Facebook-owned instant messaging app WhatsApp has refused to share user-specific data with the Securities and Exchange Board of India (SEBI).
SEBI had sought information on the origin of messages that allegedly contained unpublished price-sensitive information of listed companies. It is said to play a crucial role in the investigation into the leakage of financial data at blue-chip companies, added the report.
Experts opined that the regulator could pursue the matter by moving court against WhatsApp. Though, WhatsApp is not obliged to provide the information to SEBI.
A major concern for the messaging app appears to be the fact that sharing data with Sebi could set a precedent. If they give in to demands of SEBI or it manages to get the information from WhatsApp through court intervention, other government agencies could file similar cases.
Entrackr‘s queries to WhatsApp on its stand on sharing data are yet to get any response.
According to SEBI’s insider trading rules, mere possession of unpublished price sensitive information does not amount to wrongdoing, but trading on the basis of it amounts to a serious violation. As a result, the regulator will need substantial evidence to nail those who could have benefited.
This is not the first time that market regulator has sought information from private firms.
Earlier in 2014, it sought call records and tower location data of individuals from telecom service providers. The Indian Council of Investors (ICI) filed a public litigation against Sebi challenging the regulator’s power to seek such information. The Bombay High Court delivered a judgment in favour of the market regulator.
Besides, under Section 11 of the Sebi Act, 1992, Sebi has wide powers to protect the interests of investors in the securities market. Sebi has the same powers as those vested in a civil court under the Code of Civil Procedure, 1908, in respect of matters such as discovery and production of books of account and other documents.
There have been several cases that took place globally, where social media platforms have declined to share user-specific information with government agencies.
In France, privacy watchdog CNIL has ordered WhatsApp to stop sharing user data with parent company Facebook. Last year, WhatsApp added to its terms of service that it shares data with Facebook to develop targeted advertising, security measures, and to gather business intelligence.
Earlier in September last year, the Supreme Court issued notices to Whatsapp, Facebook, Twitter and Google, seeking their legal views on lack of control over data-sharing with cross-border corporate entities.
Whatsapp through its legal counsel claimed that data was completely encrypted and cannot be accessed by any third party, apart from the sender and the receiver.
The messaging app has more than one billion people using its app every day. It is the leading player in the messaging space, followed by Facebook Messenger that crossed a billion monthly users in July and Tencent’s WeChat that has 938 million monthly active users as of May 2017.
App users are now sending 55 billion messages, 4.5 billion photos and 1 billion videos on a daily basis, according to the company.
In 2014, Facebook acquired WhatsApp for a $19 billion in cash and stock.