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TMI Blog2022 (8) TMI 154X X X X Extracts X X X X X X X X Extracts X X X X ..... s 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 sys ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ant, representing a society, named, Fight for Transparency Society. As per the submission of the learned counsel for the Appellant that the main objective of society is to bring the voice of people at large before the appropriate judicial forums for protection of their rights and secure social justice etc. 4. The brief facts of the case as stated by the Appellant is as follows: a. The Appellant has alleged the anti-competitive conduct of WhatsApp for which he has submitted certain information, particularly, relating to the privacy policy of WhatsApp. b. It is also stated that WhatsApp has made many changes to its privacy policy for the first time from the time Facebook acquired it. c. All the changes in the privacy policy resulted into the social network join to keep enjoying the services of WhatsApp. Such changes in privacy policy is an 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. As a result, it has laid to a mechanism of cross border economic terrorism and will have an adverse effect on the competition within India. d. Inter alia, he has also stated that the WhatsApp presence is ov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f subscription fee it previously charged users and become fully free in Jan.2016. Previously it used to charge 0.99$ per annum subscription fees after one year of free trial, and IOS users were charged one off charge for lifetime. The same removal of charges was confirmed by the official blog of WhatsApp. i. The subscription amount was the source of income for WhatsApp which was to the tune of $10.8 million before Facebook acquisition, with that gone their remained no source of income for the group, and had to depend on Facebook i.e. parent company (with huge financial as well as other resources) to maintain its business. The number of users of WhatsApp also increased from 450 Million to over 1 billion people. Thus, it is asserted that the WhatsApp while removing the fees of subscription, actually provided the service below the cost, largely sourcing the remaining funds from parent company that is Facebook and the same helped it increase the customer base substantially. j. The WhatsApp group has been able to enlarge the user base substantially with removal of subscription fees after acquisition by Facebook, now using the data base of user for advertising can easily fetch the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... giving any reason: Despite the largest users of nearly 20 cores having been hooked to the service, R2 reserves the right to terminate services at any point of time without any intimation. Creating a possibility wherein the entire country can be brought to a standstill (ref. page no. 174 of the Appeal). Jurisdiction and Governing Law of California: Despite having the largest user base in any country of 20 crores in India, the jurisdiction for disputes is only California. Practically, not feasible for any user from India to approach for any legal grievance redressal. Though beyond the reach of most of the users in India but even if, with great determination, a user is able to get a favourable order, the maximum liability which R2 has limited itself is USD 100 only. (ref. page 173 of the Appeal, Limitation of Liability) No policy laid down for minimum standard for protection of data: Contrary to the expressed commitment for reasonable commercial protection of the data collected given in 2012 TOS including privacy policy, this commitment withdrawn from 2016 TOS including privacy policy. (Ref. page No. 169 (Old policy)/ Ref. page no. 173 (new policy) of the Appeal). Data is ow ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not take the duty even to inform the owner to information i.e. the user, as to whom the information has been transferred. Normally, being the owner of data, the user must be aware of how the license given by R2 is being utilized or the data being sub-licensed. Implications of this generic power are wide and many, as large number of Top Military personnel, bureaucrats, politicians and policy makers use the services of WhatsApp on regular basis, it has acquired license to sell their data, including, but not limited to, location, people they communicate with (which can be quiet sensitive), to even Pakistan and China (as they can sell it to China as well). This can dangerous to the nation at large. Power to influence election of a nation with Facebook Inc (of which R2 is a part has been seen in Cambridge Analytica case. Further when fake news was spread using these platforms. (Ref. page no. 178 of the Appeal. Proving Terms and Condition in English language alone: Even after having the largest user base of more than 20 core in India, it has not made efforts to provide translated version in vernacular language. Whatever translated version exists has only been translated partially. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cation apps are internet based and provide additional functionalities to the users. For example, users of communication apps can see when their contacts are online, when they are typing or when they last accessed the application. Further, instant communication apps can be used through smartphones only whereas traditional electronic communication services can be used through any mobile phone. There are also differences in the pricing conditions in both the above said modes of communication. 'WhatsApp' is a free to download communication application which does not charge any fee from its users for providing the services and just uses internet connection on the device to send instant messages, connect voice calls etc. Further, text messaging through traditional modes can be done between people who do not use the mobile service of the same service provider, whereas instant messaging services typically require you and your contacts to be on the same communication application platform. Thus, the Commission is of the view that the relevant product market in this case may be considered as 'the market for instant messaging services using consumer communication apps through smart ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the information available in the public domain, globally 'WhatsApp' is having a billion monthly active users and within India, it is having 160 million monthly active users. According to a study of 'Jana and mCent', 97% of the smartphone users in India use a communication app daily and the most popular is 'WhatsApp', which is installed on 96% of devices and has more daily active users than any other communication app in India. As per the said report, 'WhatsApp' is installed in 2.3 times more devices than home-grown messaging app Hike. According to a study conducted by 'TNS/TNC Connected Life Study 2015', 56% of the internet users in India use 'WhatsApp' and 51% use 'Facebook' every day. Further, amongst India's internet users, 'WhatsApp' tops the list of instant messaging apps. Further, citing a study conducted by Global Web Index, the Informant has submitted that 64% of mobile users in India use 'WhatsApp' which is the largest as compared to any other mobile messaging app usage. Based on the the above, the Commission is of the opinion that the OP is in a dominant position in the relevant market as defined ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... entity including 'Facebook' should be prohibited and protection and safety of privacy of details/ data of every kind of user of 'WhatsApp' should be ensured; vide its order dated 23rd September, 2016 has observed that: However, the contention of the petitioners is that the proposed change in the privacy policy of WhatsApp amounts to infringement of the Right to Privacy guaranteed under Article 21 of the Constitution of India. Even this cannot be a valid ground to grant the reliefs as prayed for since the legal position regarding the existence of the fundamental right to privacy is yet to be authoritatively decided {Vide: K. S. Puttaswamy (Retired) and Anr. v. Union of India Ors., (2015) 8 SCC 735}. Having taken note of the inconsistency in the decisions on the issue as to whether there is any right to privacy guaranteed under our Constitution, a three Judge Bench in K.S. Puttaswamy (supra) referred the matter to a larger Bench and the same is still pending. 18. Be that as it may, since the terms of service of WhatsApp are not traceable to any statute or statutory provisions, it appears to us that the issue sought to be espoused in the present petit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... its customers. 19. The Commission also observes that there are no significant costs preventing the users to switch from one consumer communication apps to another. It may be due to the following reasons: (i) all consumer communication apps are offered for free of cost or at a very low price (mostly free), (ii) all consumer communication apps are easily downloadable on smartphones and can co-exist on the same handset (also called 'multi homing') without taking much capacity along with other apps, (iii) once consumer communication apps are installed on a device, users can pass on from one app to its competitor apps in no-time, (iv) consumer communication apps are normally characterised by simple user interfaces so that costs of switching to a new app are minimal for consumers, and (v) information about new apps is easily accessible given the ever increasing number of reviews of consumer communication apps on apps store like google play store etc. Furthermore, the expansion of Hike Messenger to nearly 100 million user base within three years of launching their services into the aforesaid market reflects that in this market, there are no significant barriers to entry and c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cy and a user is required to provide their mobile number and users are only required to enter at least some characters in the name field and they are not required to provide a real name. Since WhatsApp is not verifying user name and so is the case with sharing of other information including profile photo is optional. c. It was submitted by the Ld. Sr. Counsel that WhatsApp with Meta under the 2016 update, but the data sharing for Meta s own use was to achieve three specific purposes (as also recognized by R1): (i) business analytics (for example, assessing how may WhatsApp users were also users of Meta); (ii) administrative, operational, and security purpose (such as preventing spam, abuse, infringement, understanding services use); and (iii) improving Meta ads and services (for example, giving Meta users better friend suggestions and more relevant advertisement). d. WhatsApp cannot and would not access or share user s chats with third parties. It is also submitted that WhatsApp completed the implementation of end-to-end encryption in 2016 for all messages on WhatsApp. All types of WhatsApp messages (including chats, group chats, images, videos, voice messages and files) are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onal safety of WhatsApp, our users or others , and (iii) in case of an acquisition or merger of R2 with a third party, transfer or assign the information collected from users to such third party. These are standard provisions, which reserve the commercial rights of any service provider. Though the 2012 Privacy Policy allowed R2 to update its privacy policy without seeking further user consent, R2 went above and beyond what was required under the Privacy Policy. R2 ensured that all users received clear and prominent notice of the Update, including the revised Privacy Policy, and an opportunity to consent to the Update, if they so choose, by affirmatively accepting the Update. Existing users were given thirty days to decide whether to consent voluntarily to the Update by clicking Agree , and new users similarly had to click Agree Continue. In addition, Respondent No. 2 implemented a control that gave existing users the further choice not to have their account information used by Facebook, Inc. to improve their Facebook advertisements and product experiences. It is, therefore, humbly submitted that since the Update cannot be said to have been imposed by Respondent No. 2 on its ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unfairly withdrawn by the update. The Appellant has completely misconstrued the postings by Respondent No. 2. This post is irrelevant in the present case, as the proposed business model of charging users a fee was never implemented in India except for a short duration to iPhone users. In any event, the post merely sought to explain Respondent No. 2's then proposed revenue generation model of charging a fee rather than generating revenue through advertisements / ads. It is submitted that the 2012 Privacy Policy of Respondent No. 2 and Update are wholly consistent with standard industry practice with respect to the collection and use of information to provide and improve the services. There are myriad examples across online markets, such as the Vodafone/Kabel Deutschland merger, Google's acquisition of Nest, Viber's acquisition by Rakuten, and Tumblr's acquisition by Yahoo, where intellectual property and data, including personal information, is shared by a company with its acquirer in order to help the combined company build upon the assets and capabilities of the acquired company. A rule that precluded such integration and data sharing efforts would damage invest ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the improved quality of services and products that result from the use of this data, and those products and services are often provided at no cost for the user. The Appellant has not provided any evidence or reasoning as to how such collection and usage of user information has damaged him or any other user of WhatsApp. In fact, the sharing of information has in no way diminished, but to the contrary has improved, the quality of services offered. Further, if the Appellant's theory were to be accepted, then when any of the technology companies named above or any other company operating in India changes its Privacy Policy to better serve its users, such a change would constitute an unfair act by resulting in a change to the user experience. Such a result would, of course, be absurd, and would only serve to harm Indian users of these services by die incentivizing innovation and change. This further shows why the Appellant's allegation that the change to the Privacy Policy was unfair should be rejected. h. WhatsApp is not dominant in any relevant market, and consequently, cannot be said to have abused its dominant position; Respondent No. 2 humbly submits that the definition ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... many such services. Second, Respondent No. 2 submits that market shares in and of themselves, do not establish dominance. In a technology driven market that is dynamic and constantly evolving, such as the market under consideration in the present case, market shares tend to fluctuate drastically and are not sufficient to show dominance. This is also recognized by the EC in Facebook/WhatsApp where it held that the consumer communications sector is a recent and fast growing sector which is characterised by frequent market entry and short innovation cycles in which large market shares may turn out to be ephemeral. Respondent No. 1 has recognized this in its recent decision in the Ola Case, where it acknowledged the dynamic nature of innovation driven markets, and expressed its hesitation to interfere where such interference poses a risk of prescribing sub-optimal solutions to nascent and developing markets. Considering factors such as rapid market expansion, low entry barriers and effective entry of competitors, countervailing forces in the market, and the nature of competition in the dynamic innovation driven markets, Respondent No. 1 held the mobile application based taxi aggregat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e present appeal. Learned counsel for the appellant referring to the rejoinder filed before the Commission submits that certain allegations had also been made against the Facebook Inc. , but the Commission has not dealt with such allegations in the impugned order. We have heard the learned counsel for the parties and perused the record. We find that the Facebook, Inc. and Facebook India Online Services Private Limited were not the party-respondent before the Commission and they were not even heard nor any decision taken with regard to them. For the said reason we also do not want to hear them at the stage of appeal. Hence, we allow the prayer to delete their names from the array of the respondents. Accordingly, it is ordered to delete the names of Facebook, Inc. and Facebook India Online Services Private Limited from the array of the respondents. However, it is made clear that if the case is remanded, it will be open to the appellant to agitate the matter against the aforesaid parties before the Commission if there is any allegation against them. With the aforesaid observations, I.A. Nos. 52 and 53 of 2017 stands disposed of. Post the appeal on 15th November, 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... discriminatory conditions in services. The Appellant has failed to prove with any data or any reasoning other than that inbuilt system has provided the user with the option to accept the update or disconnect from WhatsApp site. i. We do not find anything unusual in this as it was not compulsorily put on the users to accept their terms and conditions under pressure. Users were free to come out of their site if they are having a doubt or any other reason. j. We are also observing these days that all e-commerce site asking for such option and only when the user is confident that it is not a spam site, then users put agree otherwise, they come out the sites to save their data. k. We also do not find any unfair or discriminatory conditions, if WhatsApp has accepted the responsibility that it is end to end encrypted messaging with high quality voice and video calling and other user friendly features. l. Let it be very clear that in any merger / amalgamation the transfer of business involves existing users/service providers/vendors to opt for the new organization and this is the way the update is accepted or rejected. m. It is also very much clear that the 2012 Privacy ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s 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. r. An organization may be a dominant organization but only when it abuses its dominant position then only Section 4 of the Competition Act, 2002 is attracted. For brevity and clarity the same is reproduced below: Section 4 of the Competition Act, 2002; 4. Abuse of dominant position.- (1) No enterprise shall abuse its dominant position. (2) There shall be an abuse of dominant position under sub-section (1), if an enterprise,- (a) directly or indirectly, imposes unfair or discriminatory- (i) condition in purchase or sale of goods or services; or (ii) price in purchase or sale (including predatory price) of goods o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is the organization which lends such services develops some business modules to generate sufficient income to sustain its growth. Hence, based on all these discussions, we do not find even the allegations of predatory pricing has any substance. t. As far as reliance on foreign proceedings pointed out by the Appellant is concerned, what we observed in certain foreign jurisdiction the provisions of Indian Competition Act and those foreign jurisdiction, Competition Act have different connotation e.g. Italian Competition Authority under Article 20, 24, 25 of the Italian Court provisions do not related to abuse of dominance or any Anti-Competitive Behavior which are prohibited under the (Indian) Competition Act 2002 vide Section 4. Unlike, the Competition Commission of India/R1, the Italian Competition Authority (AGCM) bears two hats and enforces Italian and European Consumer Protection law as well as Competition Law. However, these are distinct functions and there are different departments within the AGCM responsible for the implementation of the antitrust and competition laws, and consumer protection laws (AGCM, Organization Chart, available at http://en.agcm.it/en/about-us/or ..... 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