New Delhi, Nov. 5 -- The National Company Law Appellate Tribunal (NCLAT) on Tuesday upheld a Rs.213.14 crore penalty imposed on WhatsApp and its parent company Meta Platforms Inc for abusing their dominant market position through the messaging platform's 2021 privacy policy update, but set aside a five-year ban on data sharing for advertising purposes. A bench comprising NCLAT chairperson Justice Ashok Bhushan and technical member Arun Baroka at the tribunal's principal seat in New Delhi agreed with the Competition Commission of India's (CCI) findings that WhatsApp's 2021 privacy update forced users into data sharing across Meta's platforms. The tribunal found that WhatsApp's "take-it-or-leave-it" policy deprived users of meaningful consent, eroded privacy as an essential aspect of service quality, and created barriers for rival platforms in the online advertising ecosystem, violating Sections 4(2)(a)(i) and 4(2)(c) of the Competition Act. It found no flaw in the CCI's calculation or methodology, holding that the penalty was justified given the extensive data sharing between WhatsApp and Meta had resulted in "anti-competitive effects" and was "proportionate to the gravity of the abuse". Meta and WhatsApp had challenged the imposition of a joint penalty, arguing they are separate and independent legal entities. The NCLAT, however, held that while they are distinct entities, Meta exercises "complete control over WhatsApp's operations, with shared executives and no separate financial accounts". It observed that extensive data sharing between the two had created a situation of market denial, justifying a combined penalty. "We need not pierce the corporate veil but the Commission has established that due to excessive data sharing between WhatsApp and Meta, a situation of market denial has been created. Therefore, there is a justification in imposing penalty on both in a combined manner as has been worked out by the Commission," the NCLATsaid. However, the NCLAT set aside the CCI's finding under Section 4(2)(e) relating to leveraging of dominance, where the regulator had held that Meta used WhatsApp's data advantage in the messaging market to expand its position in online display advertising. The tribunal said that since WhatsApp and Meta are separate legal entities, leveraging dominance from messaging to advertising could not be established in law. "The plea is allowed only to the extent of the findings of the Commission in so far as it holds breach of Section 4(2)(e) of the Act and to setting aside the directions in paragraph 247.1 (the ban on WhatsApp sharing data with other Meta companies). The rest of the order dated 18.11.2024 is upheld," the NCLAT said. The tribunal upheld the CCI's directions requiring WhatsApp to ensure user autonomy and transparency in data sharing, mandating that users be clearly informed about what data is collected, why it is shared and with whom, and that they be given a clear opt-out option. The NCLAT emphasised that users must have control over their personal information, including the right to decide what data is collected, for what purpose and for how long, and that any sharing of data beyond essential services must be based on "express, revocable consent". The dispute stems from WhatsApp's January 2021 announcement of revised terms of service and privacy policy, which came into effect on February 8 that year....