inclusion of Facebook in the investigation, given its integral role in the data-sharing practices under scrutiny.
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