GDPR, WhatsApp & E-commerce: luxury shopping to enter a new dimension

Although Facebook has been facing an antitrust case in which its acquisitions of Instagram and WhatsApp are at stake - as both are likely to be cancelled - the tech giant has stated that it wants to add a new purchasing feature to its instant messaging service.

Facebook claims to be able to give considerable visibility to all types of structures, from small independent shops to multinationals. As an alternative to e-commerce websites, Facebook also purports to spare businesses from pricey web development costs and to help them escape excessive reliance on marketplace platforms. But what does this new boost for WhatsApp in the fashion world really mean? 

Gerrish Legal shares its thoughts with you on the impact of these new technologies in the fashion industry, as well as tips on how to ensure GDPR compliance for these digital tools. 

Why WhatsApp?

When it was first launched, WhatsApp was a young, innovative startup with the ambition to offer its users an end-to-end encrypted instant messaging system, available for use both on mobile devices and on the web. The app was launched in 2009 and quickly drew attention from Facebook. While Facebook originally saw WhatsApp as a dangerous competitor, it was also able to quickly identify the startup's potential and offered to buy it for more than 20 billion dollars back in 2014. 

Today, more than 2 billion users in over 180 countries use WhatsApp – staggering figures which have raised the interest of many brands looking to bolster their e-reputation. As a result, more than 50 million companies are now hooked and have integrated WhatsApp into their digital strategy. 

Facebook has seized onto the growing influence of WhatsApp, with a view towards monetizing its audience. Before its acquisition, WhatsApp had been an advertising-free, subscription-free app. Facebook is now looking to capitalize on a new revenue stream, in the form of brands using the messaging app as a communication channel to interact with their customers. 

What are the expectations behind these digital strategies?

Within this new configuration, WhatsApp will now include business and e-commerce functionalities, through which the app users will be able to access online payment options. With the same end-purpose always in mind: to increase customers’ incentives to buy. The ambition is to transform WhatsApp’s billions of users - who mostly use the app to connect with friends and family - into consumers, within a couple of clicks and milliseconds. 

To this end, product catalogues will be available within the chat, allowing users to contact brands directly for more information. On their end, brands will be in a unique position to build personalized relationships with customers. This mode of interaction has proven successful: it strengthens customers’ attachment to brands and provides them with a conversation that is as accessible and natural as one with their loved ones

Looking at the luxury industry in particular, a study has shown that 80% of designer  goods consumers interact with brands, influencers and other consumers via social networks. Therefore, luxury brands have every interest in favouring digital tools. In a 2019 study, Facebook observed that 77% of luxury consumers use social networks before visiting brick-and-mortar stores.

What is more, it has been proven time and again that displaying luxury items in the content relayed on social networks has a great influence on buyer decision processes. In this sense, Facebook’s take on WhatsApp represents the promise of a whole new digital audience for luxury brands.

Just one example out of many, Yoox Net-a-Porter, an online retailer of luxury clothing, has said it is working on a technology which will allow its customers to buy products directly via WhatsApp. The Italian company intends to get ahead of its competitors, including Farfetch, by becoming one of the first companies to use WhatsApp for direct sales.

Easy to buy - but at what price? 

All these innovative practices necessarily beg the question of data protection and the extent to which consumer profiling shall and can be carried out. Indeed, there is no debate that the significance of these messaging tools rests in the possibility to provide the customer with a personalised product and experience. But this does not go without a more or less important collection of consumer data – especially bearing in mind that WhatsApp was originally designed to facilitate communication with relatives and close-ones, not third-party companies. Brands must be mindful to avoid over-intrusion into their consumers’ lives – and this is where the General Data Protection Regulation (‘GDPR’) comes into play.

 When brands will interact with customers on WhatsApp, they will be forced to disclose a large amount of customer base data to the app - and incidentally to Facebook. Some of the data shared by consumers during a purchase may be considered "sensitive data". This is the case for biometric data: fingerprints, facial recognition, voice recognition, retinal scans, etc. These are collected for identification purposes, thus providing the data subjects with additional protection under the GDPR framework. Article 9 of the same Regulation prohibits such collection, unless the consent of the person concerned has been given or if it is necessary for reasons of public policy etc.

When collecting the data provided by the brands or when processing the payments made through its platform, WhatsApp will have to ensure full compliance with the principles which are set out in the GDPR framework (such as that of data minimization and purpose minimization). This will mean ensuring that the appropriate and specific measures needed to safeguard the fundamental interests and rights of consumers are properly in place. 

While WhatsApp is committed to respecting the privacy of its users in their messages and calls, as evidenced by its 2016 end-to-end encryption roll-out, it is precisely this feature of the app which may become problematic in a business setting.

One particular risk raised by encryption is that it makes it impossible to identify the sellers of counterfeit products. It is hoped that the app will include a specific, tailor-made protection system for commercial brands by the time the shopping feature is made more widely-available to users. 

It will be therefore of utmost importance that any brands seeking to integrate these kinds of services into their existing e-commerce strategies as a route to market undertake a full privacy / data protection compliance review to ensure that they are able to implement relevant compliance requirements on their side - as regards their customers and their use of such tools.

If you have any questions regarding your privacy rights or in relation to advanced technologies, please do not hesitate to contact us! Likewise, let us know what you think about this new dimension of luxury shopping on instant messaging applications! 

Article by Manon Coste and Leila Saidi @ Gerrish Legal, January 2021 / Cover photo by Mark König on Unsplash.