As we know, in India, the Information Technology (Intermediary Guidelines and Digital Media Ethics Code) Rules, 2021 were notified on February 25, 2021. Vide these rules, the Government had granted three months to comply with new IT rules. Therefore, a significant social media intermediary has to appoint a chief compliance officer, a nodal contact person to coordinate with law enforcement agencies and a resident grievance officer. The social media intermediary has to identify the first originator of problematic content. A significant intermediary means one with over 5 million registered users. On May 25, 2021, these guidelines came into force. Social media can lose their intermediary status (pursuant to Rule 7 of the IT Rules, 2021) if they do not comply with the guidelines. This could make them responsible for third party content hosted on their platforms. The protection had been granted to them under section 79(1) of the IT Act, 2000. It enables intermediaries to protect themselves from liability for any third-party information, data or communication link made available or hosted by the intermediaries.
significant social media intermediaries have made representations to the government prior to May 25, 2021 deadline. They have asked for an extension. The Government is expected to work with the stakeholders to formulate S0Ps or standard operating procedures. There is a possibility of the imposition of criminal liability on the employees of the intermediary. This is at odds with the modern corporate liability jurisprudence that leans replacing the criminal liability with monetary penalties in the interest of ease of doing business and better enforcement.
This development is not to be seen in isolation. It is a global trend. In the initial days of Internet, platforms were given immunity from liability by the US for content posted by users. This law, Section 230 of the Communication Decency Act, provided a global template. The playing field was deliberately kept uneven between mainstream media and social media. This social media could become a dominant player which hurt credible journalism and news dissemination. Today social media operates with rights but without responsibilities. Even in the US, the relevance of Sec-230 is being questioned.
WhatsApp has challenged the new intermediary guidelines in Delhi High Court stating that the ‘new requirement under Rule 4(2) is ‘unconstitutional, illegal, and ultra vires the IT Act.’
It contends that this forces it ‘ to break end-to-end encryption on its messaging service, as well as the privacy principles underlying it, and infringes upon the fundamental rights to privacy and free speech of the users’.
The Government says new rules will be used in exceptional cases, e.g. prevention, investigation or punishment of very serious offences. It will not affect the normal functioning of WhatsApp. The rule to trace the first originator of information is mandatory for each and every significant social media intermediary.
Wider public consultation is called for before implementation. The Rules gave only three months. The EU’s General Data Protection Regulation allowed for two years.
Apart from social media platforms, the newb rules affect Slack, Zoom, LinkedIn, YouTube and mainstream news sites, which carry reader comments.
Under these rules any content flagged by the government must be taken off within 36 hours of notice. Though this would curb the fake news, there is likelihood of its being misused. Of course, all fundamental rights are subject to reasonable restrictions, but the issue is who decides what is reasonable. In the new rules, the final arbiters are the government officials. Maybe, an independent institutional mechanism is called for to bridge the trust deficit.
Social media firms now run the risk of facing increased litigation from users and social activists on content perceived as offensive. On non-compliance with the guidelines, the management becomes vulnerable as they lose the immunity to the third party content.
Google has filed a case in HC saying it is not a social intermediary and is an aggregator.
To follow the government guidelines the Big Tech companies are appointing nodal officers. However, this has tax implications. These companies pay tax on cost plus basis, on about 8-10 % of total revenue. There is an equalisation levy — 6 per cent on advertising revenue and 2 per cent on digital transactions. This could change since appointment of nodal officers changes their legal statues to permanent establishment (PE) in India subject to Indian tax laws. They are seeking a way around this. In defence, they can contend that the compliance is mandated and does not create PE status.
Except Twitter, others have complied with the guidelines and have appointed the requisite officers. Facebook has even submitted a report of the takedowns after receiving the complaints and investigating them.