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This month we deep-dive into the recent strike down of the government’s fact-checking unit (FCU) under the IT Rules; share updates on emerging competition issues; the recent smoking warning for OTT platforms; surrogate ads; and the long-on-the-horizon DPDP rules. Finally, take a look at some of the articles and pieces we found interesting over the last few weeks.
Deep dive: The Kunal Kamra case
What are FCUs?
FCUs are conceptualized under the amended Information Technology (Intermediary Guidelines and Digital Media Ethics Code) Rules, 2021 (IT Rules). They are empowered to identify any content concerning any ‘business of the Central Government’ and flag it as fake or false or misleading. Such content needs to be removed or flagged by social media intermediaries. The rules mandate intermediaries to make reasonable efforts to keep from hosting such content. Failure to comply would potentially jeopardize their default safe harbor protections under the Information Technology Act, 2000 (IT Act).
The government has been scrutinizing fake news for a long time, and this amendment is a clear reflection of that commitment (the now-withdrawn 2024 broadcasting bill is another). However, the amendment drew immediate concern from journalists, activists, and opposition parties, leading to….
…the Writ
Popular comedian Kunal Kamra and others, challenged the constitutionality of FCUs, before the Bombay High Court. A Division Bench (bench of two judges) delivered a split verdict first, then it was referred to a third judge. The deciding judge rendered his opinion striking down the 2023 amendment, and declared FCUs unconstitutional.
Quick look at the verdict
In a tie-breaker matter like this, the third judge only considers points of disagreement in the split verdict. Some of the key points highlighted are:
Transgressing Article 19: Freedom of speech can only be restricted under the grounds set out in Article 19(2) of the Constitution — such as defamation, public order, friendly relations with foreign states, and the security and integrity of India. Falsity of information isn’t a valid ground, so the state needn’t be involved in flagging information through its FCUs.
Violating principles of natural justice: Noting that the FCU’s responsibility was unilateral — since it would be appointed by the executive and be responsible for judging veracity of information about the executive and government — having courts to appeal would not be sufficient safeguard to ensure fairness. The judge also raised concerns about turning digital media into a separate class — since print media wouldn’t be in purview. Information about state governments would also be out of FCUs’ remit.
Fails to pass the proportionality test: The provisions regarding the FCU are vague and have a potential chilling effect on the free flow of information, especially without robust safeguards. There also seemed to be less restrictive alternatives to achieve the same objective.
After this verdict, the amended rule was formally declared unconstitutional.
Source: Tenor.com
Now what?
Given the involvement of the Solicitor General (the second-highest law officer of India) at every stage of arguments, the government clearly views this case as high priority. An appeal to the Supreme Court cannot be ruled out. As of now, the government does not have legal authority to appoint FCUs. However, it can still order intermediaries to remove content per the existing notice-takedown regime of the IT Act.
Other moving pieces
While the Bombay High Court dealt with an amendment to the IT Rules, the entirety of the IT Rules are currently under a constitutionality challenge before the Delhi High Court. With 17 challenges filed against the IT Rules, across various states, the matters have been tagged and transferred to the Delhi High Court. It is argued that the rules lack statutory backing for their expansive scope, and substantially harm the freedom of speech and expression of all internet users in the country.
Even as the unconstitutionality of the IT Rules is being determined, in parallel, specific provisions of the rules are being questioned. In one such ongoing case, the Delhi High Court is examining the meaning of ‘reasonable efforts’ under Rule 3(1)(b) of the IT Rules. Since platform liability depends on the kind of efforts an intermediary takes to ensure that content on its platform isn’t illegal (and does not include misinformation, illegal content, copyright / trademark infringement etc.), the IT Ministry has been asked to file an affidavit clarifying its understanding of what “reasonable” efforts are.
With increasing litigation around different facets of these rules, we look forward to greater clarity on their implementation as well.
Connecting the Dots
Festive season — for us and the competition regulator?
We wish we had a big billion bucks to splurge for the festive season. The deals, deep discounts, and cashbacks are just (for lack of a better word—) insane. Alongside, industry bodies like the Confederation of All India Traders (CAIT) are also raising concerns about e-commerce platforms’ anti-competitive practices. Last month, CAIT asked the Commerce Minister to suspend the e-commerce festive sales this year, to provide a level playing field to all other players in the retail market.
The Competition Commission of India (CCI) has been investigating some of these practices over the past years. The Director-General (who leads the anti-competitive practices investigation desk) submitted its 1000+ page reports this August — which were sent to both Amazon and Flipkart. Details of these reports were leaked. The reports allegedly claimed that Amazon and Flipkart have given preferential treatment to select sellers, have exclusive agreements with certain companies (including Samsung, Xiaomi, Realme, and OnePlus), and offer deep discounts on their platform — impacting existing competition, and potentially flouting competition norms.
Reportedly, a proxy advisor has raised complaints regarding potential impact on security markets due to leak of confidential information by investigating agencies, with the securities market regulator.
Quick commerce platforms are not beyond government scrutiny either. Reportedly, the Department of Consumer Affairs is examining their impact on local kirana stores. These inputs have also been shared with the CCI. CCI is likely to rope in the Retailers Association of India (RAI) on potential competitive concerns.
The rejigged digital competition bill is also awaited, with the Parliamentary Standing Committee on Finance seeking an update from the corporate affairs ministry.
Watching OTT may not be so chill anymore
Soon, as you sit down to unwind and watch an OTT show, you may be greeted with a disclaimer you can’t skip. Releasing draft rules for advertising of cigarettes and tobacco products, the Health Ministry is pushing for mandatory display of ‘non-skippable’ anti-tobacco health spots of at least 30 seconds upon opening the platform. For scenes involving tobacco display or its consumption, they have proposed another running disclaimer (as a prominent static message at the bottom of the screen) — for both foreign and domestic content. Citing concerns of ruining viewer experience and additional compliance burden, OTT platforms are unhappy. Stakeholders have been given a thirty-day period, till mid-October, to share their comments on these rules.
Tightening the noose on surrogate ads
Unlike countries like the US, direct advertisement of alcoholic beverages is not permitted in India. In a marketing tactic termed surrogate advertising, popular alcohol brands often publicize some of their non-liquor offerings (like drinking water or music festivals) to demonstrate their presence in the market.
To tackle this circuitous promotion of alcohol products, the consumer affairs ministry is gearing up to roll out stringent regulations. August reports on the matter suggest that the draft rules could include sponsorships and ‘brand extension’ products — attracting fines up to INR 50 lakhs and endorsement bans of up to three years.
The Rules which must not-be-named
Source: Meme idea by Vidushi, Meme generation by Nirmal
Covering the DPDP Rules in our ticker seems to be a ritual of sorts. Businesses have been eagerly awaiting these rules to provide clarity on implementation-related aspects of the digital personal data protection law, which recently marked its one-year anniversary. Already gearing up for implementation, online gaming companies have requested exemptions from age-gating and processing of children’s data. This means removal of VPC requirement, allowing targeted advertisement of children, and permitting tracking or behavioral monitoring of children. These companies say that such data is required for protecting children from instances of cyber-bullying and other online-based crimes.
From the courtrooms to your inbox
- Watch out: Upon orders of the IT Ministry, X blocked the handle Hindutva Watch, which tracks hate-crime in January. The journalist running the account, Raqib Hameed, challenged the blocking order in the Delhi High Court. During the hearing, X had objected to the blocking order stating that it disproportionately affects users’ rights. In its reply, it highlighted that the blocking order did not contain reasons and fell short of the Shreya Singhal ruling’s requirements. The next hearing is on January 9, 2025.
- X strikes again: X has challenged the government’s 2021-2022 blocking orders yet again, this time in the Karnataka High Court. The central government has argued that as an intermediary, X is neither the content author nor the relevant account holder, and therefore isn’t entitled to access the review committee orders affirming the blocking. The hearing continues November 12, 2024.
- Landmark CSEAM judgment: The Supreme Court has held that viewing, possession, and storage of material depicting minors in sexual activity constitutes an offence under the IT Act and the child protection law. Noting the significant role of intermediaries in disseminating child sexual exploitative and abuse material, the court reiterated intermediaries’ obligations under the IT Act and rules to restrict proliferation and observe due diligence. It also observed that failure to do so may threaten their safe harbor.
Tech Stories
Is the clock ticking for Tik-Tok?
Indians may not remember TikTok much these days. After all, the Indian government banned TikTok along with 58 other Chinese apps after a growing border conflict between India and China in 2020. TikTok (owned by ByteDance) has over a billion users worldwide, and a significant presence in the US market (with 170 million TikTokers).
Presently in a precarious position in the US, the company’s days are seemingly numbered.
Let’s re-wind: For a long time in the US, TikTok and its Chinese parent ByteDance have faced scrutiny by different US government agencies. Primary concerns revolved around how the app poses national security concerns, since China could potentially use the app to access sensitive information about Americans or create misinformation, manipulating US citizens. In April, President Joe Biden signed a bill which paved the way for TikTok to potentially get banned.
This legislation requires TikTok to shut shop in US, if the holding company ByteDance is not sold to a US entity by January 19, 2025.
The Pushback: TikTok challenged this legislation. The hearings started on September 16 before a panel of three judges at the U.S. Court of Appeals for the District of Columbia.
The company is arguing that banning this app would violate US citizens’ First Amendment rights to free speech and convene through an editor /publisher of their choice. Raising concerns of having been singled out, the company has said that the government has also not provided any evidence of misuse of US citizens’ data. With this, the company has emphasized lesser stringent ways, rather than banning, to address the government’s concerns.
The US government has maintained that they have given a fair option of selling TikTok. National security concerns are more important than the ownership structure itself. The government’s strongest arguments are based on classified briefings of the FBI and the Office of the Director of National Intelligence on threats posed by China due to TikTok — and are sealed. Its contents are unknown — only the judges have access to it.
Will it be banned?: It is difficult to speculate, though we cannot out rule the possibility. Even if it does, the US won’t be the first large country to ban TikTok. There is growing concern on how Chinese rules might allow the Chinese government to access users’ data from Chinese-owned apps and misuse it. India banned the app in 2020. Government bodies of countries like France, New Zealand, and the UK have banned the app from official devices.
What to watch out for?: The court is expected to give a judgement in November or December, to potentially allow for either party to appeal to the US Supreme Court. Incidentally, more than a dozen US states, and DC, have now sued TikTok, saying it’s addictive, and harms kids’ mental health.
Telegram and X: Twisting under pressure?
We covered the story of Telegram CEO Pavel Durov being arrested in the previous edition of the Tech Ticker. You can also read the edition for our update on the beef between Brazil and Elon Musk.
Telegram going soft: Pavel Durov updated Telegram’s terms of service and privacy policy. Resultantly, it will now hand over users’ IP addresses and phone numbers to authorities who have warrants or valid legal requests. This is a big shift in Telegram’s policy, as for the longest time it refused to or would often avoid cooperating with authorities.
Brazil welcomes them back?: Brazil’s Supreme Court had banned X from operating there after the company didn’t comply with court orders — to moderate hate speech and name a legal representative in the country. Despite initial resistance, the company has paid its fines and has decided to obey court orders. It is now requesting the Supreme Court to allow operation in Brazil. The Supreme Court says X has transferred the pending fines to the wrong account, which is why its decision to resume X’s services in Brazil is now postponed.
Reading Reccos
Here are some things we found interesting this month:
- Edward Zitron makes the argument that OpenAI is operating an unprofitable, unsustainable, and untenable business model in this long-form piece.
- Rest of World has a great story on how astrologers on YouTube are becoming extremely popular in Pakistan.
- Suhrith Parthasarathy looks at the Bombay High Court ruling on the IT Rules and the FCU and provides a critical lens on how this verdict bolsters free speech.
Nehaa Chaudhari and Sreenidhi Sreenivasan spoke at PrivacyNama this past month on AI and privacy law in Delhi; and Nehaa also spoke on cybersecurity at inSIG 2024 by the India School on Internet Governance in Bengaluru. Do reach out to the team if you’d like to engage on any particular issue in the world of law and policy.
That’s all from us, for now. We’ll wake you up when October ends. Stay tuned for the next version of the Ticker! Till then, don’t keep us to yourself. After all, sharing is caring.
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