Gaming series #3: Not a game of chance – plans to regulate the tech sector in India

Following the trend of increased regulation of the digital economy, India, one of the world’s largest online games and social media nations, last month introduced new regulations to regulate the tech sector and specifically, games and social media platforms.

India has c420 million online gamers in 2022 expected to grow to 500 million by 2025. Its social media usage is also huge, with c470 million active social media users recorded in 2021-2022 representing about 34% of the population. In these circumstances, the government’s recent moves to amend India’s IT regulations have significant impact.

Industry reforms for social media and games

The reforms have been delivered by an amendment to India’s Information Technology (Intermediary Guidelines and Digital Media Ethics Code) Rules (New IT Rules). These essentially require social media platforms and games companies to conduct fact-checking of content concerning the government, and introduce enhanced self-regulation of providers of wagering games.

Both of these measures are fairly unique and distinct from the approach being proposed by leading jurisdictions for the regulation of online platforms, such as the EU Digital Services Act (DSA) and the UK Online Safety Bill (OSB).

The New IT Rules provide the following key reforms:

Online games platforms

• Online games intermediaries to be regulated: For the first time “an intermediary that enables the users of its computer resources to access online games” will constitute a regulated entity (although note that is not clear whether platforms that publish their own games will be included). 
  
   
• New class of online real money games: A new class of online games has been established, known as “online real money game” where a user makes a deposit in cash or kind with the expectation of earning winnings on that deposit. It is intended to include games that allow a user to game with money but which do not constitute betting or “wagering on any outcome” (although there is currently little clarity on this distinction).  
  
   
• Industry self-regulation: New registered self-regulatory organisations will provide oversight through verifying and approving ORMG’s – an approach which has been generally been well received by the industry and an interesting departure from the central-regulator approach of the UK and EU regimes. These bodies comprise individuals with knowledge of or practical experience in the online games industry and experts in fields including psychology, mental health and protection of child rights. Concerns as to the impartiality of their members is being managed through provisions on conflicts of interest and arms-length dealings.

Social media platforms 

• Obligation to prevent publication of harmful information: A broad due diligence obligation applies to all intermediaries (which includes OGI’s and social media intermediaries) to “make reasonable efforts” to prevent the publication of certain harmful information that could cause harm to users or violate the laws.  This mirrors the EU DSA and the UK Online Safety Bill, which imposes risk assessment and mitigation obligations in relation to online harms on online intermediaries.
  
   
• Misinformation provision: However, distinct form the EU and the UK, a new misinformation provision prohibits platforms from communicating patently false information “in respect of any business” of the government. Such government-related information must now be reviewed by a “fact check unit” of the government (yet to be established). In the absence of guidance, ministry statements have indicated that “there will be a list of dos’ and don’ts” that the fact-checking unit will have to adhere to. Non-compliance will result in the information being removed or denied access to, on either a voluntary basis or through notification by the state.

Some commentators have criticized this as an attempt by the government to extend its powers and a potential threat to freedom of speech and expression. However these requirements may herald what is to come in the upcoming Digital India Act (see below), which is widely expected to enhance obligations on intermediaries and regulate the spread of misinformation.

Wider context

These reforms come at a time when the industry is awaiting the new Digital India Act - a behemoth compendium legislation that is expected to cover everything from artificial intelligence to cybercrime -  as India's Electronics and IT Minister is often quoted as saying, "there is no one who will not be touched by the Digital India Act". This new act is expected to bring much-needed clarity to an industry which has long outgrown the patchwork of largely outmoded laws currently in place.

In these circumstances, the amendments to the IT Rules appear to be somewhat of an interim stop-gap measure.

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