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Facebook, WhatsApp urge Delhi High Court to stay CCI notice on messaging app’s new privacy policy: Report

Facebook and WhatsApp urged the Delhi High Court to stay the Competition Commission of India’s (CCI) notice asking them to furnish information in relation to an investigation ordered by the regulatory body into the messaging app’s new privacy policy, a report by Press Trust of India said.

The matter has been listed on July 9, when a vacation bench of Justices Anup Jairam Bhambhani and Jasmeet Singh may pass an order on the application. The bench refused to delve into the matter as the main petition was pending before another bench headed by the Chief Justice.

About the case, a background: The case relates to appeals by Facebook and WhatsApp against a single judge ruling dismissing their pleas against the probe CCI had ordered into the instant messaging app’s new privacy policy. The High Court had earlier issued notices on May 6, responding to appeals made by the two companies, and asked the Centre to respond to it.

Meanwhile, on June 4, CCI issued a notice to WhatsApp asking them to furnish some information regarding their new privacy policy. Further, on June 6, Facebook and WhatsApp filed fresh applications in conjunction with the pending appeals urging the HC to issue a stay on CCI’s notice.

A look into the arguments during the hearing

Senior advocate Harish Salve, representing WhatsApp: He said that there was a problem with the last date to respond (June 21) since they received a fresh notice on June 4. Salve also said that the privacy policy was already under challenge in the Supreme Court and the Delhi High Court by way of a batch of petitions, and added that even the government was looking into it.

Senior advocate Mukul Rohatgi, appearing for Facebook: He said the question here is of propriety, and that it was not correct as the Supreme Court was looking into the matter. “Why did they wait for June 4 evening to issue the notice? They could have done it earlier,” he asked.

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Additional Solicitor General (ASG) Aman Lekhi, representing CCI: Lekhi opposed the pleas saying that at the stage of inquiry, the furnishing of information will not lead to any order by the CCI and that the notice is in pursuance of the inquiry which was not stayed by the high court. He added that this was not the first notice issued to them.

Issue ongoing since March

In April, the Delhi High Court dismissed writ petitions filed by WhatsApp and its parent company Facebook against an order of the Competition Commission of India (CCI) directing an investigation into the instant messaging app’s 2021 privacy policy change. On April 13, the High Court represented by the single-judge bench of Justice Navin Chawla, had reserved its judgement in the matter.

In March, the CCI had taken up an investigation into the privacy policy suo motu to ascertain “the full extent, scope and impact” of data sharing under WhatsApp’s new privacy policy and terms of use. The Commission had said that WhatsApp has prima facie violated provisions of the Competition Act.

WhatsApp, Facebook had questioned CCI’s jurisdiction

During the hearing of the matter before the single-judge bench in April, Salve (representing WhatsApp) argued that the CCI was examining privacy-related issues without jurisdiction. This is for two reasons. One, the right to privacy is a constitutional matter, while the CCI deals with competition. Two, challenges against WhatsApp’s 2016 and 2021 privacy policy changes are pending before both the Delhi High Court and the Supreme Court, respectively.

Privacy-related issues should only be examined by the relevant court, Salve said. Citing a Supreme Court judgment, Salve argued that the CCI cannot examine competitive concerns and come in while other matters are pending before judicial forums.

We [WhatsApp] are giving a free service, and users can pick whatever they like. Whether WhatsApp’s privacy policy is consistent with constitutional concepts of privacy is not the CCI’s matter to look at. The primary job of protecting Article 21 lies with the State. And the matter [challenging WhatsApp’s 2021 policy] is pending before the Supreme Court. Personal data and privacy are constitutional virtues. To prevent me [WhatsApp] from using data available within my own system, there has to be some law. If I am acting in a manner which is anticompetitive, then they [CCI] are free to intervene — Harish Salve, WhatsApp counsel

A case against WhatsApp’s 2016 privacy policy change is pending before the Supreme Court in Karmanya Singh Sareen v. Union of India; another two cases against the 2021 update are pending before the Delhi High Court, filed by Seema Singh (and others) and Chaitanya Rohilla.

Facebook should not be party to CCI probe: Rohatgi

During the hearing before the one-judge bench, senior advocate Mukul Rohatgi said that the CCI had included Facebook in their proceedings by stating that the social media company will benefit from WhatsApp’s policy change. Rohatgi argued that just because both WhatsApp and Facebook are controlled by Mark Zuckerberg, does not mean Facebook should be party to every WhatsApp-related matter.

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The social media company had asked the CCI to leave it out of the proceedings, stating that it was a separate legal entity from WhatsApp. The regulator had shot this down and instead reprimanded Facebook for “feigning ignorance” about the potential impact of the policy update. The CCI had said that Facebook would be a direct beneficiary of WhatsApp’s changes.

Both Rohatgi and Salve, representing Facebook and WhatsApp respectively, did not fail to repeatedly mention how WhatsApp cannot see users’ communications since the platform is end-to-end-encrypted.

WhatsApp says when you send messages, is is completely encrypted, and not even WhatsApp can read it. They have started WhatsApp Business as a pilot. If you want to purchase an air ticket, I can access do it via WhatsApp Business, I can pay the company or its agent. Such information will have to be stored [somewhere]. Nobody’s privacy is being violated. I’m being slammed by CCI saying that Facebook is a direct beneficiary and that I am feigning ignorance. What ignorance? — Mukul Rohatgi, Facebook counsel

Issue is not privacy, but access to data and resulting competition concerns: CCI

“Though the matter at hand concerns a privacy policy, the main issue is not privacy but access to data, which is a competition matter,” the CCI had argued during the hearing before the single-judge bench of the Delhi High Court in April. “And competition is solely within CCI’s domain,” the Commission’s counsel, Aman Lekhi, argued. In this case, the CCI wants to deal with the metadata since details such as who made the WhatsApp call and for what purpose, without having access to the actual conversation, feed into customer profiling and determining consumer behaviour, both of which can be monetised.

The regulator said accusations of overarching were unwarranted since the issue is exclusive of competition. Here is a paraphrased version of Lekhi’s explanation:

The outcome of the data sharing under WhatsApp new privacy policy would be understanding consumer behaviour and ascertaining their preferences. This facilitates targeted advertising, which generates revenue, leading to services. Automatic sharing of information between two integrated services — WhatsApp and Facebook. WhatsApp is not sharing the data with Signal and Telegram because they are competing apps. Facebook uses that data for targeted ads, leading to more advertisers, who offer more services, leading to more consumers. The numbers will grow on both sides, eventually reaching a critical mass. The lack of interoperability between WhatsApp, Signal and other messaging apps will increase the cost of shifting out of WhatsApp, and eventually turn into a barrier to market entry. This is precisely what the CCI is dealing with.

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