The Competition Commission of India has penalised Meta and WhatsApp for the latter’s “take-it or leave-it” approach in implementing its 2021 updated privacy policy and terms of service.

The policy that mandated data sharing with Meta allegedly exploited users’ lack of alternatives and infringed user autonomy. Separately, the CCI found that sharing WhatsApp user data with Meta for purposes unrelated to WhatsApp services creates entry barriers for competitors in the online display advertising market.

This is an important case not only because it’s the first big enforcement action that Meta has faced at the CCI but also because it provides an insight into the CCI’s approach in assessing the level of harm enterprises with market-power can cause.

The case is due to be heard by the appellate tribunal starting Wednesday where the key question the court will assess is if the CCI’s analysis adheres with its previous decision mandating an assessment of anti-competitive effects in the market. The CCI decision is a mix of a few hits and some significant misses but we focus on the decision’s reliance on presumptive harms and speculation over a well-founded effects-based assessment.

Effects Doctrine

The effects doctrine emphasises the necessity of examining the actual repercussions of contested conduct on competition, consumer welfare, and market dynamics. By focusing on measurable outcomes, this approach ensures antitrust enforcement remains grounded in economic realities. In abuse of dominance cases, effects-based analysis is indispensable for establishing how specific conduct distorts competition or harms consumers. Authorities often rely on rigorous empirical analysis to determine effects and handle with care the submissions of the rivals as they are naturally laced with self-interest and strategic intent

In 2023, the appellate tribunal issued a decision in Android mobiles finding that, to establish an abuse of dominance, the CCI must perform an effects analysis. It referred extensively to Indian legislation, committee reports, case law and commentary, as well as the EU case law and commentary.

The tribunal concluded that “for proving abuse of dominance under Section 4, effect analysis is required to be done, and the test to be employed in the effect analysis is whether the abusive conduct is anti-competitive or not” (emphasis added). It also finds that “conduct of a dominant enterprise or group, which is held to be abusive has to be anti-competitive conduct and there has to be effect analysis on the above point”, — evidence adduced must show restrictive effects.

The text of the decision — “whether the abusive conduct is anti-competitive or not” implies that an analysis of actual restrictive effects is required, instead of a future-looking analysis. The decision does not say the test should be if the abusive conduct ‘can be’ be anti-competitive, or ‘may be’ anti-competitive.

More Nuanced Analytical Framework

While the decision attempts to present competitors’ written statements, and some data about Meta’s/ WhatsApp’s presence in the markets under assessment, the actual effects of WhatsApp’s updated privacy policy are not assessed in detail. Theoretical assumptions of harm like rivals “|may struggle” because they “would be unable to offer […] personalisation” such that “Meta, can raise entry barriers” and use its “ability to leverage […] data set[s]” are peppered across the decision. These assumptions do not by themselves reflect market realities and also do not follow the real legislative mandate of the Competition Act — protect consumers by ensuring fair markets, without unjustly penalising companies for their size or perceived advantage. The decision finds that an analysis of actual anticompetitive effects is not required, and violations can be found based on “potential impact” and “likelihood” of some restrictive effects.

• Seeing half the picture. The decision relies on competitors’ views about Meta’s data advantage that they are unable to replicate, but fails to test if Meta’s conduct has led to any disadvantage to the advertisers through empirical analysis. The right approach would have been to evaluate the nature of migration patterns to competing platforms, or assess multi-homing by advertisers.
• Correlation doesn’t necessarily mean causation. The decision assumes that Meta’s data aggregation practices have created barriers to entry in online display advertising, but this conclusion lacks empirical support. It does not address whether Meta’s competitors were materially disadvantaged or if smaller players faced exclusionary effects that can be attributed to Meta’s conduct. Moreover, the analysis never quantifies the extent of reduced market entry or weakened competition. Importantly, the decision does not explore if Meta’s practices restricted competition, whether rivals struggled due to Meta’s access to data or if third-party data could have enabled competitors to remain viable.
• Third, conflating preventive powers with substantive analysis. The decision relies on provisions empowering the CCI to issue injunctions to argue that it is sufficient to assess potential effects and it acts in a preventive capacity. The CCI’s role while issuing an injunction (to stop anticompetitive conduct before it occurs or spreads) is entirely different from its role while issuing a final order after an investigation. An injunction serves as an immediate, temporary measure to preserve market conditions and prevent harm, while the final stage involves a comprehensive evaluation of all evidence, the establishment of clear liabilities, and the determination of long-term consequences for the parties involved. The preventive nature of an injunction does not align with the need for a conclusive , evidence-based judgment at the final stage of proceedings.
• Fourth, misapplication of the ‘long-arm’ provision in assessing abuse of dominance. The decision also asserts that testing actual effects for abuse of dominance would be inconsistent with the CCI’s power to assess foreign conduct that has an impact in India, suggesting that it only needs to assess the likelihood of effects. However, this lacks legal basis. This ‘long-arm’ provision, which addresses foreign conduct, should be treated differently and in the context of the statutory standards laid down for it. Differing standards for different provisions are already well accepted. For example, Indian cartels are automatically assumed to be anti-competitive, while for foreign cartels impacting India, there must be proof of actual or likely harm to competition.

Challenges

The multi-sided nature of digital platforms and the intricate dynamics of data-centric markets demand sophisticated analytical models. The CCI’s reluctance to engage with these complexities suggests methodological or resource limitations.

• By emphasising data as a critical competition parameter, the CCI presumes harm without analysing the context-specific implications of data-sharing practices. This oversimplification undermines the robustness of its conclusions.
• Reliance on presumptive harms — such as equating mandatory data sharing with market foreclosure — diverges from global trends favouring empirical assessments. Jurisdictions, such as the EU and the US, increasingly prioritise effects-based analyses in antitrust enforcement.

The CCI’s decision regarding WhatsApp’s privacy policy marks a significant juncture in India’s antitrust jurisprudence. However, its neglect of the effects doctrine diminishes its analytical rigor and practical value. In the race to regulate, even the best-intentioned referee can risk misplacing the goalposts.

As digital markets evolve, it is imperative for the CCI to ground its analysis in empirical evidence and economic realities. Integrating the effects doctrine into future decisions will enhance the credibility and effectiveness of regulatory outcomes while solidifying the CCI’s role as a visionary enforcer in the digital age. Overreliance on presumptions risks fostering an antitrust framework that penalises legitimate business practices without clear evidence of harm.

Toshit Shandilya is a partner and Mohith Gauri is a senior associate at AZB & Partners’ competition law team. The views expressed are personal and should not be attributed to the firm.