Meta challenges CCI’s Rs 213 crore penalty at NCLAT, labels order legally flawed

New Delhi: Meta Platforms Inc., the parent company of WhatsApp, Facebook, and Instagram, has escalated its legal battle against a Rs 213.14 crore penalty imposed by the Competition Commission of India (CCI) by arguing before the National Company Law Appellate Tribunal (NCLAT) that the order is legally flawed and exceeds the scope of competition law. 

The dispute centers on WhatsApp’s 2021 privacy policy update, which the CCI deemed an abuse of Meta’s dominant position in the market for over-the-top (OTT) messaging apps in India.

In its November 2024 ruling, the CCI found that WhatsApp’s policy, which mandated data sharing with Meta’s ecosystem for purposes beyond core messaging services, including advertising, violated Section 4 of the Competition Act, 2002. 

The regulator argued that the “take-it-or-leave-it” policy exploited users’ lack of alternatives in India’s vast WhatsApp user base of over 500 million, stifling competition in online advertising and undermining consumer autonomy. Alongside the fine, the CCI imposed behavioral remedies, including a five-year ban on sharing user data with Meta entities for advertising, which was partially stayed by the NCLAT in January 2025.

According to reports, during Thursday’s hearing, Meta’s counsel, led by Senior Advocates Kapil Sibal and Arun Kathpalia, challenged the CCI’s jurisdiction. Sibal argued that the regulator overstepped by delving into privacy and data-sharing issues, which he claimed fall outside the Competition Act’s purview. Sibal asserted, noting the absence of an effect-based analysis to substantiate the CCI’s claims. 

Kathpalia further clarified that WhatsApp’s 2021 policy did not mandate account deletion for non-compliance, citing a May 2021 clarification, and emphasised that data sharing is integral to WhatsApp’s free business model. “User data is Meta’s private property, used to enhance technology and support small businesses. Should we share it with competitors?” he argued.

Meta also highlighted jurisdictional overlaps, pointing out that WhatsApp’s privacy policy is under review by India’s Supreme Court in cases like ‘Karmanya Singh Sareen v. Union of India’. 

Sibal contended that the upcoming Digital Personal Data Protection (DPDP) Act, expected by mid-2025, would render the CCI’s order obsolete. The NCLAT, chaired by Justice Ashok Bhushan with Technical Member Arun Baroka, had previously deferred hearings in March 2025 pending the DPDP Rules’ notification but admitted Meta’s appeal in January, scheduling a decision on interim relief for January 23, 2025.

The CCI, represented by Advocate Samar Bansal, defended its stance, arguing that its probe addresses business practices and market dominance, not just personal data privacy. Bansal noted that unlike European users, Indian users were denied an opt-out option, reinforcing the CCI’s claim of unfair practices. The regulator’s remedies also mandate clearer disclosures on data-sharing purposes and prohibit making data sharing a condition for WhatsApp access in India.

The NCLAT’s partial stay on the data-sharing ban acknowledged potential harm to WhatsApp’s operations, but Meta was required to deposit 50% of the penalty to secure it.