When it comes to cracking down on tech giants, India is on a roll. The country was the first to reject Facebook’s contentious plan to offer free internet access to parts of the developing world in 2016. Since December, Indian policymakers have taken a page from China’s playbook, enacting sweeping restrictions in an attempt to curtail the power of ecommerce behemoths like Amazon, and pushing proposals that would require internet companies to censor “unlawful” content, break user encryption, and forbid Indian data from being stored on foreign soil. In the past week alone, Indian officials have demanded Twitter CEO Jack Dorsey come before Parliament to answer to accusations of bias, called for a ban on TikTok, and opened an investigation into claims that Google abused its Android mobile operating system to unfairly promote its own services.
For all its good intentions, India’s tech backlash could backfire, with potentially dire consequences for all tech companies—big and small—operating in India, and free speech online for users around the globe. “There is an element of nationalism which is creeping into tech policy in India,” said Apar Gupta, executive director Internet Freedom Foundation, a digital-rights group. Gupta says this has resulted in a number of India-First-style tech policies being rushed through the government using the much quicker executive notification process rather than seeking parliamentary approval, which could have resulted in laws that would be more comprehensive and enforceable.
Calling for the regulation of tech giants is easy, but actually developing reasonable, scalable policies with a feasible strategy for deployment is more difficult. In the case of India, Gupta added, “it wants to do a lot, but it all seems a bit clumsy.”
Thursday marks the end of the counter-comment period for new proposed rules that could have a chilling effect on free expression and privacy online. The proposed changes would drastically weaken protections for internet “intermediaries” by amending Section 79 of the IT Act—the Indian equivalent of Section 230 of the Communications Decency Act in the US—effectively forcing platforms to censor user content deemed “unlawful” by the government, or be held liable for the postings. The rules would also require messaging services like WhatsApp to build a backdoor for Indian authorities, weakening end-to-end encryption. Prime Minister Narendra Modi’s government could put the rules in effect as soon as Friday, as the change doesn’t require parliamentary approval.
The proposed rules were ostensibly created to check the power of tech giants, but they could end up helping the Facebooks, Twitters, and Googles of the world by holding newer, less-well-heeled rivals to the same strict censorship and filtering requirements. “It may have the unintended consequence of in fact benefiting [the tech giants],” says Gupta, “because only they would have the ability to actually comply with [these rules] to any feasible extent.”
On Feb. 1, new rules aimed at limiting the influence of ecommerce giants such as Amazon and Walmart took effect. The new regulations ban many of the strategies that have contributed to Amazon’s dominance in the US and Europe, such as: promoting and selling your own products (or the products of a company you control), pushing other companies to sell products exclusively through your marketplace, giving certain sellers preferential treatment or placement, and abusing your market power to undercut your competitors by offering hard-to-beat discounts.
Initially, Amazon was forced to pull thousands of products from its digital shelves because they came from Amazon brands or from companies in which it had a large stake. For example, Amazon owned a 49 percent stake in Cloudtail India, the site’s biggest vendor, and in Appario Retail, another extremely popular seller for Amazon users in India. Both were prohibited under the new ecommerce rules.
However, less than a week later, Cloudtail was back on Amazon, with over 300,000 products listed for sale. The rules defined company-controlled vendors as sellers in which the marketplace owns at least a 25 percent stake, so Amazon cut its indirect holding of Cloudtail to 24 percent, according to Reuters. An early supporter of the ecommerce restrictions, the Confederation of All India Traders called Amazon’s move an attempt to circumvent the rules. Amazon appears to have used a similar strategy to get its Prime Pantry services back online, and is reportedly now selling its own grocery products via an affiliate. On Thursday, Amazon slashed its commission fees for certain high performing sellers in an attempt to boost the visibility of independent vendors on the platform.
“It's a cat and mouse game to address harms such as anti-competitive effects and price gouging by using executive notifications rather than regulatory institutions such as a competition regulator,” says Gupta. He says tech giants like Amazon have a lengthy history of finding and exploiting loopholes in even the most stringent regulations, while smaller companies can feel the brunt of the rules. ”Unless you specifically look at who is actually indulging in anti-competitive practices [and] levy a very tough penalty on them—which can only happen through institutional enforcement—these kinds of issues will linger,” he added.
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