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No Ads without consent: NCLAT tightens rules on WhatsApp data use, extends norms to Meta’s Ad engine
The tribunal noted that although Meta may not be formally dominant in the advertising market, its integration of WhatsApp data created structural entry barriers, reinforcing Meta’s data-driven advertising advantage.
On a request, the NCLAT granted WhatsApp three months to comply with the directions for bringing about necessary changes at their end.
In a significant judgment with far-reaching implications for India’s digital advertising ecosystem, the National Company Law Appellate Tribunal (NCLAT) has clarified that Meta Platforms must extend strict user consent, transparency, and opt-out safeguards to all uses of WhatsApp user data for advertising, not just non-advertising purposes.
The ruling stems from the long-running dispute between WhatsApp LLC and the Competition Commission of India (CCI) over WhatsApp’s 2021 privacy policy, which enabled cross-platform data sharing with Meta entities such as Facebook and Instagram. While the tribunal had earlier struck down a controversial five-year ban on using WhatsApp data for advertising, it has now decisively reaffirmed that advertising-related data use cannot escape competition law scrutiny.
In its findings, the tribunal upheld the CCI’s conclusion that WhatsApp’s data-sharing practices strengthened Meta’s position in the online display advertising market, effectively denying market access to rival ad-tech and digital advertising platforms that lack comparable access to WhatsApp’s vast user data pool.
The tribunal noted that although Meta may not be formally dominant in the advertising market, its integration of WhatsApp data created structural entry barriers, reinforcing Meta’s data-driven advertising advantage. This linkage between messaging data and ad targeting was central to the competition concerns.
The ruling is a clear principle: any non-essential data use — including advertising — can occur only with the user’s express and revocable consent. The tribunal emphasised that WhatsApp cannot impose “take-it-or-leave-it” data terms or claim open-ended rights over user data, regardless of whether the use is for ads or other commercial purposes.
Crucially, the tribunal clarified that its earlier operative order had inadvertently diluted this principle by excluding one disclosure requirement. That error has now been corrected, ensuring that Meta must provide:
Detailed disclosure of what WhatsApp data is shared with Meta companies
Clear linkage between each category of data and its advertising purpose
Opt-out mechanisms that are revocable at any time
Full transparency across both advertising and non-advertising data use
Why the judgment matters for Meta’s ad business
For Meta, India is one of its largest growth markets for click-to-WhatsApp ads, conversational commerce, and small-business advertising. The clarification directly affects how data flows between WhatsApp and Meta’s ad stack, particularly for targeting, attribution, and optimisation.
While Meta argued that advertising-related data sharing occurs only through optional features and does not condition access to WhatsApp, the tribunal rejected this defence, stating that optionality does not dilute the requirement of informed consent and transparency.
This effectively raises compliance costs and operational complexity for Meta’s ad products linked to WhatsApp, forcing tighter internal firewalls, clearer disclosures, and potentially reduced data leverage.
Impact on India’s digital advertising ecosystem
The ruling is expected to recalibrate competitive dynamics in India’s fast-growing digital advertising market by:
Curtailing unchecked cross-platform data pooling by Big Tech
Strengthening the position of independent ad-tech and martech players
Aligning competition law enforcement with India’s upcoming data protection regime
Setting a precedent that messaging platforms cannot be silently converted into advertising data engines
Industry executives say the decision signals a tougher regulatory stance on “data dominance” as a competitive weapon, especially where consumer communication platforms intersect with advertising monetisation.
The tribunal also referenced India’s Digital Personal Data Protection Act and Rules, noting that consent architecture and transparency obligations are inherently complex and time-consuming to implement. Accordingly, WhatsApp has been granted three months to comply with the clarified directions.
For advertisers and platforms alike, the judgment underscores a new reality: growth in digital advertising will increasingly depend not just on scale and data, but on demonstrable user choice and regulatory compliance.
On a request, the NCLAT granted WhatsApp three months to comply with the directions for bringing about necessary changes at their end.
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