Post new IT rules deadline, social media companies' future looks dark

Experts say companies qualifying as social media intermediaries may lose safe harbour protection under existing law

With the deadline to comply with India's new social media rules ending on Tuesday, social media companies remain in the dark as to how the rules will play out.  

There has been little clarity on their fate — the government has shed no light on it — though some experts say that, as social media intermediaries, the companies could lose their safe harbour protection under the existing law.

According to the Information Technology (Intermediary Guidelines and Digital Media Ethics Code) Rules 2021, published on February 25, a ‘significant social media intermediary’ has to appoint a chief compliance officer, a nodal contact person for 24x7 coordination with law enforcement agencies, and a resident grievance officer. 

It also has to be able to identify the first originator of problematic content that may harm the country’s interests, and several other provisions described in the Rules. 

A significant social media intermediary has been defined as one with over 5 million registered users. News reports suggest social media firms could lose their intermediary status following the May 25 deadline.

"While the play on words is a bit harsh, yes, social media companies (presently operating as intermediaries) can lose their intermediary status pursuant to Rule 7 of the Information Technology (Intermediary Guidelines and Digital Media Ethics Code) Rules, 2021 (“2021 IT Rules”) if they don’t implement the compliances prescribed,” said Shreya Suri, Partner at IndusLaw.

She added that the consequence would be that these entities would no longer be able to take advantage of the safe harbour protection granted to them under Section 79(1) of the Information Technology Act, 2000.

“This protection enables intermediaries to protect themselves from liability for any third-party information, data, or communication link made available or hosted by such intermediaries," said Suri.

The implication, she said, was that the platforms could become liable under law for third-party and user-generated content hosted by them. 

According to PTI, IT ministry sources said the appointment of a grievance officer would be a key requirement from day one of the rules coming into effect, given the importance of public interface for complaints and need for an acknowledgement system for requests.

A Facebook spokesperson stated: “The firm aims to comply with the provisions of the IT rules and continue to discuss a few of the issues which need more engagement with the government. Pursuant to the IT Rules, we are working to implement operational processes and improve efficiencies.”

A Google spokesperson said the company has a “history of responding to government requests to remove content where the content violates the local law or our product policies”.

Koo said it had complied with the government's requirements and implemented due diligence and grievance redressal mechanism, supported by an Indian resident chief compliance officer, nodal officer and grievance officer. The firm said it has six million downloads, making it a significant social media intermediary. 

Aprameya Radhakrishna, co-founder and CEO of Koo, said that user safety and convenience was important for the company. “Complying with the new social media guidelines published by the government within time clearly shows why it's important to have Indian social media players thriving in the country,” said Radhakrishna.

Many significant social media intermediaries made representations to the government through their industry groupings in the run up to the 25 May deadline. Most asked for an extension of six months to a year to comply with the new rules.

The Confederation of Indian Industry (CII) in its submission to the Ministry of Electronics and Technology (a copy of which was seen by Business Standard), pointed out that the IT Rules, 2021 bring about a wholly new set of compliances required of intermediaries, which not only affect their day-to-day operations but also severely hampers their ability to carry out the wide-ranging changes.

“These are exacerbated further with the onset of the ongoing wave of the covid-19 pandemic, impacting all companies alike," said the CII.

The Federation of Indian Chambers of Commerce & Industry recommended staggering the implementation of the rules by a minimum of one year.

"We recommend that the government work with stakeholders to formulate Standard Operating Procedures/Guidelines clarifying the manner in which the IT Rules 2021 will be implemented within the scope of and in accordance with the IT Act, 2000,” said the federation.

It went on: “This will provide the affected entities greater flexibility and ability to ensure better compliance with the IT Rules 2021 in the longer run. The SOPs/Guidelines should be published and made specifically applicable to the IT Rules 2021, so that they are duly recognised in interpreting compliance with the IT Rules 2021.”

The US-India Business Council also echoed these suggestions and pointed out that the criminal liability of employees, as suggested by the Rules, should be reconsidered. 

"This possibility of the imposition of criminal liability of the employees of an intermediary is at odds with modern corporate criminal liability jurisprudence, which is leaning towards replacing criminal liability with monetary penalties, in the interests of ease of doing business and better enforcement of laws,” said the council in its submission to the ministry.

The new rules state that if intermediaries fail to comply with the new requirements, they may be liable for punishment under Indian law.