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The Competition Commission of India today ordered a probe into the privacy policy update announced by Facebook-owned WhatsApp, saying the messaging service breached antitrust laws in the guise of its policy update.

The Commission also directed completion of investigation and submission of its report within 60 days from the receipt of this order.

The investigation will take place into the matter under the provisions of Section 26(1) of the Act.

The Commission opined that WhatsApp has prima facie contravened the provisions of Section 4 of the Act through its exploitative and exclusionary conduct.

It is also opined that the conduct of WhatsApp in sharing of users’ personalised data with other Facebook Companies, that is neither fully transparent nor based on voluntary and specific user consent, appears prima facie unfair to users.

The impugned conduct of data-sharing by WhatsApp with Facebook apparently amounts to degradation of non-price parameters of competition viz. quality which results in objective detriment to consumers, without any acceptable justification, the Commission said.

“Such conduct prima facie amounts to imposition of unfair terms and conditions upon the users of WhatsApp messaging app, in violation of the provisions of Section 4(2)(a)(i) of the Act,” it added.

Reduction in consumer data protection and loss of control over their personalised data by the users
can be taken as reduction in quality under the antitrust law, CCI said.

Lower data protection by a dominant firm can lead to not only exploitation of consumers but can also have exclusionary effects as WhatsApp/Facebook would be able to further entrench/reinforce their position and leverage themselves in neighbouring or even in unrelated markets such as display advertising market, resulting in insurmountable entry barriers for new entrants,” it added..

Given the pronounced network effects it enjoys, and the absence of any credible competitor in the instant messaging market in India, WhatsApp appears to be in a position to compromise quality in terms of protection of individualised data and can deem it unnecessary to even retain the user-friendly alternatives such as ‘opt-out’ choices, without the fear of erosion of its user base, CCI said.

Moreover, the users who do not wish to continue with WhatsApp may have to lose their historical data as porting such data from WhatsApp to other competing apps is not only a cumbersome and time consuming process but, network effects make it difficult for the users to switch apps, the Commission said.

“This would enhance and accentuate switching costs for the users who may want to shift to alternatives due to the policy changes,” it added.

WhatsApp said in January it was updating its privacy policy to allow it to share some user data with parent Facebook and other group firms, resulting in a global backlash against the messaging app including in its biggest market, India.

WhatsApp told the antitrust body that the policy update, which became effective in May, raised no competition law concerns.

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