Supreme Court’s Hard Look at Meta–WhatsApp: Rethinking Consent, Competition and Data Ownership

Why in News ?

In a significant hearing, the Supreme Court of India sharply questioned the data practices of Meta, the parent company of WhatsApp, suggesting that the extraction of user data may resemble “theft” rather than voluntary exchange.

A three-judge Bench observed that in markets dominated by a few digital platforms, user consent may be illusory, as individuals have little real choice but to accept data-sharing terms. The court indicated that market dominance can convert consent into coercion, raising concerns that go beyond privacy to challenge the very economic foundations of data-driven business models.

These observations signal a possible judicial rethink on how consent, competition, and data ownership are understood in India’s rapidly expanding digital ecosystem, with far-reaching implications for Big Tech regulation in the world’s largest internet market.

Background and Context

• India hosts over 500 million WhatsApp users, making it one of the world’s largest digital markets.
• Digital platforms increasingly operate on a data-driven business model, where:
  • Services appear “free”,
  • Users pay with personal and behavioural data,
  • Data is monetised through targeted advertising and profiling.
• This has raised fundamental regulatory questions around:
  • Informed consent,
  • Market power,
  • Fair competition,
  • Ownership and economic value of personal data.
• India’s regulatory framework has evolved through:
  • Competition law (Competition Act, 2002),
  • The Digital Personal Data Protection Act, 2023,
  • Sectoral and judicial oversight.
• The Meta–WhatsApp case sits at the intersection of:
  • Privacy rights,
  • Competition law,
  • Digital economy governance,
  • Constitutional values of autonomy and fairness.

Meta–WhatsApp Regulatory Friction

Origin of the Dispute

• In 2021, WhatsApp introduced a “take-it-or-leave-it” privacy policy update.
• The revised policy enabled:
  • Greater data sharing between WhatsApp and its parent company, Meta.
• Although WhatsApp claimed that:
  • End-to-end encryption continued to protect message content,
• Regulators flagged concerns over:
  • Use of metadata,
  • Profiling,
  • Targeted advertising,
  • Business intelligence.

Competition Commission of India’s (CCI) Intervention

• The CCI viewed the update as an abuse of dominant market position.
• Key observations included:
  • For most Indian users, opting out of WhatsApp is not a realistic choice.
  • WhatsApp functions as India’s “digital town square”, making consent effectively coerced.
• Penalty imposed: ₹213.14 crore (≈ $25 million).
  • While modest for a trillion-dollar firm, it carried strong symbolic and regulatory weight.
• Meta challenged the CCI order before the National Company Law Appellate Tribunal (NCLAT).

NCLAT’s Nuanced Verdict

• The NCLAT delivered a split decision:
  • Upheld the CCI’s finding of abuse of dominance,
  • Retained the monetary penalty,
  • Set aside the directive barring Meta from sharing WhatsApp user data with its other entities for five years for advertising purposes.
• The tribunal’s reasoning rested on:
  • A traditional view of corporate integration, treating intra-group data-sharing as common in the digital economy,
  • Concern that a five-year moratorium would be a disproportionate “structural remedy”,
  • Preference for privacy-specific legislation, rather than competition law, to govern data flows.
• With the Digital Personal Data Protection Act, 2023 in place, the NCLAT appeared inclined to defer questions of consent and data use to the emerging data protection regime.

Why Meta Took the Dispute to the Supreme Court

• Dissatisfied with:
  • The financial penalty,
  • The legal reasoning,
  • Meta appealed to the Supreme Court of India.
• Meta sought relief from what it perceived as:
  • Excessive regulatory interference,
  • Restrictions on its data-sharing practices and business model.

Supreme Court’s Emerging Jurisprudence on Data and Dominance

1. Hard Line on Market Dominance

• The Chief Justice remarked that:
  • Opting out of WhatsApp in India is akin to “opting out of the country”.
• This highlights:
  • Strong network effects,
  • User lock-in,
  • The erosion of meaningful consumer choice.
• The court reinforced the idea that:
  • Consent in monopolistic or oligopolistic markets may be illusory.

2. Shift from Privacy to the Economic Value of Data

• Justice Joymalya Bagchi reframed the debate:
  • Beyond privacy,
  • Toward the economic value of personal data.
• While the DPDP Act, 2023 protects informational privacy, it is largely silent on:
  • Rent-sharing — who benefits economically when platforms monetise user data.
• The court questioned:
  • If Indian users’ behavioural data fuels targeted advertising, who owns the profits generated from that data ?

3. Towards a ‘Data-as-Property’ Approach

• The court’s reasoning hinted at:
  • A data-as-property or data-as-economic-asset framework,
  • Aligning India closer to the European Union’s Digital Services Act model,
  • Rather than the more laissez-faire approach traditionally associated with the United States.
• By impleading the Ministry of Electronics and Information Technology (MeitY), the court compelled the government to reflect on:
  • Whether privacy protection alone is sufficient, or
  • Whether the economic value of citizens’ digital footprints warrants a new form of sovereign and regulatory protection.

What Happens Next ?

1. Court’s Growing Discomfort with the ‘Free Internet’ Model

• The court’s remark that users are “not only consumers, but also products” reflects unease with:
  • Business models built on invisible data extraction,
  • Targeted advertisements following private digital interactions.
• Such practices are increasingly viewed as:
  • Intrusions into autonomy,
  • Not merely innovations.

2. Transparency vs Real Understanding

• The court signalled that:
  • Formal consent does not equal informed consent,
  • Especially in a country with:
    • Uneven digital literacy,
    • Asymmetric bargaining power between users and platforms.

3. Ultimatum to Meta

• The Supreme Court has issued a clear warning:
  • Meta must give an undertaking to stop sharing personal data,
  • Or risk dismissal of its case and the imposition of “very strict conditions”.

4. Message from the Judiciary

• The judiciary’s stance is unmistakable:
  • Indian users are no longer passive data sources.
  • The long-tolerated model of invisible data extraction may be nearing its end.

Significance of the Case

• Redefinition of Consent:
  • Moves beyond formal acceptance to examine real choice and power asymmetry.
• Integration of Competition and Data Law:
  • Bridges privacy regulation with market dominance and economic exploitation.
• Economic Justice in the Digital Age:
  • Raises the question of whether citizens should share in the economic value derived from their data.
• Regulatory Precedent:
  • Sets the stage for stricter oversight of Big Tech in India’s digital economy.
• Global Implications:
  • Positions India as a potential leader in shaping rights-based digital governance frameworks.