WhatsApp vs govt: Is India really open for business? – The Economic Times

Clipped from: https://economictimes.indiatimes.com/opinion/et-commentary/whatsapp-vs-govt-is-india-really-open-for-business/articleshow/83044721.cmsSynopsis

The prescription of a content code for streaming sites and news portals is legally dubious. GoI has no authority granted to it by Parliament to enact such a code. The IT Act grants the authority only to make regulations with respect to intermediaries, which by definition host user content like Facebook or YouTube.

Sidhant Kumar

New Delhi-based advocateGoI’s hostility towards international online businesses is palpable. This is evident from its insistence to enforce social media intermediary regulations that could be considered dubious, which was further confirmed by Delhi Police’s ‘courtesy call’ (sic) to Twitter offices earlier this week.

Safe harbour protection is a legal defence against liability for user content available to online intermediaries such as Facebook and Google. The law requires that online intermediaries undertake certain due diligences to be eligible for this protection. GoI issued the Information Technology (Intermediary Guidelines and Digital Media Ethics Code) Rules, 2021 — Intermediary Guidelines (IG) — that changed these due diligence requirements.

The new IG go beyond social media intermediaries to include streaming services, such as Netflix and Amazon Prime, and online news portals. They prescribe an entire code for the content hosted on these websites. It further requires social media intermediaries to implement an archaic bureaucratic framework of grievance redressal.

The prescription of a content code for streaming sites and news portals is legally dubious. GoI has no authority granted to it by Parliament to enact such a code. The IT Act grants the authority only to make regulations with respect to intermediaries, which by definition host user content like Facebook or YouTube.

It does not accord any authority over streaming services and news portals or the content produced and hosted by them. This code being clearly beyond the scope of the delegated authority of GoI is an unlawful usurpation of regulatory power.

Under IG, social media intermediaries will be required to have grievance redressal officers stationed in India. The Personal Data Protection Bill also includes requirements of companies to host data and data protection officers locally within India.

These requirements destroy the basic value of the digital economy — connectivity beyond physical barriers. The outside world, for one, is likely to see these measures to be less about protection and more about protectionism.

It is often argued that the same technology companies comply with far greater regulatory intervention in markets like China. To use a one-party state as a yardstick to measure progress of a democracy is one step away from grasping a very slippery slope. Also, the reality is that the Indian digital market does not, at present, have the purchasing power to offset these substantial regulatory sacrifices.

For instance, each Facebook user in Asia generates only $11 of advertising revenue a year, while one in North America creates $112. The combined internet market of emerging economies (except China) is only $100 billion a year. At the same time, Comcast, the US’ 31st biggest listed firm, has the same yearly revenue. These facts put India’s position in the digital world economy in the right perspective, reaffirming the need of regulatory alignment with major foreign markets. Technology companies are the most valuable US MNCs today.

Naturally, these interests are going to be the centre piece of US-India economic relations. The enforcement of IG — and the overzealous visits of the Delhi Police to Twitter offices — come at a time when India’s foreign minister is in the US to bolster bilateral relations. It also comes close on the heels of a breakdown in talks for a free trade agreement. These developments are certain to cast serious doubts about the credibility and receptiveness of India’s public policy framework.

The new IG are an assault on the right to privacy of users. Most popular messaging services deploy end-to-end encryption, which means that messages between two or more users remain private and safe to outsiders. Under the new guidelines, GoI can require that companies trace the ‘first originator’ of any message. This is a mandate to weaken encryption and protection of private communications. This would make a large number of users, first, subject to roving inquiries by law enforcement and, second, weaken overall security of their communications.

This requirement makes users vulnerable to unauthorised access even by private actors. This is entirely contradictory to the principles of data minimisation and privacy protection heralded by GoI in India’s Personal Data Protection Bill. Social media and other intermediaries are some of the most valuable businesses in the world. These platforms are the bedrock of the digital economy. These sweeping and intrusive measures queer the pitch for an open digital economy.

Value generation here requires an open, nimble and innovation-friendly regulatory environment. We need aregulatory regime based on commercial prudence, not on regulatory fiat. Which brings us to the question: is India really open for business?

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