INDIA: Whatsapp Gains Relief from the Competition Commission

The Competition Commission of India has rendered its decision in the case of "Shri Vinod Kumar Gupta, Chartered Accountant and WhatsApp Inc (Case No 99 of 2016)".

The informant had contended before the Competition Commission that WhatsApp, a popular messaging service, was abusing its dominant position under S. 4 of the Act, by forcing users to share account and other information with WhatsApp’s parent company Facebook, without admitting the exact nature of the disclosure to them, and further, indulging in predatory pricing by not charging any fees for its services.

Under S. 4(1) of the Competition Act, “no enterprise shall abuse its dominant position”. Further, the explanation to the section clarifies that the expression “dominant position” means a position of strength, enjoyed by an enterprise, in the relevant market, in India, which enables it to:

Operate independently of competitive forces prevailing in the relevant market

Affect its competitors or consumers in the relevant market in its favour

The Commission found that though WhatsApp did hold a dominant position in the market, there had been no abuse of the position, since the disclosure had been made to the users regarding the sharing of information. The Commission stated that the sharing of information with parent company Facebook was to improve services provided to users. Further, WhatsApp provided users the option of “opting out” of sharing user account information within 30 days of agreeing to the updated terms of service and privacy policy. The Commission also found force in WhatsApp’s submissions regarding the security systems employed by it, including end-to-end encryption.

The Commission also looked to the decision of the Delhi High Court in Karmanya Singh Sareen and Others Vs. Union of India and Others (W.P. (C) 7663/2016) where the Petitioners, who were users of WhatsApp, had prayed that sharing user data of subscribers of WhatsApp with any entity, including Facebook, be prohibited, and protection and safety of privacy of details/data of every kind of user of WhatsApp should be ensured. The Court had stated in Karmanya Singh Sareen that 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 (2015) 8 SCC 735). The three judge bench in K.S. Puttaswamy had referred the matter to a larger bench, and the matter is still pending. The Delhi High Court had also stated that it was always open to WhatsApp users to delete their accounts in the event that they did not want their information shared, since their information would be deleted from WhatsApp’s servers along with their account.

In response to the submissions of the Informant that WhatsApp was engaging in predatory pricing, the Commission held that there were several players in the smartphone texting application market, which did not charge for their services, just like WhatsApp. The Commission also commented that not charging fees appears to be standard industry practice.

There was no evidence found that WhatsApp had contravened any of the provisions of S. 4 of the Competition Act.

The WhatsApp-Facebook information sharing issue has taken on greater proportions with the debate on privacy currently raging in India. However, in terms of competition law, there does not appear to have been any contravention by WhatsApp and Facebook.