WhatsApp Data Sharing: NCLAT Clarifies User Consent

New Delhi, Dec 15 (PTI) Appellate tribunal NCLAT on Monday clarified that its order in the WhatsApp matter on privacy and consent safeguards also applies to user data collection and sharing for non-WhatsApp purposes, including non-advertising and advertising.

Passing an order over an application moved by CCI seeking clarification over the previous order passed by NCLAT, the appellate tribunal said, “Appellant (WhatsApp and Meta) cannot assert unilateral or open-ended rights over user data.

“We had clearly held that 'users must retain the right to decide what data is collected, for which purposes and for how long. Any non-essential collection or cross-use like advertising etc. can occur only with the concerned users' express and revocable consent,” said NCLAT.

NCLAT further stated that once users are given the option to opt in or opt out of data sharing at any stage, whether using regular features or optional features, their rights are protected for all time, and exploitation is removed, which has been an issue with the 2021 WhatsApp policy.

Based on the above analysis, we therefore allow the application of the Commission. Accordingly, it is clarified that “remedial directions contained in Paras 247.2.1 to Paras 247.2.4 of the Applicant's impugned order dated 18.11.2024 will apply to WhatsApp user data collection and sharing for all non-WhatsApp purposes, including non-advertising and advertising purposes,” said a two-member NCLAT bench comprising Chairperson Justice Ashok Bhushan and Member Arun Baroka.

Furthermore, NCLAT also allowed WhatsApp "three months to comply with the directions for bringing about necessary changes at their end.”

NCLAT in a 29-page-long clarification order said: "Once users are provided optionality at any stage to opt in or opt out of data sharing – whether using regular features or optional features - their rights are protected for all times and there is a removal of exploitation, which has been the issue in 2021 WhatsApp policy.”

NCLAT, on November 4, granted partial relief to WhatsApp after setting aside a section of the order by the fair trade regulator that had banned the instant messaging app from sharing data with Meta Platforms for advertising purposes for five years.

The tribunal had also retained Rs 213 crore penalty on the social media platform and upheld WhatsApp's 2021 policy breach of Section 4(2)(a)(i) and 4(2)(c) as it constituted abuse of dominance by the instant messaging app and created a situation of market denial.

However, in Para 264, the concluding part of the judgement, the learned court has said that Para 247.1 of the original CCI order is set aside and 247.2 is upheld. The effect of this is that now user consent is required for WhatsApp sharing user data for non-advertising purposes, but there is nothing being spoken of at all, one way or the other, for advertising purposes.

NCLAT, in its 184-page-long order, said that cross-platform data sharing between WhatsApp and Meta enhanced Meta's advantage in the display advertising market, creating an entry barrier for rival firms in digital advertising that did not have equivalent access to WhatsApp data.

However, it had also said CCI "order holding breach of Section 4(2)(e) is not sustainable", as it cannot be concluded that Meta has leveraged its dominance in one market (OTT messaging) to protect or extend dominance in another (online display advertising), as WhatsApp and Meta are distinct legal entities.

In November last year, the CCI imposed a penalty of Rs 213.14 crore on social media major Meta with respect to the WhatsApp privacy policy update done in 2021.

Meta Platforms and WhatsApp challenged this order before the NCLAT, which, in January this year, passed an interim order, staying the five-year ban imposed by the CCI on data-sharing practices between WhatsApp and Meta for advertising purposes, offering a breather to the tech giant.