WhatsApp users will have noticed a recent intensification of pop-ups nudging them to agree to the app’s new terms of service. The cliff-edge deadline for users to accept these new terms – with WhatsApp announcing that those who failed to do so would lose functionality on the app – had been set for Saturday, May 15. That deadline was recently moved forward by “several weeks”.
This extension comes after WhatsApp was forced to scrap its initial February deadline in response to a global backlash against the Facebook subsidiary’s take-it-or-leave-it policy change. Since then, WhatsApp has sought to reassure users that its commitment to end-to-end encryption and user privacy is as strong as ever.
But while the German ban will be a blow to WhatsApp’s ambitions to monetise the app, the messaging platform may ultimately have its sights fixed elsewhere. WhatsApp’s largest market is India, with over 400 million users. That’s more than three times as many users as the app’s second-largest market, Brazil, which has 120 million users.
That means the messaging app’s privacy changes – built around the introduction of WhatsApp Business – are expected to be particularly lucrative in India, where WhatsApp recently took out front-page adverts in all the country’s daily newspapers in an attempt to placate disgruntled users. WhatsApp’s continuing resolve to pursue changes to its terms, despite widespread opposition, is best understood by looking at the opportunity for growth big tech firms see in India’s blossoming, less-regulated digital economy.
Explaining WhatsApp’s changes
Since acquiring WhatsApp for US$19 billion (£13.5 billion) in 2014, Facebook has been exploring how to monetise the app. Determined not to introduce third-party banner ads, the company launched WhatsApp Business and Business API in 2018 to facilitate instant chat and payments between users and businesses, with the latter paying WhatsApp for access to the platform’s users.
The new terms and conditions are a crucial step in this move to make money from WhatsApp, because users who agree to them will consent to their information being shared between WhatsApp Business and other Facebook products. According to WhatsApp, only those who use WhatsApp Business will be affected by its new terms.
Still, when WhatsApp’s privacy update was first announced, the Competition Commission of India called for an investigation, condemning the update’s compulsory nature. The commission also criticised WhatsApp and Facebook’s abuse of their network effect within the Indian market, which in practice means users have limited choice to change platforms.
A complaint was also filed with the Delhi High Court confronting the “clear attack on users’ personal data” which “has put a Damocles sword upon its users”, ultimately for Facebook’s gain. The next date for the court hearing is May 21 2021.
But unlike Europeans, who enjoy the protection of EU privacy laws and assertive regulators prepared to ban the update altogether, Indian users are protected by fewer privacy laws. India’s Personal Data Protection Bill has not yet been implemented, leaving WhatsApp with a diminishing window of opportunity to monetise the data of its Indian users.
Privacy in India
Despite the messaging platform’s “#ItsBetweenYou’” campaign in India, which emphasised WhatsApp’s commitment to privacy, the platform feels less than private when the government targets its critics for surveillance on the app, when private health data is shared on neighbourhood WhatsApp groups during the pandemic and when police routinely seize smartphones to access their WhatsApp chat histories.
This sense of encroachment on privacy has been further heightened by the Indian government’s expediting of its new internet regulations, which will force platforms to hand over user information to law enforcement upon request.
Critics argue that such moves are tantamount to “digital authoritarianism” and that, while India’s forthcoming data protection laws may offer greater digital privacy, they may also enable further government misuse of citizens’ data – as we have seen in China.
Against this backdrop of weak privacy protections, Facebook bought a 9.99% stake in Jio Platforms for US$5.7 billion in April 2020. The telecommunications company, a subsidiary of Reliance Industries, runs the JioMart and JioMoney platforms - strategically important for Facebook’s expansion into India.
Then, in November 2020, WhatsApp Payments received government approval after two years of regulatory pushback and protectionism – opening the door for WhatsApp to compete in India’s payments market.
This carefully orchestrated double move not only integrates WhatsApp and WhatsApp Payments with India’s increasingly dominant e-commerce platform JioMart – it also provides Facebook with a valuable ally in India’s wealthiest businessman, Mukesh Ambani.
Ambani previously warned Modi about the threat of “data colonialisation” as foreign tech companies turn to India’s huge market as their next source of growth. Now he appears to have paved the way for US-based Facebook to enjoy the spoils, via WhatsApp Business and its new terms and conditions.