Complying with NCLAT directions on privacy: Meta and WhatsApp

NEW DELHI: Social media giants Meta and WhatsApp on Monday told the Supreme Court that they would not insist on a stay of appellate company law tribunal (NCLAT) order prohibiting them from sharing data for non-core services and directing them to give users a transparent opt-out option for withdrawal of consent for such sharing.

Two weeks after SC severely criticised them on data sharing and the complicated process for withdrawal of users' consent, senior advocate Kapil Sibal informed a bench of CJI Surya Kant, Justices Joymalya Bagchi and Vipul M Pancholi that both Meta and WhatsApp will be fully compliant with the NCLAT directions on these two counts within the three month timeframe, that is by March 16.




Though the bench disposed of the two applications by Meta and WhatsApp seeking stay of the NCLAT order, senior advocate Madhavi Divan, appearing for Competition Commission of India (CCI), said the main issue is the direction of the regulator imposing a five-year ban on data sharing for advertisement purposes. SC posted further hearing on Apr 19. Sibal attempted to skirt the issue by first arguing that it can be decided during the final hearing on the appeals filed by Meta, WhatsApp and CCI and later by arguing that the companies are mandated by law to be compliant with Digital Personal Data Protection (DPDP) Act by June 2027.

Divan said that the NCLAT had stayed one of the crucial directions by the regulator to WhatsApp not to share user data collected on its platform with other Meta Companies or Meta Company Products for advertisement purposes for five years.

This needs to be adjudicated and an interim stay of the direction of NCLAT on this issue is needed, she said, adding that this is despite NCLAT agreeing with CCI that the these two companies enjoyed dominant position in market and cross-sharing of data between them enhanced Meta's competitive advantage in display advertising market, which created barriers for rivals that did not have comparable access to WhatsApp data.

CCI said, if the five-year ban on data sharing for advertising purposes is not enforced "grave prejudice would be caused to the market for OTT messaging apps on smartphones in India and market for Online Display Advertising in India."
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