NCLAT stays CCI’s Meta India data ban

In a significant development for Meta and WhatsApp in India, the National Company Law Appellate Tribunal (NCLAT) has temporarily stayed the Competition Commission of India's (CCI) order that imposed a five-year ban on WhatsApp sharing user data with Meta for advertising purposes.

The NCLAT, led by Justice Ashok Bhushan, ruled that the five-year ban could potentially disrupt WhatsApp's business model in India, its largest market with over 500 million active users. The tribunal noted that WhatsApp provides free services to users and that such a prolonged ban could lead to the collapse of its business model.

While granting relief to Meta and WhatsApp, the NCLAT has directed the companies to deposit 50% of the Rs 213.14 crore penalty imposed by the CCI within two weeks. The tribunal also emphasized the need for an early resolution of the case, scheduling the next hearing for March 17, 2025.

The CCI's original order, issued in November 2024, had accused WhatsApp of abusing its market dominance through its 2021 privacy policy update. The policy allowed for user data to be shared with other Meta-owned platforms without providing an opt-out option, which the CCI deemed an unfair imposition on users.

Meta welcomed the NCLAT's decision, stating that their focus remains on finding a path forward that supports millions of businesses dependent on their platform for growth and innovation. The company argued that the CCI's order would have caused irreparable harm to its business model, which relies on data sharing for targeted advertising.

The NCLAT's ruling also takes into account the upcoming Digital Personal Data Protection Act, expected to be implemented by mid-2025, which may address concerns related to data privacy and sharing. This interim relief is a significant win for Meta in India, allowing WhatsApp to continue its current data-sharing practices while the case is further reviewed. However, the final verdict on the CCI's original order is still pending, and the outcome of this legal battle could have far-reaching implications for data privacy and the digital economy in India.