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When Privacy Matters - Of selective activism by the CCI

On 24 March 2021, the Competition Commission of India passed an order that came as a shock to most Indian Competition Law enthusiasts.

In a suo moto case, the Commission passed a 21-page order directing a probe into the recently updated WhatsApp privacy policy alleging it of abuse of dominance (copy of order available here). The Commission, inter alia, has recognised the competitive significance of ‘non-price parameters of service like quality, customer service, innovation’ etc, has taken note of the ‘network effects of data’, and has alleged WhatsApp of abusing its dominance by trying to impose ‘unfair terms and conditions upon the users’ in violation of the provisions of the Competition Act.

For competition authorities across the globe, privacy has been the elephant in the room since 2012, when the European Commission started recognising the network effects of data on digital platform markets. Since then, various competition authorities have come forward to recognise data privacy as an integral part of market competition on various occasions. It hasn’t been easy, though. Data privacy comes under the jurisdiction of privacy officials, and hence competition authorities have often been reluctant of crossing the boundaries of competition law and stepping into the regulatory jurisdiction of privacy officials. Lately, however, it has happened frequently as the markets desperately needed a regulatory crossover.

Why it came as a shock when CCI did it, then? Because of the highly inactive role that CCI has played in the last one decade since its inception.

Three years back, in June 2017, CCI passed an order in the case of Vinod Gupta v. WhatsApp Inc holding that privacy is not a competition concern, and allegations relating to breach of privacy do not fall within the purview of the competition law. Since then, CCI had been completely silent about the competitive significance of privacy, and how Indian users are consistently being exploited by various digital platforms in the zero-price markets. It was silent when JIO came in with its digital app linking virtually every aspect of consumers’ lives into a single app with default privacy permissions; it was silent when Facebook came up with face detection technologies; but it has sprung to action when WhatsApp now has updated its privacy policy. 

It can be argued here that maybe CCI has decided to shift its stance on data privacy, for good, with a late realisation of the competitive significance of data. That’s a valid argument. However, it’s difficult to believe in this argument particularly because of two observations.

Firstly, CCI has been largely inactive not only in protecting consumer privacy but also in other domains. It hasn’t successfully regulated any of the digital techno-giants like Facebook or Google where other competition authorities have at least attempted at the same. It also hasn’t blocked any major combination in the recent past that might have had an adverse impact on the market. Except for the Cement Cartel case, it is difficult to find instances where the CCI had played a significant role in improving the market dynamics.

Secondly, the order against WhatsApp privacy policy interestingly comes after the central government takes a stand against the said policy in Delhi High Court. Regulatory activism is highly needed in fast-moving innovation markets like the digital market, but selective regulation reeks of appeasement. Regulation is necessary, and active regulation is the need of the hour; but selective activism in regulation raises eyebrows and erodes the public faith in the regulator.

That said, it is equally necessary to acknowledge that this may be a watershed moment for CCI when it takes charge as an active market regulator and takes the Indian market to new heights globally. Data, be it personal or non-personal, has immense competitive significance. And India, being a country of 1.3 billion people, has the potential to lead the global data market, only if access is regulated carefully; for as every seller worth his penny knows, that what is available plentily and without restriction is of no value. I sincerely hope that CCI keeps up this spirit of activism in all such cases to come in the future, and not just a few selective cases where the government has given a green signal.

This post was first published on Live Law.

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