India WhatsApp Privacy Fight May Affect Multinationals

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By Nayanima Basu

The Indian Supreme Court’s review of Facebook Inc.'s and WhatsApp Inc.'s data security practices may lack teeth but also presages a desire for a stronger privacy regime and oversight of multinationals, internet and privacy specialists told Bloomberg BNA.

WhatsApp revised its privacy policy in August 2016 to share data with owner Facebook and allow targeted ads and messages from businesses, laying the groundwork for the free messaging service to monetize such data. But a public interest complaint, akin to a class action in the U.S., filed by two Indian students and regulatory inquiries have resulted in India’s top court asking Facebook and WhatsApp about their data protection practices.

The court’s move Jan. 17 to seek the information may make multinational companies jittery, Rahul Khullar, former secretary of commerce for India’s Ministry of Commerce and Industry, told Bloomberg BNA. Although stronger data privacy enforcement is needed, all the high court has done is aggravate Facebook and other large multinationals, he said.

Facebook is the second largest media company in the world with a $367 billion market capitalization, Bloomberg data show. It acquired WhatsApp in 2014 for approximately $18 billion, data show. Facebook didn’t immediately respond to Bloomberg BNA’s e-mail request for comments.

Khullar, who is also the former chairman of the Telecom Regulatory Authority of India, said multinationals need to be more careful in sharing their data because of the “distinction between digital non-commercial data and digitally sensitive data,” he said. A strong national data privacy law would resolve some of these issues, he said.

An U.S. official based at the U.S. Embassy in New Delhi, speaking on background, told Bloomberg BNA that any maneuver that restricts the free flow of data may harm the operations of U.S.-based multinationals and similar companies.

Clarity, Stronger Laws Needed

Some internet and privacy specialists say that Facebook and WhatsApp failed to provide effective data protection under Indian law.

Pranesh Prakash, policy director at the nonprofit digital technologies advocate Centre for Internet and Society, told Bloomberg BNA that Facebook and WhatsApp are in violation of Section 43A of the Information Technology Act that lays out “reasonable security practices and procedures.”

Indian citizens are reaching out to the courts for data protection enforcement because lawmakers have “failed to do so,” he said. That highlights the need for robust data protection laws in India and, he said, hopefully “goads the government and Parliament into enacting a privacy and data protection law.”

In lieu of further legislative action, companies may be able to resolve some issues by establishing clearer privacy policies, Niraj Gunde, a Mumbai-based attorney and consumer advocate, told Bloomberg BNA. Most software agreements have a clandestine clause that allows companies to access user data, but those agreements should also state how the data will be used, stored and eventually disposed of, he said.

To contact the reporter on this story: Nayanima Basu in New Delhi at correspondents@bna.com

To contact the editor responsible for this story: Donald Aplin at daplin@bna.com

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