WhatsApp Faces Antitrust Investigation in India Over Privacy Policy Changes

Recent planned alterations to WhatsApp’s policies are encountering resistance in India, its largest user base. The Competition Commission of India (CCI), the nation’s antitrust authority, has initiated an investigation into the messaging service’s revised privacy policy.

Investigation Ordered by Indian Antitrust Body

The CCI alleges that the Facebook-owned platform potentially violated local antitrust regulations under the guise of a policy update. A formal investigation has been ordered, with the Director General (DG) tasked with assessing the extent and impact of data sharing resulting from user consent.

The DG is required to finalize the investigation and submit a comprehensive report within a 60-day timeframe.

Concerns Regarding User Consent and Market Dominance

The Indian watchdog highlighted the “take-it-or-leave-it” nature of WhatsApp’s privacy policy and terms of service as warranting a thorough examination, considering the company’s substantial market position and power.

WhatsApp responded with a statement expressing its commitment to protecting user communications through end-to-end encryption and maintaining transparency regarding new optional business features.

Impact on User Choice and Data Portability

The CCI’s order suggests that WhatsApp’s dominance allows it to potentially compromise data protection standards. The absence of viable competitors in the Indian instant messaging market may reduce the incentive to offer user-friendly options like ‘opt-out’ choices.

Furthermore, the order points out the difficulties users face when attempting to transfer their data to alternative applications, and the network effects that discourage switching platforms. This could increase switching costs for users who disagree with the policy changes.

Potential Data Sharing with Facebook

The investigation will also explore the possibility of third-party service providers, such as Facebook, gaining access to user communications for business purposes. Specifically, the DG will investigate whether Facebook might require businesses to utilize collected data as a condition for service provision.

Ongoing Legal Challenges and Government Opposition

This action by the CCI follows a protracted legal dispute WhatsApp has been navigating in India concerning its new policy, scheduled to take effect this May. The Indian government recently asserted that the planned privacy update infringes upon local laws.

A filing with the Delhi High Court requested the court to prevent WhatsApp from implementing the update within India.

Government Concerns and Previous Communication

Earlier this year, India’s IT ministry communicated its “grave concerns” to WhatsApp head Will Cathcart regarding the update and its potential ramifications, requesting a withdrawal of the proposed changes.

Facebook’s Role and Perceived Lack of Transparency

Despite ongoing efforts by WhatsApp to address New Delhi’s concerns, India remains unconvinced by Facebook’s explanations. The CCI’s order strongly criticized Facebook, stating it is a direct beneficiary of the updates and accusing it of feigning ignorance regarding their potential impact.

Data Sharing History and Recent Updates

WhatsApp has been sharing certain information with its parent company, Facebook, since 2016. Last year, the company announced plans to share additional user data – including phone numbers and location – with Facebook, representing a significant update to its terms of service.

User Backlash and Policy Extension

An in-app alert requesting user consent for the new terms in January triggered substantial backlash, prompting many users to explore alternative messaging services like Signal and Telegram. In response, WhatsApp extended the deadline for users to review the new policy by three months.

India as a Key Market for WhatsApp and Facebook

With over 450 million monthly active users, India represents WhatsApp’s largest market, and also a crucial market for Facebook. The company has significantly increased its investment in India in recent years.

Last year, Facebook invested $5.7 billion in Jio Platforms, India’s leading telecom operator, owned by Mukesh Ambani, the country’s wealthiest individual.