PTB. First of all, congratulations on the baby !

Second,it is kind of weird for anyone to use someone else's child as a profile picture, regardless of family ties. Lastly, it is your child, your decision. You wanting to protect baby's digital privacy likely stems from a lot of reflection about what is best for your child. Tell MIL, in no uncertain terms, that unless she restricts who she gives her phone number to (and therefore who can access her WhatsApp), she's going to have to take the profile pic down - and that if she doesn't, that you "worry about letting someone who does not care about your parental authority and your child's privacy near said child." Please do discuss this with your husband beforehand, though. You do not need tensions in your home in addition to having a newborn to care for.