Caught in the crosshairs


Fierce campaign to tame online space

The digital sphere has been firmly in the sights of the government. When the Information Technology (Intermediary Guidelines and Digital Media Ethics Code) Rules, 2021, were announced last year, they were decried for being “draconian” and granting the authorities unprecedented powers over social media, streaming platforms and digital content providers.

Then, in a bid to enforce provisions of the Information Technology (Intermediary Guidelines) Rules, 2021, for “significant” social media intermediaries to appoint compliance officers, Twitter lost the safe harbour protection that safeguarded the platform from third parties posting offensive content on the site. A subsequent 26% FDI cap on the ownership of digital media firms prompted Yahoo to shut its news websites in India.

October 2022
India Business Law Journal

Earlier this year, Facebook’s parent company, Meta, warned that it would have to shut operations in India in response to the country’s data privacy law. With the draft Indian Telecommunication Bill, 2022, the government also sought to bring internet­based communications such as WhatsApp calls, Facetime and Google Meet under telecom services, giving it yet more unprecedented powers in this space.

In the Cover story, we look at a set of cybersecurity directives from the Indian Computer Emergency Response Team (CERT-In), which came into effect in late September, that has sparked a strong pushback from the industry. These provide an agonisingly short six-hour timeline for businesses to report cybersecurity incidents, and also require virtual private networks to store data on their users for five years, and disclose them upon demand from the authorities.

The directives impose a compliance burden for companies, and a main criticism is that they grant CERT-In authority beyond the mandate of its parent act. Lawyers are calling for consultations to address and resolve grievances.

The Briefing looks at another battle brewing in the digital space. The Competition Commission of India (CCI) has levied huge fines on Google for abusing its dominance via its Play Store and the ubiquitous Android mobile operating system, which it owns. Google is currently assessing its legal options and has warned that the ruling will expose users to “security risks”. However, the decision of the CCI to take on the US tech giant in these areas has caught the attention of competition regulators around the world. The ruling has had a positive effect, as Google had to defer the deadline to make Indian developers integrate with the Play Store’s billing system, which charges developers a 30% commission for transactions against 2% charged by other payment processing services.

Our What’s the Deal? explores how the Insolvency and Bankruptcy Board of India (IBBI) has become stricter on enforcement, and many insolvency professionals (IPs) have faced penalties or seen their registrations suspended. To ensure compliance with the Insolvency and Bankruptcy Code (IBC), the IBBI has the tools of inspections and investigations at its disposal. Our article examines the scope of action possible with these two tools and the penalties reserved for infractions.

In our Spotlight, titled Keymasters, we assess how companies should manage their overseas investment at a time when a recession in 2023 is well on the cards. Along with weak growth prospects, companies also have to navigate increasing scrutiny of foreign investment that comes with protectionism. The Indian government has chosen to scrutinise investment from countries sharing a land border with the country, and has put in place an approval process.

In the West, the US and Europe have enhanced reviews of foreign investment in sensitive sectors prompted by geopolitical tensions. Driven by the conflict in Ukraine and flashpoints elsewhere, the focus among developed economies has shifted from inter-dependence to self-dependence to ensure domestic production and supply.

Vantage Point explores estate planning, where the tendency among successful businesspeople has been to focus on creating wealth for the next generation. But the process of transference of the wealth often gets neglected. K Satish Kumar, the group chief legal officer of Intellect Design Arena, provides an explainer to get readers started on this journey. He advises on the differences between a will and a trust as a vehicle for wealth transfer, and factors that need to be taken into account in an Indian context.

Finally, our annual billing rates article, titled The business of billing, finds that it is the clients who are calling the shots in terms of what and how much legal work they give to external counsel. Having developed the capacities of their house teams to handle much of the work means increased pressure on firms and competition to get work. This year’s article spots trends of firms shifting to electronic billing systems to avoid payment disputes, and a stronger preference for payment in US dollars in light of the depreciating rupee.