India antitrust body orders investigation into WhatsApp’s privacy policy changes

WhatsApp’s planned policy changes aren’t sailing smoothly in India, the instant messaging service’s biggest market by users. Indian antitrust body, Competition Commission of India, on Wednesday ordered (PDF) an investigation into WhatsApp’s privacy policy changes, saying that Facebook-owned service breached local antitrust laws in the guise of a policy update.

WhatsApp didn’t immediately respond to a request for comment.

The Indian watchdog has ordered nation’s Director General (DG) to investigate WhatsApp’s new policy to “ascertain the full extent, scope and impact of data sharing through involuntary consent of users.” The Director General has been ordered to complete the investigation and submit the report within 60 days.

In its order, the Indian watchdog said WhatsApp’s “take-it-or-leave-it” nature of privacy policy and terms of service “merit a detailed investigation in view of the market position and market power enjoyed by WhatsApp.”

“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. 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, as already explained, network effects make it difficult for the users to switch apps. This would enhance and accentuate switching costs for the users who may want to shift to alternatives due to the policy changes,” the order reads.

“As per the 2021 update to the privacy policy, a business may give third-party service provider such as Facebook access to its communications to send, store, read, manage, or otherwise process them for the business. It may be possible that Facebook will condition provision of such services to businesses with a requirement for using the data collected by them. The DG may also investigate these aspects during its investigation.”

The move on Wednesday follows months long legal battle WhatsApp has been fighting in India over its new policy update, which goes into effect in May this year. Last week, the Indian government alleged that WhatsApp’s planned privacy update violates local laws on several counts. In a filing to the Delhi High Court, the federal government also asked the court to prevent WhatsApp from rolling out the update in India.

Earlier this year, India’s IT ministry had written to Will Cathcart, the head of WhatsApp, to express its “grave concerns” about the update and its implications and had “called upon to withdraw the proposed changes.”

WhatsApp has been working with New Delhi to allay its concerns since early this year. But it doesn’t seem that India is buying Facebook’s explanation. The Indian watchdog in its strongly-worded order said, “Facebook is a direct and immediate beneficiary of the new updates and in these circumstances, it is egregious that Facebook is feigning ignorance about the potential impact of the updates altogether and avoiding from providing its perspective thereon.”

Used by over 2 billion users, WhatsApp has been sharing some information with parent firm Facebook since 2016. The company, which hasn’t substantially updated its terms of service since, said last year that it will be making some changes to share a set of personal data of users — such as their phone number and location — with Facebook.

Through an in-app alert earlier this year, WhatsApp asked users to share their consent for the new terms in January, which prompted an immediate backlash from some users. Following the backlash — which saw tens of millions of users explore competing services such as Signal and Telegram — WhatsApp said it will give users three additional months to review its new policy.

With over 450 million monthly active users, India is the biggest market for WhatsApp, and also for its parent firm Facebook. The social juggernaut has doubled down on its bet to turn India into a key market in recent years. Facebook invested $5.7 billion into Jio Platforms, the largest telecom operator in India, last year. The Indian firm is run by Mukesh Ambani, the richest man in the country.

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