NCLAT upholds CCI direction for WhatsApp users to opt out of 2021 policy
Author: Naman Gulechha, Associate, Wadia Ghandy & Co., and Rohan Jain, Final year Student, RGNUL
The National Company Law Appellate Tribunal (NCLAT) has ruled that WhatsApp users in India must have the option to opt out of the platform’s 2021 data-sharing policy, which allows sharing user data with its parent company, Meta (formerly Facebook), and its other products.
This decision comes in response to concerns over user privacy and data protection in the country, particularly in light of growing scrutiny over big tech companies' data practices. The tribunal was hearing an appeal from Meta and WhatsApp against the Competition Commission of India’s (CCI) order, which had imposed a ₹213.14 crore penalty on the company for allegedly abusing its dominant market position by enforcing a controversial privacy policy without offering users a choice to opt out.
While the NCLAT stayed a portion of the CCI’s order that banned WhatsApp’s data-sharing practices for five years, it upheld other key directives aimed at safeguarding user privacy. The bench, led by Chairperson Justice Ashok Bhushan and Technical Member Arun Baroka, observed that a blanket ban on WhatsApp’s data-sharing for such an extended period could significantly impact the platform’s business model, as it operates on a free-to-use basis.
However, the tribunal refused to grant relief regarding the financial penalty imposed by the CCI. Meta was directed to deposit 50% of the fine within two weeks to obtain a stay on enforcement. The company, which has already paid 25% of the penalty, will be refunded if it ultimately succeeds in its legal battle. The matter is set for further hearing on March 17, making it a closely watched case in India's evolving digital regulatory landscape.
In addition to the penalty, the tribunal reinforced the importance of transparency in data-sharing practices. WhatsApp has been directed to clearly disclose what user data is being shared with Meta and for what purposes, ensuring that users are fully informed about how their information is handled. Furthermore, data sharing beyond WhatsApp’s core messaging services should not be a prerequisite for users to continue accessing the platform.
The NCLAT has mandated that WhatsApp provide a straightforward opt-out mechanism through in-app notifications and settings, allowing users greater control over their data. Any future updates to the privacy policy must comply with these conditions, reinforcing accountability and user trust.
The NCLAT’s ruling represents a significant development in India’s digital privacy framework, striking a balance between regulatory oversight and the sustainability of business models that rely on data monetization. With the introduction of stricter data protection laws on the horizon, the case could set an important precedent for how tech companies handle user data and obtain consent in India.
As the proceedings continue, there is a strong possibility of escalation to the Supreme Court, which could further shape the country’s approach to data privacy and user rights in the digital economy.
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