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2022 Supreme(Del) 2078

IN THE HIGH COURT OF DELHI
Satish Chandra Sharma, Subramonium Prasad, JJ.
Whatsapp LLC - Appellant
Versus
Competition Commission of India - Respondent
LPA 163 of 2021 & CM Appls. 15908 of 2021, 16893 of 2021, 18800 of 2021, 18910 of 2021, 46058 of 2021, 46059 of 2021, 46655 of 2021 and LPA 164 of 2021 & CM Appls. 15931 of 2021, 18798 of 2021, 18912 of 2021, 40334 of 2021, 40335 of 2021 and 46656 of 2021
Decided On : 25-08-2022

Advocates appeared:
Harish Salve, Senior Advocate with Tejas Karia, Shashank Mishra, Ms Supritha Prodaturi and Shashank Mishra, Advocates, for the Appellant in LPA 163/2021 & CM APPLs. 15908/2021, 16893/2021, 18800/2021, 18910/2021, 46058/2021, 46059/2021, 46655/2021.
V.

Headnote:

The Delhi High Court held that the CCI has the jurisdiction to investigate WhatsApp's 2021 Terms of Service and Privacy Policy for potential violations of the Competition Act, 2002, despite the ongoing Supreme Court challenge to the policy. The court found that the CCI's investigation is not an adjudicatory function and does not affect the rights of the parties, and that the CCI has the authority to investigate alleged anti-competitive practices even if they are also being considered by other authorities.

Fact of the Case:

WhatsApp, a messaging platform, updated its Terms of Service and Privacy Policy in 2021. The updated policy allowed WhatsApp to share user data with other Facebook companies, including Facebook Inc. and Instagram. Several individuals and organizations challenged the policy, arguing that it violated users' privacy and was anti-competitive. The Competition Commission of India (CCI) initiated an investigation into the policy in 2021, but WhatsApp and Facebook challenged the CCI's jurisdiction to investigate the matter. The Delhi High Court upheld the CCI's jurisdiction, finding that the CCI's investigation was not an adjudicatory function and did not affect the rights of the parties.

Finding of the Court:

The Delhi High Court held that the CCI has the jurisdiction to investigate WhatsApp's 2021 Terms of Service and Privacy Policy for potential violations of the Competition Act, 2002, despite the ongoing Supreme Court challenge to the policy. The court found that the CCI's investigation is not an adjudicatory function and does not affect the rights of the parties, and that the CCI has the authority to investigate alleged anti-competitive practices even if they are also being considered by other authorities.

Issues: 1. Whether the CCI has the jurisdiction to investigate WhatsApp's 2021 Terms of Service and Privacy Policy for potential violations of the Competition Act, 2002, despite the ongoing Supreme Court challenge to the policy. 2. Whether the CCI's investigation is an adjudicatory function that affects the rights of the parties.

Ratio Decidendi: 1. The CCI's investigation is not an adjudicatory function and does not affect the rights of the parties. 2. The CCI has the authority to investigate alleged anti-competitive practices even if they are also being considered by other authorities.

Final Decision: The Delhi High Court dismissed WhatsApp and Facebook's challenges to the CCI's jurisdiction to investigate the 2021 Terms of Service and Privacy Policy.

JUDGMENT

Subramonium Prasad, J.

1. The Appellant seeks to challenge the Judgement dated 22.04.2021, passed by the learned Single Judge in W.P.(C) 4378/2021 & W.P.(C) 4407/2021 by which the learned Single Judge rejected the Writ Petition filed by the Appellants. The Appellants herein, by way of the abovementioned Writ Petition, had sought to challenge the Order dated 24.03.2021 passed by the Respondent No.1 herein directing the Director-General, CCI, to initiate investigation into the 2021 Terms of Service and Privacy Policy of the Appellant in LPA No.163/2021 on the ground that it violates the provisions of the Competition Act, 2002 (hereinafter referred to as 'the Act').

2. The facts, in brief, leading to the instant Appeals are as under:

i. Prior to 25.08.2016, WhatsApp (the Appellant in LPA 163/2021), a messaging platform, was governed by its Terms of Service and Privacy Policy of July 2012. In the year 2014, WhatsApp was acquired by Facebook (the Appellant in LPA 164/2021). Facebook Inc. is now known as "Meta Platforms", however, for ease of comprehension, this Court shall refer to the Appellant in LPA 164/2021 by its former nomenclature.

ii. On 25.08.2016, the Terms and Services and the Privacy Policy of WhatsApp (hereinafter referred to as "2016 Policy") was updated, and WhatsApp users were informed of Facebook's acquisition of WhatsApp and how Facebook would use WhatsApp's information for its advertisement and products. A one-time opportunity was given to WhatsApp users to opt out of Facebook using their information that was shared over WhatsApp. However, users who joined WhatsApp after the 2016 Policy, were not offered this option.

iii. The 2016 Policy, was challenged by way of a writ petition in Karmanya Singh Sareen & Anr. v. Union of India & Ors., W.P.(C) 7663/2016, and the policy was upheld vide Judgement dated 23.09.2016. This Judgment has been challenged before the Hon'ble Supreme Court and adjudication on the same is pending.

iv. On 04.01.2021, WhatsApp announced an update to its Terms of Service and Privacy Policy (hereinafter referred to as "2021 Policy"). The 2021 Policy was also challenged before this Court as well as the Hon'ble Supreme Court, and the said matters are still pending.

v. It is stated that cognizance was taken by the Respondent No.1, Competition Commission of India (hereinafter referred to as the "CCI"), of the 2021 Policy, and accordingly vide Order dated 24.03.2021, the CCI initiated a suo motu case under Section 26(1) of the Act by directing the Director-General, CCI (DG) to conduct an investigation in order to examine the potential abuse of dominance exercised by both the Appellants under Section 4 of the Act.

vi. This Order dated 24.03.2021 under Section 26(1) of the Act was challenged before this Court in W.P.(C) 4378/2021 and W.P.(C) 4407/2021 by the Appellants herein. Vide Judgment dated 22.04.2021, the learned Single Judge held that the CCI- Respondent No.1 in both the Appeals would not be divested of its jurisdiction that it possesses under the Act merely because an issue may be pending before the Supreme Court or the High Court. Furthermore, it was observed that 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 Appellants herein. Accordingly, the learned Single Judge dismissed the petitions filed by the Appellants herein.

vii. Aggrieved by the Judgment dated 22.04.2021, passed by the learned Single Judge in W.P.(C) 4378/2021 and W.P.(C) 4407/2021, the Appellants have approached this Court by filing the instant Appeals.

3. Mr. Harish Salve, learned Senior Counsel appearing for Appellant in LPA 163/2021, submits that WhatsApp provides an end-to-end encryption service for sending and receiving of messages to safeguard the privacy of its users. He submits that this very issue has been considered by this Court in Karmanya Singh Sareen & Anr. v. Union of India & Ors., W.P.(C) 7663/2016, and this Cou

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