Rethinking Effects in Digital Markets through WhatsApp/META Lens

Introduction

India’s competition law framework is entering a decisive moment as digital platforms redefine how market power operates. Traditional antitrust principles, built around measurable outcomes like price and output, are being tested by ecosystems where dominance is sustained through data concentration, network effects, and cross-platform integration. These developments have forced the Competition Commission of India (“CCI”) to confront a central question that is, can an effects-based approach designed for conventional markets adequately capture structural and latent forms of harm that emerge in digital environments?

This tension is at the heart of the CCI’s case concerning WhatsApp’s 2021 Privacy Policy, where Meta argued before the NCLAT that the CCI’s findings rested on hypothetical future conduct and lacked proof of actual harm in online advertising. The argument mirrors the Supreme Court’s reasoning in CCI v. Schott Glass (“Schott Glass”), which emphasized demonstrable effects before establishing abuse under Section 4(2) of the Competition Act, 2002 (“Act”).

\However, as this article contends, the WhatsApp/Meta proceedings reveal how an insistence on observable effects overlooks the structural mechanisms of exclusion embedded within digital platforms. By using this case as a focal point, this article critiques the limitations of the effects-based approach and proposes a structural and probabilistic framework better suited to the architecture of digital markets.

Understanding Meta’s Defence through Schott Glass

In 2021 WhatsApp introduced a substantial update to its Privacy Policy requiring users to consent to the sharing of their messaging data with Meta, the parent company for purposes including targeted advertising and integration with Meta’s broader ecosystem. Users who declined to provide consent were effectively barred from continuing to use the platform, making data-sharing a mandatory condition for access. This design transformed WhatsApp’s messaging network into a proprietary input for Meta’s advertising and service infrastructure, linking everyday communications directly to commercial applications across its suite of platforms.

This integration of WhatsApp into Meta's ecosystem has transformed the competitive landscape in adjacent markets. With over 2 billion monthly active users, WhatsApp is the default messaging platform for millions, providing Meta with unique scale and data insights. Leveraging these assets, Meta has improved ad-targeting precision, boosting lead acquisition by up to 13%, and introduced ads in the Updates tab, projected to generate $10.2 billion annually by 2028. However, Firms without access to WhatsApp’s datasets and cross-platform integration face operational constraints such as user acquisition, ad-targeting, and feature development, which highlights the contrast between their limited capabilities and Meta’s ability to convert its data and network advantages into superior user retention, measurable advertising performance, and revenue streams that competitors cannot match, clearly establishing its market dominance even in the absence of immediate price or output effects.

Meta challenged the CCI’s findings before the NCLAT, contending that the Commission’s conclusions were based on speculative future harms rather than demonstrable anti-competitive effects. In support, Meta relied on the Supreme Court’s reasoning in Schott Glass, which held that liability under Section 4(2) arises only when conduct produces measurable distortions in competition rather than from dominance or contractual arrangements alone. In Schott Glass, the Court applied the Section 19(4) factors namely market share, enterprise resources, entry barriers, countervailing buyer power, consumer dependence and overall market structure to determine whether alleged margin squeezes materially impeded competitors. Evidence showing that rivals retained meaningful market access and continued profitability led the Court to conclude that no actionable abuse had occurred.

Meta’s reliance on this framework highlighted that, under Indian competition law, enforcement requires proof of tangible competitive harm, such as reduced rival profitability, constrained entry, or observable shifts in output, before a violation can be established. Section 19(4) provides the statutory threshold for this assessment, guiding authorities to distinguish conduct reflecting competitive efficiency from conduct that materially impairs competitors. Viewed through the lens of Schott Glass, the WhatsApp-Meta case exemplifies the application of effects-based analysis in India, offering a doctrinal baseline for assessing competitive harm in digital markets. This baseline provides context for evaluating the unique challenges posed by platform architectures characterized by network effects, multi-sided interactions, and data-driven interdependencies.

Limits of CCI’s Effects-Based Approach

In its order imposing a penalty of INR 213.14 crore on Meta and WhatsApp for abuse of dominance under the Act the CCI acknowledged that the integration of user data across Meta’s platforms could reinforce network effects and create entry barriers in digital advertising and communication markets. The Commission recognised that “data concentration” and “cross-linking of services” had the potential to strengthen Meta’s ecosystem, thereby constraining rivals that lacked access to comparable datasets. Yet, despite identifying these dynamics, the CCI’s reasoning remained anchored in an effects-based framework. It treated competitive harm as contingent upon observable market outcomes such as demonstrable foreclosure, loss of rival viability, or user attrition, rather than the structural configuration of the platform that generated exclusion in the first place.

This approach exposes a core limitation of the effects-based model in digital markets. It treats competition as a static outcome rather than as a dynamic process shaped by platform architecture. While the CCI acknowledged the relevance of network effects and data integration, it regarded them as contextual features rather than as mechanisms of harm. By insisting on tangible, measurable distortions, the analysis effectively deferred intervention until exclusion had already materialised, allowing structural advantages to solidify into durable market power.

The Organisation for Economic Cooperation and Development Report on Competition in Digital Markets observes that even marginal structural advantages, such as early control over user data or interlinked services, can tip markets irreversibly before traditional indicators such as price or output effects emerge. Structural exclusion operates not through discrete acts of conduct but through design choices that determine who can participate in the market and on what terms. Viewed through this lens, the integration of WhatsApp’s user base into Meta’s broader data ecosystem represents a form of architectural foreclosure because Competitive asymmetry becomes embedded within the infrastructure of participation itself, insulating Meta’s advertising operations from meaningful contestation.

The limitations of the CCI’s evidentiary approach are further compounded by its continued reliance on traditional analytical tools such as the Small but Significant Non-Transitory Increase in Price (“SSNIP”) and Small but Significant Non-Transitory Decrease in Quality (“SSNDQ”) tests. Both tests presuppose the existence of a monetary price or a quantifiable quality metric to infer consumer switching behavior and market boundaries. In zero-price ecosystems such as WhatsApp, where users pay with data and attention, these assumptions collapse. Harms emerge not through price increases or reduced output but through subtler dependencies, including diminished privacy, reduced interoperability, and loss of autonomy. These harms, being intangible and anticipatory, remain invisible within SSNIP and SSNDQ frameworks that rely on observable, market-based indicators.

Eventually, the CCI’s effects-based orientation remains tied to an ex-post evidentiary framework that demands proof of realised harm, such as, changes in market share, rival profitability, or user migration before regulatory intervention. This posture renders enforcement reactive rather than preventive, overlooking how the very structure of interconnection and data control can foreclose competition long before measurable distortions appear. By analysing the WhatsApp/Meta integration solely through observable consequences, the Commission inadvertently reaffirmed the limits of an effects-based framework ill-suited to structural exclusion in digital markets. Addressing such exclusion therefore requires a shift toward a structural assessment of digital architectures, evaluating how platform design itself facilitates competitive foreclosure even before its effects crystallise.

Way Forward: Addressing Structural Denial in Digital Markets

Meta’s integration of WhatsApp’s messaging data with its advertising infrastructure constitutes a denial of market access under Section 4(2)(c) of the Competition Act, 2002. The provision prohibits a dominant enterprise from engaging in conduct that denies access to the market “in any manner.” In Umar Javeed, Sukarma Thapar, Aaqib Javeed v. Google LLC & Ors., the CCI interpreted this phrase broadly, holding that unfair conditions, technical barriers, and opaque design choices can themselves amount to exclusionary denial. Viewed through this lens, Meta’s conduct linking user data across platforms without consent creates a structural foreclosure, embedding competitive asymmetry within the architecture of its digital ecosystem.

Recognising such integration as structural denial offers a foundation for recalibrating the CCI’s enforcement approach. Using its powers under Sections 64(1) and 64(2)(h), the Commission should frame rules defining structural thresholds such as user concentration, data control, transaction volume, and network dependencies that serve as presumptive indicators of potential foreclosure. Once these thresholds are triggered, specific digital practices such as self-preferencing, mandatory data sharing, or cross-use of personal data across services should be rebuttably presumed to distort competition unless justified by demonstrable efficiencies.

A presumption-based model of this kind strengthens preventive enforcement in markets where harms are probabilistic and cumulative rather than immediately observable. Studies of global competition authorities show that effects-based standards with high evidentiary burdens succeed in only about 40% of judicial reviews, while frameworks incorporating rebuttable presumptions or structural indicators achieve success rates near 68.5%. This divergence underscores that rigid proof-based enforcement often collapses under evidentiary uncertainty, whereas presumption-driven systems maintain deterrence and predictability.

By implementing structural thresholds, presumptive rules, and a probabilistic enforcement framework, the CCI would be able to address exclusionary conduct before measurable harm materialises. In scenarios like WhatsApp/Meta, this approach would have flagged the integration of user data with Meta’s advertising infrastructure as a structural barrier, preventing competitors from being foreclosed ex ante. More broadly, it equips Indian competition law to intervene proactively in digital markets where network effects, multi-sided interactions, or data-driven dependencies create hidden but durable advantages. Implementing these reforms would not only operationalise Section 4(2)(c) for structural denial but also provide a forward-looking mechanism to prevent future platform architectures from entrenching dominance in ways that traditional effects-based enforcement cannot detect.