NEW DELHI (Reuters) - Meta may have to "roll back or pause" some features in India due to an antitrust directive which banned its WhatsApp messaging service from sharing user data with Meta for advertising purposes, according to a court filing by the U.S. company seen by Reuters.

Meta is seeking to quash the Competition Commission of India's (CCI) November directive which found the company abused its dominance and "coerced" WhatsApp users into accepting a 2021 privacy policy which allegedly expanded user data collection and sharing, giving it an unfair advantage over rivals.

The CCI has imposed a fine of $24.5 million and a five-year ban on the data sharing practice in India, the biggest market for Meta where it has more than 350 million Facebook users and over 500 million people using WhatsApp.

Publicly, Meta has defended its policy change and said it disagrees with the CCI order, but its appeal filing has taken a critical position on the watchdog's functioning and details how unnerved the U.S. firm is about the CCI's decision.

The company is concerned that the WhatsApp-to-Meta user data sharing ban on WhatsApp will curb its ability to offer users personalized ads on Facebook and Instagram, according to a Reuters review of its nearly 2,000 page filing with the Indian appeals tribunal dated Jan. 3, which is not public.

WhatsApp publicly says it shares with Meta a user's phone number, transaction data, how they interact with businesses and mobile device information.

Detailing the ruling's impact for the first time, Meta said in its filing the data sharing ban could mean that an Indian fashion business won't be able to personalize ads on Facebook or Instagram based on their interaction with a WhatsApp user regarding a specific clothing line.

"Under its widest interpretation, implementing the remedy will likely require Meta to roll back or pause several features and products," it said.

"It impacts Meta's and WhatsApp's ability to remain commercially viable," the company added, without quantifying any exact business impact in monetary terms.

Facebook's registered entity engaged in selling advertising inventory in India - Facebook India Online Services - reported revenue of $351 million in 2023-24, the highest in at least five years.

The Indian appeals tribunal will hear Meta's plea on Thursday. Though the case could go on for weeks or months, the tribunal can put the CCI directive on hold in the meantime.

Meta and the CCI did not respond to Reuters queries.

GLOBAL CHALLENGES

The Indian antitrust concerns add to Meta's global woes. In 2021, WhatsApp was accused to have violated the EU bloc's law by failing to clarify changes to its policy in plain and intelligible language. It later agreed to explain the changes to EU users.

The Indian case started in 2021 amid criticism of WhatsApp's privacy policy changes. Meta told the CCI the changes were only to provide information about how optional business messaging features work and did not expand its data collection and sharing ability.

But the CCI disagreed.

Its ruling in November said WhatsApp's policy pushed users to accept or risk losing access to the service and had no opt-out feature. The watchdog has ordered WhatsApp to now allow users to decide whether they want WhatsApp to share data with Meta or not.

Meta in its Indian tribunal challenge also took a critical position about the CCI and its functioning, arguing the watchdog should have consulted with Meta and WhatsApp before passing directives to change company behaviour.

"The Commission does not have the necessary technical expertise and knowledge to understand the ramifications of the remedies," Meta said.