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The New IT Rules : Boon or Bane?

The New IT Rules : Boon or Bane?

The Government of India recently notified the Information Technology (Intermediary Guidelines and Digital Media Ethics Code) Rules 2021 - and it’s going to have major implications on the Media & Entertainment industry going forward.


Why do we need these rules?

Big Tech and OTT are indispensable today. Global lockdowns and an all new WFH culture have given an even greater boost to digitization. We are also witnessing regulators tightening the noose around entities in these domains to prevent monopolization in the market.

There are concerns over user privacy and potentially anti-competitive behavior. India is no exception. There had long been demands to regulate OTTs and social media.

What are the changes notified for Social Media Companies?

1. Giving an explicit power to an intermediary to ‘take down’ unlawful content

An intermediary is an entity on which users upload or share content. The intermediary hosts the content, which it does not itself create, modify or initiate transmission of.

Intermediaries are only held liable for unlawful content hosted by them if they don’t remove it even after receiving an order by a court or government authority. Once they receive such an order, they are deemed to have “actual knowledge” of the unlawful content.

Indian law was so far silent on whether an entity can itself remove unlawful content without such an order. Experts were divided on whether platforms could claim to be intermediaries if they exercised such discretion.

This no longer remains a grey area. The 2021 Rules clarify that an entity will continue to remain an intermediary even if it voluntarily removes unlawful content in the absence of a court or government order. This is in line with the evolving regulatory landscape of various jurisdictions, which seek to ensure that Big Tech players monitor content.

2. Appointment of Chief Compliance Officer, Nodal Officer & Grievance Officers

The Rules also prescribe stringent compliance requirements for significant social media intermediaries.

They have to mandatorily appoint a Chief Compliance Officer (CCO) who will be held liable if the Company violates these IT Rules. [Yikes!]

They also have appoint a Nodal Officer for 24x7 coordination with legal authorities & a Grievance officer who will address complaints received against the Company.

All of these officers have to be appointed in India & for social media companies like Signal/Telegram - this will lead to an increased administrative cost - because they don’t have significant operations in India.

3. Tracing the ‘First Originator of Content’

The rules also make it necessary for intermediaries in the nature of messaging apps to trace the ‘original source’ of information - in case of a Government/Court order - which might require breaking end to end encryption.

The rules however, didn’t instruct as to how exactly these Companies would trace the information & how it would be aligned with the end to end encryption rules in place.

What are the changes notified for Digital News & OTT platforms?

These rules are also applicable to publishers/intermediaries of news and current affairs content, publishers/intermediaries of online curated content.

It includes films, television programmes, serials, podcasts and such information. Thus this very podcast that we’ve recorded for you, or the TV shows that you watch over Netflix and Amazon will have to abide by the IT Rules.

1. Setting up a 3 tier Grievance Redressal System

These IT Rules have introduced a 3 level Grievance Redressal System for taking care of complaints.

At the first level, Digital News & OTT platforms have to appoint a designated grievance officer.

At the second level, is the Oversight Body - which comes into the picture if the Grievance officer is unable to resolve the complaint.

And, above the Oversight Body - in the third level is the Inter Ministerial Committee [a Government body], which can step in as a last resort.

2. Age based Classifications required

Age-based classifications have also been prescribed by the Code and its criteria. We enjoyed looking into this part, particularly.

The Code explains how shows with “darker, pessimistic” themes will receive higher ratings and “age verification mechanisms” will have to be put in place by OTT players. It will be interesting to see how it all plays out in implementation.

What are the Controversies that could arise?

There are several controversial aspects to these rules.

(a) Making the process of taking down content by the intermediaries - might lead to situations where politically insensitive content is posted, and intermediaries might be pressurized to take it down within 36 hours. Freedom of speech, could be affected if that happens.

(b) Tracing the original source of information - in situations of national security, the Government can ask messaging apps to trace the original source of information, breaking end to end encryption. These could lead to privacy concerns & could generate a lot of backlash from the public.

Financial Impact?

We know that increased regulations are never good for business. These additional compliances will increase administrative expenses & also restrict the creativity & flexibility of creating content.

Everyone from Ad agencies, to production houses will be impacted by these rules. Social media companies might see a further dip in Ad revenues - if certain controversial Ads are taken down.

For OTT players - the variety of shows they can stream will have to be evaluated. Age based classification might lead to a reduction in viewers. Inability to produce controversial shows - might not create the same level of excitement among the subscribers.

Interesting times ahead.

What do you think? Are these rules a boon or a bane?

~ Written by Utsav Mukherjee

Sid's Blog
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