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.
