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India’s National Company Law Appellate Tribunal (NCLAT) has temporarily suspended a five-year ban imposed on data sharing between WhatsApp and its parent company, Meta Platforms. This ruling comes as a relief to the U.S.-based tech giant, which had argued that the ban could severely impact its advertising business and the operational model of WhatsApp in India.
In November 2024, the Competition Commission of India(CCI) prohibited WhatsApp from sharing its users’ data with Meta companies for advertising purposes. Meta challenged the order, asserting that the CCI lacked the necessary technical expertise to make informed decisions. The company announced that it might have to pause or cancel enhancements if the law prohibits linking WhatsApp user activities to ads on Facebook and Instagram.
Meta emphasized that the new regulations could “lead to a collapse” of WhatsApp’s data-driven business model, which plays a crucial role in supporting small businesses. For instance, Indian fashion brands leverage focused advertising strategies to engage with their audience.
The postponement of the NCLAT’s ruling allowing Meta to continue its operations during the appeal process offers considerable backing to the company and its numerous users in India. Meta operates in a market with 500 million WhatsApp users and 350 million Facebook users, making it their largest market. In the 2023-24 financial year, Facebook India Online Services achieved its highest revenue milestone of $351 million since 2019.
A Meta spokesperson welcomed the tribunal’s ruling, stating that the company will “evaluate next steps.” The CCI has yet to comment on the decision but has the option to escalate the matter to India’s Supreme Court.
The privacy updates from WhatsApp in 2021 sparked widespread dissatisfaction, signaling the start of this ongoing concern. Users reported that they were required to accept new rules, or else their access to the WhatsApp platform would be terminated. The investigation revealed that WhatsApp was violating antitrust regulations due to its unfair business practices.
This case mirrors a similar lawsuit faced by WhatsApp, where European authorities accused the company of violating data transparency regulations in 2021. In response to criticism from EU users, WhatsApp has enhanced its user terms specifically for European audiences.
As Meta awaits the final verdict, the suspension of the data-sharing ban offers the company some breathing room to continue its operations in one of its most critical markets while navigating regulatory hurdles.
