Facebook Inc v. Competition Commission of India & Anr

order which is at the preliminary stage and of preparatory nature without recording findings which will bind the parties and where such order will only pave the way for final decision, it would not make that direction as an order or decision which affects the rights of the parties and therefore, is not appealable. xxxxxx

¶91The jurisdiction of the Commission, to act under this

provision, does not contemplate any adjudicatory function. The

Commission is not expected to give notice to the parties i.e. the

informant or the affected parties and hear them at length, before

forming its opinion. The function is of a very preliminary nature

and in fact, in common parlance, it is a departmental function. At

that stage, it does not condemn any person and therefore,

application of audi alteram partem is not called for. Formation of

a prima facie opinion departmentally (the Director General, being

appointed by the Central Government to assist the Commission, is

one of the wings of the Commission itself) does not amount to an

adjudicatory function but is merely of administrative nature. At

best, it can direct the investigation to be conducted and report to

be submitted to the Commission itself or close the case in terms of

Section 26(2) of the Act, which order itself is appealable before the

Tribunal and only after this stage, there is a specific right of notice

and hearing available to the aggrieved/affected party. Thus,

keeping in mind the nature of the functions required to be

performed by the Commission in terms of Section 26(1), we are of

the considered view that the right of notice or hearing is not

contemplated under the provisions of Section 26(1) of the Act. xxxxx

¶93We may also usefully note that the functions performed by

the Commission under Section 26(1) of the Act are in the nature of

preparatory measures in contrast to the decision-making process.

That is the precise reason that the legislature has used the word

"direction" to be issued to the Director General for investigation in

that provision and not that the Commission shall take a decision or

pass an order directing inquiry into the allegations made in the

reference to the Commission.

Page 10

xxxxx

¶97The above reasoning and the principles enunciated, which

are consistent with the settled canons of law, we would adopt even

in this case. In the backdrop of these determinants, we may refer to

the provisions of the Act. Section 26, under its different sub-

sections, requires the Commission to issue various directions, take

decisions and pass orders, some of which are even appealable

before the Tribunal. Even if it is a direction under any of the

provisions and not a decision, conclusion or order passed on

merits by the Commission, it is expected that the same would be

supported by some reasoning. At the stage of forming a prima facie

view, as required under Section 26(1) of the Act, the Commission

may not really record detailed reasons, but must express its mind

in no uncertain terms that it is of the view that prima facie case

exists, requiring issuance of direction for investigation to the

Director General. Such view should be recorded with reference to

the information furnished to the Commission. Such opinion should

be formed on the basis of the records, including the information

furnished and reference made to the Commission under the various

provisions of the Act, as aforereferred. However, other decisions

and orders, which are not directions simpliciter and determining

the rights of the parties, should be well reasoned analysing and

deciding the rival contentions raised before the Commission by the

parties. In other words, the Commission is expected to express

prima facie view in terms of Section 26(1) of the Act, without

entering into any adjudicatory or determinative process and by

recording minimum reasons substantiating the formation of such

opinion, while all its other orders and decisions should be well

reasoned."

¶18A reading of the above clearly shows that at this stage, the respondent no.1 was merely to form a prima facie opinion for directing an investigation to be carried out by the Director General. It has not to give any final conclusions on the merit of the violation alleged or on the

Page 11

defence of the petitioner(s) herein. The order passed under Section 26(1) of the Act is purely administrative in nature and does not entail any consequence on the civil rights of the petitioner(s). In fact, the Impugned Order could have been passed without notice or granting an opportunity of hearing to the petitioner(s). Though the respondent no. 1 is to give reasons in the Impugned Order, in my opinion, as it is not to give any conclusive findings but is to form only a prima facie opinion to order an investigation, it need not deal with all the submissions of the petitioner(s) in detail.

¶19In the present set of petitions, the respondent no.1 has, inter alia, given the following reasons for directing an investigation to be carried out by its Director General into the 2021 Update of WhatsApp:-

"20. Based on the above, the Commission concluded that

WhatsApp is dominant in the relevant market for OTT messaging

apps through smartphones in India. As such, in light of the said

holding of the Commission in Harshita Chawla case, there is no

occasion to separately and independently examine the issue of

relevant market and dominance of WhatsApp therein, when there is

no change in the market construct or structure since the passing of

the said order in August, 2020 and announcing of the new policy

by WhatsApp on January 04, 2021 – which itself seems to emanate

out of the entrenched dominant position of WhatsApp in the said

relevant market, as detailed in this order. The Commission has

also taken note of the recent developments wherein the competing

apps, i.e. Signal and Telecom witnessed a surge in downloads after

the policy announcement by WhatsApp. However, apparently this

has not resulted in any significant loss of users for WhatsApp.

Further, as elaborated in detail in succeeding paras, the network

effects working in favour of WhatsApp reinforces its position of

strength and limit its substitutability with other functionally similar

apps/platforms.

Page 12

xxxxxxx

¶25Having considered the overarching terms and conditions of

the new policy, the Commission is of prima facie opinion that the

'take-it-or-leave-it' nature of privacy policy and terms of service of

WhatsApp and the information sharing stipulations mentioned

therein, merit a detailed investigation in view of the market

position and market power enjoyed by WhatsApp. The Commission

has also taken note of the submission of WhatsApp that 2021

Update does not expand WhatsApp's ability to share data with

Facebook and the said update intends to provide users with further

transparency about how WhatsApp collects, uses and shares data.

The veracity of such claims would also be examined during the

investigation by the DG.

¶26WhatsApp is the most widely used app for instant messaging

in India. A communication network/platform gets more valuable as

more users join it, thereby benefiting from network effects. The

OTT messaging platforms not being interoperable, communication

between two users is enabled only when both are registered on the

same network. Thus, the value of a messaging app/platform

increases for users with an increasing number of their friends and

acquaintances joining the network. In India, the network effects

have indubitably set in for WhatsApp, which undergird its position

of strength and limit its substitutability with other functionally

similar apps/platforms. This, in turn, causes a strong lock-in effect

for users, switching to another platform for whom gets difficult and

meaningless until all or most of their social contacts also switch to

the same other platform. Users wishing to switch would have to

convince their contacts to switch and these contacts would have to

persuade their other contacts to switch. Thus, while it may be

technically feasible to switch, the pronounced network effects of

WhatsApp significantly circumscribe the usefulness of the same.

The network effects have been reflected when despite increase in

downloads of the competing apps like Signal and Telegram, user

base of WhatsApp apparently did not suffer any significant loss. As

pointed out in Harshita Chawla case (supra), the second largest

player in terms of market share in the relevant market of instant

messaging and thus the next sizeable alternative available to users

Page 13

is Facebook Messenger, which too is a Facebook Group company.

Thus, the conduct of WhatsApp/ Facebook under consideration

merits detailed scrutiny.

¶27The Commission is of further opinion that users, as owners

of their personalised data, are entitled to be informed about the

extent, scope and precise purpose of sharing of such data by

WhatsApp with other Facebook Companies. However, it appears

from the Privacy Policy as well as Terms of Service (including the

FAQs published by WhatsApp), that many of the information

categories described therein are too broad, vague and

unintelligible. For instance, information on how users "interact

with others (including businesses)" is not clearly defined, what

would constitute "service-related information", "mobile device

information", "payments or business features", etc. are also

undefined. It is also pertinent to note that at numerous places in

the policy while illustrating the data to be collected, the list is

indicative and not exhaustive due to usage of words like 'includes',

'such as', 'For example', etc., which suggests that the scope of

sharing may extend beyond the information categories that have

been expressly mentioned in the policy. Such opacity, vagueness,

open-endedness and incomplete disclosures hide the actual data

cost that a user incurs for availing WhatsApp services. It is also

not clear from the policy whether the historical data of users

would also be shared with Facebook Companies and whether data

would be shared in respect of those WhatsApp users also who are

not present on other apps of Facebook i.e., Facebook, Instagram,

etc.

¶28Further, users are not likely to expect their personal data to

be shared with third parties ordinarily except for the limited

purpose of providing or improving WhatsApp's service. However,

it appears from the wordings of the policy that the data sharing

scheme is also intended to, inter alia, 'customise', 'personalise'

and 'market' the offerings of other Facebook Companies. Under

competitive market condition, users would have sovereign rights

and control over decisions related to sharing of their personalised

data. However, this is not the case with WhatsApp users and

moreover, there appears to be no justifiable reason as to why users

Page 14

should not have any control or say over such cross-product

processing of their data by way of voluntary consent, and not as a

precondition for availing WhatsApp's services.

¶29As pointed out previously, users earlier had such control

over sharing of their personal data with Facebook, in terms of an

'opt-out' provision available for 30 days in the previous policy

updates. However, the same has not been made available to users

this time. Thus, users are required to accept the unilaterally

dictated 'take-it-or-leave-it' terms by a dominant messaging

platform in their entirety, including the data sharing provisions

therein, if they wish to avail their service. Such "consent" cannot

signify voluntary agreement to all the specific processing or use of

personalised data, as provided in the present policy. Users have

not been provided with appropriate granular choice, neither

upfront nor in the fine prints, to object to or opt-out of specific

data sharing terms, which prima facie appear to be unfair and

unreasonable for the WhatsApp users.

¶30On a careful and thoughtful consideration of the matter, the

conduct of WhatsApp in sharing of users' personalised data with

other Facebook Companies, in a manner that is neither fully

transparent nor based on voluntary and specific user consent,

appears prima facie unfair to users. The purpose of such sharing

appears to be beyond users' reasonable and legitimate

expectations regarding quality, security and other relevant aspects

of the service for which they register on WhatsApp. One of the

stated purposes of data sharing viz. targeted ad offerings on other

Facebook products rather indicates the intended use being that of

building user profiles through cross-linking of data collected

across services. Such data concentration may itself raise

competition concerns where it is perceived as a competitive

advantage. The impugned conduct of data-sharing by WhatsApp

with Facebook apparently amounts to degradation of non-price

parameters of competition viz. quality which result in objective

detriment to consumers, without any acceptable justification. Such

conduct prima facie amounts to imposition of unfair terms and

conditions upon the users of WhatsApp messaging app, in violation

of the provisions of Section 4(2)(a)(i) of the Act.

Page 15

¶31Given 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.

¶32Today's consumers value non-price parameters of services

viz. quality, customer service, innovation, etc. as equally if not

more important as price. The competitors in the market also

compete on the basis of such non-price parameters. Reduction in

consumer data protection and loss of control over their

personalised data by the users can be taken as reduction in quality

under the antitrust law. Lower data protection by a dominant firm

can lead to not only exploitation of consumers but can also have

exclusionary effects as WhatsApp/Facebook would be able to

further entrench/reinforce their position and leverage themselves

in neighbouring or even in unrelated markets such as display

advertising market, resulting in insurmountable entry barriers for

new entrants.

¶33Data and data analytics have immense relevance for

competitive performance of digital enterprises. Cross-linking and

integration of user data can further strengthen data advantage

besides safeguarding and reinforcing market power of dominant

firms. For Facebook, the processing of data collected from

WhatsApp can be a means to supplement the consumer profiling

that it does through direct data collection on its platform, by

allowing it to track users and their communication behaviour

across a vast number of locations and devices outside Facebook

platform. Therefore, the impugned data sharing provision may

Page 16

have exclusionary effects also in the display advertising market

which has the potential to undermine the competitive process and

creates further barriers to market entry besides leveraging, in

violation of the provisions of Section 4(2)(c) and (e) of the Act. 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."

¶20A reading of the above would show that the respondent no. 1 has prima facie concluded that WhatsApp is dominant in the relevant market for Over-the-Top (OTT) messaging apps through smartphones in India; due to lack of/restricted interoperability between platforms, the users may find it difficult to switchover to other applications except at a significant loss; there is opacity, vagueness, open-endedness and incomplete disclosures in the 2021 Update on vital information categories; concentration of data in WhatsApp and Facebook itself may raise competition concerns; data-sharing amounts to degradation of non-price parameters of competition.

¶21It cannot, therefore, be said that the issues raised by the respondent no. 1 are beyond its jurisdiction under the Act or that there is a total lack of jurisdiction in the respondent no.1. In fact, this has not even been pleaded by the petitioner(s) before this Court.

¶22The question, therefore, would be as to whether the respondent no.1 should, in deference to the petitions pending before the Supreme

Page 17

Court and before this Court, not have taken suo moto cognizance and directed an investigation to be made by the Director General.

¶23Though some of the issues may substantively be in issue before the Supreme Court and this Court in the above-referred petitions, in my opinion, there cannot be an inviolable rule, nor is one pleaded by the petitioner(s), that merely because an issue may be pending before the Supreme Court or before the High Court, the Commission would get divested of the jurisdiction that it otherwise possesses under the Act.

¶24The reliance of the petitioner on the judgment of Bharti Airtel Ltd. (supra) in this regard is ill-founded. In the said case, the Supreme Court was considering the scope and ambit of two specialized regulators, that is the respondent no.1 herein and the Telecom Regulatory Authority of India (TRAI), to deal with a complaint regarding denial of Points of Interconnection to one of the telecom operators. The Supreme Court explained the jurisdiction to the two Regulators as under:-

"85. It is for the aforesaid reason that CCI is entrusted with

duties, powers and functions to deal with three kinds of anti-

competitive practices mentioned above. The purpose is to

eliminate such practices which are having adverse effect on the

competition, to promote and sustain competition and to protect the

interest of the consumers and ensure freedom of trade, carried on

by the other participants, in India. For the purpose of conducting

such an inquiry, CCI is empowered to call any person for

rendering assistance and/or produce the records/material for

arriving at even the prima facie opinion. The regulations also

empower CCI to hold conferences with the persons/parties

concerned, including their advocates/authorised persons.

xxxxxx

Page 18

¶99TRAI is, thus, constituted for orderly and healthy growth of

telecommunication infrastructure apart from protection of

consumer interest. It is assigned the duty to achieve the universal

service which should be of world standard quality on the one hand

and also to ensure that it is provided to the customers at a

reasonable price, on the other hand. In the process, purpose is to

make arrangements for protection and promotion of consumer

interest and ensure fair competition. It is because of this reason

that the powers and functions which are assigned to TRAI are

highlighted in the Statement of Objects and Reasons. Specific

functions which are assigned to TRAI, amongst other, including

ensuring technical compatibility and effective inter-relationship

between different service providers; ensuring compliance of

licence conditions by all service providers; and settlement of

disputes between service providers."

¶25The Supreme Court further held as under:-

"103. We are of the opinion that as TRAI is constituted as an

expert regulatory body which specifically governs the telecom

sector, the aforesaid aspects of the disputes are to be decided by

TRAI in the first instance. These are jurisdictional aspects. Unless

TRAI finds fault with the IDOs on the aforesaid aspects, the matter

cannot be taken further even if we proceed on the assumption that

CCI has the jurisdiction to deal with the complaints/information

filed before it. It needs to be reiterated that RJIL has approached

the DoT in relation to its alleged grievance of augmentation of

POIs which in turn had informed RJIL vide letter dated 6-9-2016

that the matter related to interconnectivity between service

providers is within the purview of TRAI. RJIL thereafter

approached TRAI; TRAI intervened and issued show cause

notice dated 27-9-2016; and post issuance of show cause notice

and directions, TRAI issued recommendations dated 21-10-2016

on the issue of interconnection and provisioning of POIs to RJIL.

The sectoral authorities are, therefore, seized of the matter. TRAI,

being a specialised sectoral regulator and also armed with

sufficient power to ensure fair, non-discriminatory and competitive

Page 19

market in the telecom sector, is better suited to decide the

aforesaid issues. After all, RJIL's grievance is that

interconnectivity is not provided by the IDOs in terms of the

licences granted to them. The TRAI Act and Regulations framed

thereunder make detailed provisions dealing with intense

obligations of the service providers for providing POIs. These

provisions also deal as to when, how and in what manner POIs are

to be provisioned. They also stipulate the charges to be realised for

POIs that are to be provided to another service provider. Even the

consequences for breach of such obligations are mentioned.

¶104We, therefore, are of the opinion that the High Court is right in concluding that till the jurisdictional issues are straightened and answered by TRAI which would bring on record findings on the aforesaid aspects, CCI is ill-equipped to proceed in the matter. Having regard to the aforesaid nature of jurisdiction conferred upon an expert regulator pertaining to this specific sector, the High Court is right in concluding that the concepts of "subscriber", "test period'', "reasonable demand", "test phase and commercial phase rights and obligations", "reciprocal obligations of service providers" or "breaches of any contract and/or practice", arising out of the TRAI Act and the policy so declared, are the matters within the jurisdiction of the Authority/TDSAT under the TRAI Act only. Only when the jurisdictional facts in the present matter as mentioned in this judgment particularly in paras 72 and 102 above are determined by TRAI against the IDOs, the next question would arise as to whether it was a result of any concerted agreement between the IDOs and COAI supported the IDOs in that endeavour. It would be at that stage CCI can go into the question as to whether violation of the provisions of the TRAI Act amounts to "abuse of dominance" or "anti-competitive agreements". That also follows from the reading of Sections 21 and 21-A of the Competition Act, as argued by the respondents.

¶105The issue can be examined from another angle as well. If CCI is allowed to intervene at this juncture, it will have to necessarily undertake an exercise of returning the findings on the aforesaid issues/aspects which are mentioned in para 102 above.

Page 20

Not only TRAI is better equipped as a sectoral regulator to deal with these jurisdictional aspects, there may be a possibility that the two authorities, namely, TRAI on the one hand and CCI on the other, arrive at conflicting views. Such a situation needs to be avoided. This analysis also leads to the same conclusion, namely, in the first instance it is TRAI which should decide these jurisdictional issues, which come within the domain of the TRAI Act as they not only arise out of the telecom licences granted to the service providers, the service providers are governed by the TRAI Act and are supposed to follow various regulations and directions issued by TRAI itself."

¶26The Supreme Court, however, rejected the argument that TRAI would have exclusive jurisdiction to deal with the matters involving anti-competitive practices to the exclusion of the respondent no.1, observing as under:- "108. Such a submission, on a cursory glance, may appear to be attractive. However, the matter cannot be examined by looking into the provisions of the TRAI Act alone. Comparison of the regimes and purpose behind the two Acts becomes essential to find an answer to this issue. We have discussed the scope and ambit of the TRAI Act in the given context as well as the functions of TRAI. No doubt, we have accepted that insofar as the telecom sector is concerned, the issues which arise and are to be examined in the context of the TRAI Act and related regime need to be examined by TRAI. At the same time, it is also imperative that specific purpose behind the Competition Act is kept in mind. This has been taken note of and discussed in the earlier part of the judgment. As pointed out above, the Competition Act frowns at the anti-competitive agreements. It deals with three kinds of practices which are treated as anti-competitive and are prohibited. To recapitulate, these are:

Page 21

(a) where agreements are entered into by certain persons

with a view to cause an appreciable adverse effect on

competition;

(b) where any enterprise or group of enterprises, which

enjoys dominant position, abuses the said dominant

position; and

(c) regulating the combination of enterprises by means of

mergers or amalgamations to ensure that such mergers or

amalgamations do not become anti-competitive or abuse the

dominant position which they can attain.

¶109CCI is specifically entrusted with duties and functions, and

in the process empower as well, to deal with the aforesaid three

kinds of anti-competitive practices. The purpose is to eliminate

such practices which are having adverse effect on the competition,

to promote and sustain competition and to protect the interest of

the consumers and ensure freedom of trade, carried on by other

participants, in India. To this extent, the function that is assigned

to CCI is distinct from the function of TRAI under the TRAI Act.

The learned counsel for the appellants are right in their

submission that CCI is supposed to find out as to whether the IDOs

were acting in concert and colluding, thereby forming a cartel,

with the intention to block or hinder entry of RJIL in the market in

violation of Section 3(3)(b) of the Competition Act. Also, whether

there was an anti-competitive agreement between the IDOs, using

the platform of COAI. CCI, therefore, is to determine whether the

conduct of the parties was unilateral or it was a collective action

based on an agreement. Agreement between the parties, if it was

there, is pivotal to the issue. Such an exercise has to be necessarily

undertaken by CCI. In Haridas Exports, this Court held that

where statutes operate in different fields and have different

purposes, it cannot be said that there is an implied repeal of one by

the other. The Competition Act is also a special statute which deals

with anti-competition. It is also to be borne in mind that if the

activity undertaken by some persons is anti-competitive and

offends Section 3 of the Competition Act, the consequences

thereof are provided in the Competition Act.

Page 22

xxxxxx

¶112Obviously, all the aforesaid functions not only come within

the domain of CCI, TRAI is not at all equipped to deal with the

same. Even if TRAI also returns a finding that a particular activity

was anti-competitive, its powers would be limited to the action that

can be taken under the TRAI Act alone. It is only CCI which is

empowered to deal with the same anti-competitive act from the

lens of the Competition Act. lf such activities offend the provisions

of the Competition Act as well, the consequences under that Act

would also follow. Therefore, contention of the IDOs that the

jurisdiction of CCI stands totally ousted cannot be accepted.

Insofar as the nuanced exercise from the standpoint of the

Competition Act is concerned, CCI is the experienced body in

conducting competition analysis. Further, CCI is more likely to opt

for structural remedies which would lead the sector to evolve a

point where sufficient new entry is induced thereby promoting

genuine competition. This specific and important role assigned to

CCI cannot be completely wished away and the "comity" between

the sectoral regulator (i.e. TRAI) and the market regulator (i.e.

CCI) is to be maintained.

¶113The conclusion of the aforesaid discussion is to give primacy

to the respective objections (sic objectives) of the two regulators

under the two Acts. At the same time, since the matter pertains to

the telecom sector which is specifically regulated by the TRAI Act,

balance is maintained by permitting TRAI in the first instance to

deal with and decide the jurisdictional aspects which can be more

competently handled by it. Once that exercise is done and there are

findings returned by TRAI which lead to the prima facie conclusion

that the IDOs have indulged in anti-competitive practices, CCI

can be activated to investigate the matter going by the criteria laid

down in the relevant provisions of the Competition Act and take it

to its logical conclusion. This balanced approach in construing

the two Acts would take care of Section 60 of the Competition Act

as well.

¶114We, thus, do not agree with the appellants that CCI could

have dealt with this matter at this stage itself without availing the

inquiry by TRAI. We also do not agree with the respondents that

Page 23

insofar as the telecom sector is concerned, jurisdiction of CCI

under the Competition Act is totally ousted. In a nutshell, that

leads to the conclusion that the view taken by the High Court is

perfectly justified. Even the argument of the learned ASG is that

the exercise of jurisdiction by CCI to investigate an alleged cartel

does not impinge upon TRAI's jurisdiction to regulate the industry

in any way. It was submitted that the promotion of competition and

prevention of competitive behaviour may not be high on the change

of sectoral regulator which makes it prone to "regulatory capture"

and, therefore, CCI is competent to exercise its jurisdiction from

the standpoint of the Competition Act. However, having taken

note of the skilful exercise which TRAI is supposed to carry out,

such a comment vis-a-vis TRAI may not be appropriate. No doubt,

as commented by the Planning Commission in its report of

February 2007, a sectoral regulator, may not have an overall view

of the economy as a whole, which CCI is able to fathom.

Therefore, our analysis does not bar the jurisdiction of CCI

altogether but only pushes it to a later stage, after TRAI has

undertaken necessary exercise in the first place, which it is more

suitable to carry out."

¶27A reading of the above judgment would clearly show that, in spite of having come to the conclusion that TRAI is the expert regulator constituted for the purposes of ensuring an orderly and healthy growth of telecommunication infrastructure services, the Supreme Court held that TRAI would not be the sole repository of the jurisdiction to deal even with the Competition Act and violations thereunder. However, the Supreme Court found that the jurisdictional facts and obligations under the TRAI Act, 1997 and the Regulations framed thereunder were first to be determined by the TRAI and therefore, held that the respondent no. 1 had to await the outcome of the proceedings before TRAI before

Page 24

proceeding with the investigation ordered by it under Section 26(1) of the Act.

¶28In the present case, the issue as to whether the 2016 Update/2021 Update announced by WhatsApp in any manner infringes upon the Right of Privacy of the users guaranteed under Article 21 of the Constitution of India is pending adjudication before the Supreme Court and this Court. The question regarding the 2016 Update/2021 Update not giving an option to opt-out is also an issue before the Supreme Court and this Court. However, the same cannot necessarily mean that during the pendency of those petitions, the respondent no.1 is completely denuded of the jurisdiction vested in it under the Competition Act, 2002 or that it must necessarily await the outcome of such proceedings. Therefore, it is not a question of lack of jurisdiction of the respondent no. 1, but rather one of prudence and discretion.

¶29It must be remembered that any finding by the respondent no. 1 on any of the issues would always be subject to the findings of the Supreme Court or of this Court in the above-mentioned petitions and would be binding on the respondent no. 1. Such is the case in every proceeding before the respondent no. 1. Nevertheless, while such issues are being determined by the Supreme Court or by the High Court, it cannot be stated that the respondent no.1 has to necessarily await the outcome of such proceedings before acting further under its own jurisdiction. The respondent no.1 has to proceed within its own jurisdiction, applying the law as it stands presently. In this regard, I may only note the submission of the learned ASG appearing for the respondent no. 1 that the scope of

Page 25

inquiry before the respondent no. 1 is not confined only to the issues raised before the Supreme Court or before this Court, but is much vaster in nature.

¶30In State of Maharashtra and Anr. vs. Sarva Shramik Sangh, Sangli and Ors.; (2013) 16 SCC 16, the Supreme Court in relation to the Industrial Disputes Act, 1947, has observed as under:- "27. It is, however, contended on behalf of the appellant that the said undertaking was being run by the Irrigation Department of the first appellant, and the activities of the Irrigation Department could not be considered to be an "industry" within the definition of the concept under Section 2(j) of the ID Act. As noted earlier, the reconsideration of the wide interpretation of the concept of "industry" in Bangalore Water Supply and Sewerage Board (supra) is pending before a larger Bench of this Court. However, as of now we will have to follow the interpretation of law presently holding the field as per the approach taken by this Court in State of Orissa v. Dandasi Sahu (supra), referred to above. The determination of the present pending industrial dispute cannot be kept undecided until the judgment of the larger Bench is received."

(Emphasis supplied)

¶31Similarly, in P. Sudhakar Rao & Ors. vs. U. Govinda Rao & Ors.,

(2013) 8 SCC 693, the Supreme Court observed that the pendency of a similar matter before a larger Bench did not prevent the Supreme Court from dealing with the issue on merit.

¶32The Division Bench of this Court in Union of India & Anr. vs. V.K. Vashisht; (judgment dated 19.12.2012 in WP (C) No. 5036/2012)

Page 26

has also observed on the question of effect of a reference to the larger Bench as under:-

"14. With regard to the contention that a similar matter is

pending before a Larger Bench of the Supreme Court, it would be

suffice to state that reference to Larger Bench does not lead to an

inescapable conclusion that such matters be kept in abeyance. In a

recent case reported as Ashok Sadarangani and Anr. vs. Union of

India and Ors., AIR 2012 SC 1563, the Supreme Court has

observed:

"19. As was indicated in Harbhajan Singh's case

(supra), the pendency of a reference to a larger

Bench, does not mean that all other proceedings

involving the same issue would remain stayed till a

decision was rendered in the reference. The

reference made in Gian Singh's case (supra) need

not, therefore, detain us. Till such time as the

decisions cited at the Bar are not modified or

altered in any way, they continue to hold the field."

¶33Though the above-mentioned judgments are in relation to issues pending before the larger bench of the Supreme Court, in my opinion, they show that even during such pendency, the other courts may and should continue to decide the cases and applying the law as it then prevails. This is so, as mere pendency of a reference before the larger bench does not denude the other courts of their jurisdiction to decide on the lis before them. Similarly, merely because of the pendency of the above proceedings before the Supreme Court and before this Court, the respondent no. 1 cannot be said to be bound to necessarily hold its hands and not exercise the jurisdiction otherwise vested in it under the statute.

Page 27

Maybe, it would have been prudent for the respondent no.1 to have awaited the outcome of the above-referred petitions before the Supreme Court and before this Court, however, merely for its decision not to wait, the Impugned Order cannot be said to be without jurisdiction or so perverse so as to warrant to be quashed by this Court in exercise of its extra-ordinary jurisdiction.

¶34I may also note that the challenge to the WhatsApp 2021 Update has been raised before the Supreme Court only in form of applications being filed by the petitioner and intervener therein. It is not stated by the petitioner(s) herein if the Supreme Court has taken cognizance of these applications or passed any order thereon. As far as the petitions before this Court are concerned, the same are also at a preliminary stage. The petitioner(s) instead of filing any application in these petitions (before the Supreme Court or before this Court) seeking appropriate clarification/relief, have filed an independent challenge to the Impugned Order. The same, in my opinion, is not sustainable.

¶35As far as the 2016 Update having been upheld by respondent no. 1 in Vinod Kumar Gupta (supra) or by this Court in Karmanya Singh Sareen (supra), it need only be noted that presently there is nothing on record to presume that the respondent no. 1 shall act contrary to the same. In any case, these orders are also pending challenge before the learned NCLAT and before the Supreme Court respectively.

¶36As far as the submission of Facebook on its impleadment in the investigation is concerned, the same is only stated to be rejected. A reading of the Impugned Order passed by the respondent no.1 itself

Page 28

shows that Facebook shall be an integral part of such investigation and the allegations in relation to sharing of data by Whatsapp with Facebook would necessarily require the presence of Facebook in such an investigation.

¶37In view of the above, I find no merit in these present petitions. The same are dismissed. The parties shall bear their own costs.

NAVIN CHAWLA, J APRIL 22, 2021 RN/A.

Page 1 * IN THE HIGH COURT OF DELHI AT NEW DELHI Reserved on: 13.04.2021 Date of Decision : 22.04.2021 + W.P.(C) 4378/2021 & CM 13336/2021 WHATSAPP LLC ..... Petitioner Through Mr.Harish Salve and Mr.Amit Sibal, Sr. Advocates with Mr.Tejas Karia, Mr.Shashank Mishra, Ms.Nitika Dwivedi, Mr.Aasish Somasi, Advs versus COMPETITION COMMISSION OF INDIA & ANR. ..... Respondents Through Mr.Aman Lekhi, Sr. Adv. and ASG, Mr.Samar Bansal, Mr.Anirudh Bakhru, Mr.Ritwiz Rishabh, Mr.Ujjwal Sinha, Ms.Mehak Huria, Mr.Aniket Seth, Ms.Shikha Sandhu, Ms.Devahuti Pathak, Ms.Harsheen Madan Palli, Mr.Sachin Mishra, Advs for R-1. Mr.Yaman Verma, Mr.Pavit Singh Katoch, Mr.Shyamal Anand, Advs. for R-2. + W.P.(C) 4407/2021 & CM 13490/2021 FACEBOOK INC ..... Petitioner Through Mr.Mukul Rohatgi, Sr. Adv. with Mr.Naval S. Chopra, Mr.Gauhar Mirza, Mr.Shantanu Mathur, Advs. versus Page 2 COMPETITION COMMISSION OF INDIA & ANR. ..... Respondents Through Mr.Aman Lekhi, Sr. Adv. and ASG, Mr.Samar Bansal, Mr.Anirudh Bakhru, Mr.Ritwiz Rishabh, Mr.Ujjwal Sinha, Ms.Mehak Huria, Mr.Aniket Seth, Ms.Shikha Sandhu, Ms.Devahuti Pathak, Ms.Harsheen Madan Palli, Mr.Sachin Mishra, Advs for R-1. Mr.Varun Pathak, Ms.Mitali Daryani, Ms.Madhavi Singh, Advs. for R-2. CORAM: HON'BLE MR. JUSTICE NAVIN CHAWLA 1. These petitions have been filed challenging the order dated 24.03.2021 passed by the respondent no.1 under Section 26(1) of the Competition Act, 2002 (hereinafter referred to as the 'Act'), forming a prima facie opinion of the violation of Section 4 of the Act by the petitioners, and directing the Director General of the respondent no.1 to cause an investigation to be made into the WhatsApp 2021 Update to its Terms and Privacy Policy. 2. The petitioner in W.P.(C) No.4378/2021 is providing software based application for sending and receiving variety of media texts, photos and videos, calls etc. by using the internet. It was acquired by the respondent no.2 (petitioner in W.P.(C) No.4407/2021) in the year 2014. It is claimed that WhatsApp is used by more than a billion users throughout the world and over 400 million users in India. Page 3 3. It is stated that prior to 25.08.2016, the Agreement between WhatsApp and its users was governed by the Terms of Service and Privacy Policy dated July, 2012. On 25.08.2016, WhatsApp updated its Terms and Services of Privacy Policy (hereinafter referred to as the '2016 Update'). It is claimed that WhatsApp users prior to the 2016 Update were given a one-time opportunity to 'opt-out' of Facebook using their WhatsApp account information. The users who joined WhatsApp after the release of 2016 Update, however, were not offered this 'opt-out' option. 4. The 2016 Update was challenged in a Public Interest Litigation, being W.P.(C) 7663/2016 titled Karmanya Singh Sareen & Anr. vs. Union of India & Ors., before this Court. This Court by its judgment dated 23.09.2016, was pleased to dispose of the petition with the following observations and directions:- "20. Having regard to the complete security and protection of privacy provided by the Respondent No.2 initially while launching "WhatsApp" and keeping in view that the issue relating to the existence of an individual's right of privacy as a distinct basis of a cause of action is yet to be decided by a larger Bench of the Supreme Court [vide K.S. Puttaswamy (supra)], we consider it appropriate to issue the following directions to protect the interest of the users of "WhatsApp": i) If the users opt for completely deleting "WhatsApp" account before 25.09.2016, the information/data/details of such users should be deleted completely from "WhatsApp" servers and the same shall not be shared with the "Facebook" or any one of its group companies. ii) So far as the users who opt to remain in "WhatsApp" are concerned, the existing information/data/details of such Page 4 users upto 25.09.2016 shall not be shared with "Facebook" or any one of its group companies. iii) The respondent Nos.1 and 5 shall consider th