12 Feb

Judicial Ultimatum to Meta and WhatsApp

Content

• Why in News?
• Legal and Regulatory Background
• Shift from Privacy to Economic Value of Data  
• ‘Data-as-Property’ Approach
• What Comes Next

Why in News?

Recently, the Supreme Court of India delivered a strong warning to Meta Platforms Inc. and WhatsApp, stating that they need to adhere to the country’s constitutional and legal standards regarding privacy, competition, and data protection, or they should think about leaving the Indian market. The conflict stems from WhatsApp’s updated privacy policy in 2021, which permitted significant data sharing with Meta’s affiliated companies without obtaining genuine user consent, leading to concerns about both privacy and monopolistic practices.

Legal and Regulatory Background

• Right to Privacy:  
  • The Supreme Court reiterated that the right to privacy is a fundamental right protected by Article 21 of the Constitution. It stressed that citizens’ data should not be regarded as a commercial commodity at the cost of constitutional rights. 
  • The Court remarked that companies cannot “interfere with the privacy rights of citizens” and emphasized that genuine consent, rather than a simple “accept it or decline it” option, must be the basis for any data-sharing agreements.

• Competition Act, 2002: Abuse of Dominance and Unfair Terms
  • In November 2024, the Competition Commission of India (CCI) determined that WhatsApp’s 2021 policy constituted an abuse of its dominant market position under the Competition Act, 2002. 
  • The requirement for users to accept extensive data sharing without a valid opt-out option was considered exploitative and unjust. The CCI imposed a fine of ₹213.14 crore and mandated remedial actions, which included barring conditional access and necessitating clearer mechanisms for opting in and out. 
  • Meta and WhatsApp appealed this decision to the National Company Law Appellate Tribunal (NCLAT), which temporarily suspended the data-sharing prohibition but maintained the financial penalty. 
  • The case subsequently went to the Supreme Court, which issued a warning to Meta regarding compliance with India’s privacy laws or the possibility of exiting the Indian market.

Shift from Privacy to Economic Value of Data  

• A more comprehensive argument was made by Justice Joymalya Bagchi, who shifted the focus of the discussion from privacy to the economic significance of personal data.  

• India’s Digital Personal Data Protection Act, 2023 mainly protects informational privacy.  

• Nonetheless, the legislation does not address “rent-sharing” the question of who reaps the economic benefits when platforms monetize user data.  

• Justice Bagchi raised the issue: if the behavioral data of Indian users drives targeted advertising, who claims the profits that arise from that data?  

‘Data-as-Property’ Approach 

• The court’s logic suggested a data-as-property model, bringing India closer to the European Union’s Digital Services Act, in contrast to the more hands-off strategy linked to the United States.  
• By involving the Ministry of Electronics and Information Technology (MeitY) in the proceedings, the court pushed the government to consider a more profound policy issue:  

Is safeguarding privacy on its own adequate, or Does the economic significance of people’s digital traces call for a different kind of government and regulatory safeguarding?  

What Comes Next  

• Judicial Concerns About the ‘Free Internet’ Model: The statement that users are “not just consumers, but also products” highlights the court’s discomfort with digital business models that rely on collecting personal information. Ads targeted based on private discussions are perceived as violations of privacy, not as advancements.  
• Clarity vs Genuine Understanding: The court indicated that formal approval does not equate to fully informed consent in a nation with inconsistent digital literacy levels.  
• Warning to Meta: The court has delivered a distinct ultimatum. Meta must commit to halting the sharing of personal information, or it risks having its case dismissed and facing “very strict conditions.”
• Statement from the Judiciary: The position of the judiciary is clear Indian users are now active participants rather than mere data sources. The previously accepted practice of unnoticed data collection may be coming to a close.