Bengaluru: WhatsApp’s new privacy policy aimed at allowing the messaging app to share extensive metadata and business chats with parent Facebook and its companies could be viewed as an abuse of its dominant position, according to legal and privacy experts who expect this could also raise antitrust concerns with the Competition Commission of India (CCI).
In August last year, CCI had declared WhatsApp as a dominant player in the relevant market of ‘OTT messaging apps through smartphones in India’, saying the Facebook-owned app has the advantage of reaping the benefits of ‘network effect’. It added that the lack of interoperability between platforms is another concern, as a result of which customers may be unwilling to incur switching costs.
The changes proposed by WhatsApp does not offer users the option to opt out in case they do not want to share data with Facebook. Those who don’t agree to its new update will lose access to the app.
“It is not a question of downloads of rival apps, and it’s not just about the quality of service. The question is where is your network? With 400 million users, the shift cannot be swift,” said antitrust lawyer Abir Roy, who is the founder of Sarvada Legal.
‘A One-sided Contract’
“People are accepting the new privacy policy because it is very difficult to shift completely. And therein lies the issue. It’s a one-sided contract. CCI should look at it. They can take suo moto cognisance,” said Roy.
Emails sent to CCI chairman Ashok Gupta did not elicit a response.
WhatsApp, however, does not agree that its new privacy policy is an abuse of its dominant position in India. “No. We’re grateful that people continue to use and trust WhatsApp to communicate with family, friends and co-workers. We know we have to compete for users’ trust when it comes to privacy. We think competition on privacy is good because it will help make apps even more private and secure in the future,” Will Cathcart, global head of WhatsApp, told ET in an email.
Following the messaging app’s announcement of its new policy last week, downloads of rival app Signal, which has a minuscule base of 20 million monthly active users globally, has soared in India. The privacy activists fear that the network effect among WhatsApp’s users in India could still render it a dominant player in the market.
Network effects happen in markets where an increase in usage of a particular platform leads to a direct increase in the value for other users, which makes social media products a ‘winner takes all’ market.
Smriti Parsheera, a tech policy researcher with the National Institute of Public Finance and Policy ( NIPFP), believes that a combination of network effects and Facebook’s integration strategies mean that the user is not only tied to a product but to a family of companies, and this could make the entry of competitors and exit by users even harder. “Until that last person in your network doesn’t move out of WhatsApp, it may not be easy to completely give up on the system. CCI has held WhatsApp to be a dominant player. If a dominant player changes terms unilaterally it could constitute an unfair practice, which is a type of abuse of dominant position,” she said.
In August last year, CCI had declared WhatsApp as a dominant player in the relevant market of ‘OTT messaging apps through smartphones in India’, saying the Facebook-owned app has the advantage of reaping the benefits of ‘network effect’. It added that the lack of interoperability between platforms is another concern, as a result of which customers may be unwilling to incur switching costs.
WhatsApp has deferred the implementation of its new privacy policy from February to May following sustained outrage from users.
The changes proposed by WhatsApp does not offer users the option to opt out in case they do not want to share data with Facebook. Those who don’t agree to its new update will lose access to the app.
“It is not a question of downloads of rival apps, and it’s not just about the quality of service. The question is where is your network? With 400 million users, the shift cannot be swift,” said antitrust lawyer Abir Roy, who is the founder of Sarvada Legal.
‘A One-sided Contract’
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“People are accepting the new privacy policy because it is very difficult to shift completely. And therein lies the issue. It’s a one-sided contract. CCI should look at it. They can take suo moto cognisance,” said Roy.
Emails sent to CCI chairman Ashok Gupta did not elicit a response.
WhatsApp, however, does not agree that its new privacy policy is an abuse of its dominant position in India. “No. We’re grateful that people continue to use and trust WhatsApp to communicate with family, friends and co-workers. We know we have to compete for users’ trust when it comes to privacy. We think competition on privacy is good because it will help make apps even more private and secure in the future,” Will Cathcart, global head of WhatsApp, told ET in an email.
Following the messaging app’s announcement of its new policy last week, downloads of rival app Signal, which has a minuscule base of 20 million monthly active users globally, has soared in India. The privacy activists fear that the network effect among WhatsApp’s users in India could still render it a dominant player in the market.
Network effects happen in markets where an increase in usage of a particular platform leads to a direct increase in the value for other users, which makes social media products a ‘winner takes all’ market.
Smriti Parsheera, a tech policy researcher with the National Institute of Public Finance and Policy ( NIPFP), believes that a combination of network effects and Facebook’s integration strategies mean that the user is not only tied to a product but to a family of companies, and this could make the entry of competitors and exit by users even harder. “Until that last person in your network doesn’t move out of WhatsApp, it may not be easy to completely give up on the system. CCI has held WhatsApp to be a dominant player. If a dominant player changes terms unilaterally it could constitute an unfair practice, which is a type of abuse of dominant position,” she said.
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