Friday, February 3, 2023

WhatsApp’s 2021 privacy policy creates a take-it-or-leave-it situation for users : Delhi High Court

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The Delhi High Court today held that the privacy policy WhatsApp’s 2021 creates a “take-it-or-leave-it” situation,making a tough choice before its users for and virtually forcing them into an agreement and then sharing their sensitive data with Facebook.

A Division Bench comprising of the Chief Justice Satish Chandra Sharma and Justice Subramonium Prasad stated that WhatsApp holds a dominant position which in turn makes it difficult for the users to shift to another platform despite dissatisfaction with the product.

The Court said although in the year 2021, there was an increase in the downloads of Telegram and Signal when the 2021 policy was announced, however the WhatsApp users remained unchanged.

The Court heldBy and large, to ensure retention of its user base and to prevent any other disruptive technology from entering the market, data is utilised by tech companies to customise and personalise their own platforms so that its userbase remains hooked. When data concentration is seen through this prism, it does give meaning to the new adage that “data is the new oil”, and, as noted in the CCI Order dated 24.03.2021, it raises competition concerns because it prima facie amounts to imposition of unfair terms and conditions upon its users, thereby violating Section 4(2)(a)(i) of the Competition Act.”

The 2021 policy was a modified version of its 2016 policy as with new terms, there was no “opt-out” option ,the presence of which led the Competition Commission of India (CCI) to say that  that the 2016 Policy did not violate the Competition Act.

The observations were made while the appeals by WhatsApp and its parent company Facebook challenging a single-judge’s order which refused to stay a probe by CCI were dismissed.

 The Facebook’s argument that it is a separate and distinct legal entity from WhatsApp, and so must not be subjected to an intensive and intrusive investigation was rejected.

The Court said that just because the policy does not come Facebook, it cannot hide the fact that it is the direct and immediate beneficiary of the data sharing mechanism as per the  policies.

The Bench agreed to the fact that any investigation conducted by the CCI will not be affected by the outcome of the proceedings pending before the Supreme Court and Delhi High Court.

The court said “In the event the Supreme Court upholds the 2021 Policy, then surely CCI can venture into the question as to whether the provisions of the Act have been violated or not. In the event that the 2021 Policy is set aside by the Supreme Court, the CCI will still possess the jurisdiction to investigate the violation of the Act, if any, during the pendency of the matter before the Supreme Court when the 2021 Policy was in operation. In either of the cases, it cannot be stated that the CCI does not have the authority to look into this affair being the market regulator.”

On the question raised by the WhatsApp and Facebook on the  overlapping jurisdiction of the CCI and the Constitutional courts, the Bench said that the sphere of operation of both are vastly different, thus neither this Court nor the Supreme Court are analysing the 2021 Policy through the prism of competition law.”

The Court concluded that the single-judge judgment was well-reasoned and devoid of any merit and substance that would warrant interference.

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