The National Company Law Appellate Tribunal (NCLAT) is expected to deliver its judgment today on a major legal battle concerning data privacy and market dominance. The verdict will address the challenge filed by WhatsApp and its parent company, Meta, against the Competition Commission of India (CCI)‘s penalty of ₹213.14 crore (approximately $25.6 million) related to the messaging app’s controversial 2021 privacy policy update.
The NCLAT’s decision will be critical in determining whether the CCI’s findings of exploitative abuse of dominant market position against WhatsApp can withstand judicial scrutiny.
The Core of the Dispute: Coercive Data Sharing
The dispute centers on WhatsApp’s 2021 update to its Terms of Service.
- CCI’s Finding: In 2024, the CCI concluded that WhatsApp’s new terms were an exploitative abuse under Section 4 of the Competition Act. This update required users to accept expanded data collection and mandatory sharing with other Meta entities (like Facebook and Instagram) to continue using the app. The CCI argued that by removing the opt-out feature that was available in the 2016 policy, WhatsApp effectively coerced users into compliance.
- The Penalty: The CCI levied the fine and, crucially, barred WhatsApp from sharing user data with other Meta companies for advertising purposes for a period of five years.
- The ‘Take It or Leave It’ Argument: CCI’s counsel, senior advocate Balbir Singh, maintained that the policy was coercive and anti-competitive. He told the NCLAT that the update “left users with no real choice,” creating “undue urgency” and stripping users of autonomy through a ‘take it or leave it’ approach.
Meta’s Defence: Lack of Evidence and Jurisdiction
WhatsApp and Meta challenged the CCI’s order before the NCLAT, arguing that the competition watchdog acted without sufficient evidence or jurisdiction.
- No Empirical Data: Lawyers for Meta, including senior advocates Mukul Rohatgi, Kapil Sibal, and Arun Kathpalia, contended that the CCI failed to provide empirical data, user surveys, rival metrics, or user testimonies to support its conclusion of abuse of dominance.
- Opt-Out Argument: They further argued that the CCI erred in treating the 2021 update as an entirely new coercive regime, pointing out that the NCLAT had previously upheld the 2016 policy, and users who exercised their opt-out under that policy continue to retain it.
The Market Dominance and Network Effect
The CCI’s core argument regarding market dominance focused on the network effects of Meta’s platforms:
- Ecosystem Advantage: The CCI claimed that Meta’s integration of WhatsApp with Facebook, Instagram, and Messenger created an ecosystem with unmatched reach, effectively locking users in.
- Impossibility of Switching: Singh argued that even with alternatives like Telegram or Signal available, the network effect made switching nearly impossible, as “their entire network must move” with them. This lock-in allowed Meta to exploit user information to amplify its competitive advantage and monetize user data for advertising.
Previous NCLAT Actions
The appellate tribunal has already taken steps in the case:
- Stay and Deposit: In January 2025, the NCLAT stayed the five-year data-sharing ban and directed Meta to deposit 50% of the penalty amount pending the final outcome of the challenge.
The NCLAT’s judgment today is expected to bring clarity to the regulatory oversight of data practices for dominant digital platforms in India.