SME Forum urges Supreme Court not to bar data sharing by Meta, cites harm to MSMEs

The Small and Medium Enterprises (SME) Forum has intervened in the Supreme Court, praying that Meta-owned firms not be prohibited from sharing user data with each other, arguing such a ban would “cause substantial harm and hardship” to SMEs.

The intervention, viewed by The Hindu, reacts to the Supreme Court’s oral observations on February 3, where the apex court warned that Meta could face a complete prohibition on sharing user data across platforms.

“The applicant’s members, particularly MSMEs, would be directly and substantially affected by such orders or directions, as restrictions on data sharing for advertising would undermine their ability to reach interested customers effectively on Facebook and Instagram,” the SME Forum said. “MSMEs often lack resources, requiring them to find cheaper and cost-effective alternatives, including tools offered by WhatsApp and Meta, which may require data sharing. These tools enable MSMEs to compete more effectively with larger businesses at significantly lower costs.”

The intervention comes in the context of Meta’s appeal against a fine and conditions imposed on the firm by the Competition Commission of India (CCI), which were largely upheld by the National Company Law Appellate Tribunal (NCLAT). The CCI has also appealed a part of the NCLAT judgment. Meta didn’t immediately comment on the SME Forum’s intervention.

Tuesday’s hearing was particularly contentious, with the company facing intense questioning about its data privacy practices, owing to its dominance in personal and business messaging in India. Meta argued that users can opt out of data sharing, but the justices questioned the comprehensibility of such a mechanism. While WhatsApp messages are end-to-end encrypted, its 2021 privacy policy update, allowing data sharing across platforms for business convenience, has drawn major pushback.

“The Applicant [SME Forum] respectfully acknowledges this Hon’ble Court’s efforts to protect the constitutional right to privacy of millions of Indian users and foster fair competition in the digital ecosystem,” the intervention said. “At the same time, the Applicant humbly submits that it would be prudent for this Hon’ble Court not to restrict or prohibit data sharing until it has heard from all stakeholders. This will enable this Hon’ble Court to consider the potential consequences of such restriction or prohibition, to appropriately balance the potential harms and benefits to consumers and businesses, especially MSMEs, and assess its impact on India’s economy.”

The SME Forum said it has over 90,000 paying members and represents MSMEs on a range of policy issues. “MSMEs use online advertising platforms, including Facebook, to set up direct communication channels with their customers. This helps them develop strong relationships and understand customer interests,” the intervention said. 

“Despite limited knowledge about online advertising, MSMEs can launch campaigns with the help of platforms like Facebook Ads and Google Ads, which provide user-friendly interfaces and step-by-step guides. MSMEs use predefined templates, audience insights, and lookalike audiences to set up their campaigns quickly and adjust them as they gather more data. Surveys indicate that around 70% of MSMEs use more than two online advertising platforms, demonstrating a strategic approach to diversifying their digital presence,” it said.