Safe Harbour Exemptions Available To Intermediaries: Exception Or Norm Under Digital India Act?

Need for Digital India Act:

It is nobody's case that India is rapidly transitioning into a digital economy however, technology is rolling under outdated statutes and the old statutes have not yet caught up to technology. IT Act is one such law which had been long criticised for not keeping up with new technologies especially artificial intelligence (“AI”) and multiple types of intermediaries. The current version of the IT Act as it exists today is old and redundant in India due to the digital revolution and the advent of new technologies. No doubt, since the time of its enactment in 2000, there have been numerous amendments to the IT Act with respect to regulation of new-age technologies and paradigm shift with respect to e-commerce business including the amendments made in the year 2008 to include definition for the term "intermediary" and the insertion of Section 79 into the IT Act, still the IT Act seems to be obsolete and inadequate to handle technology-related matters

The Ministry of Electronics and Information Technology (“MEITY”) after carefully examining the existing lacunae and inadequacies in the IT Act, has officially announced that the two-decade-old IT Act created during the dawn of digitisation will be finally replaced with a new Digital India Act (“DIA”). Though the draft of the DIA is yet to be circulated for public comments, it is understood that MEITY is conducting rounds of consultations and soliciting feedback from various stakeholders. The DIA will not only be reflective of the recent developments in the digital ecosystem but it is also expected to address the asymmetry between digital news publishers and big tech platforms in the revenue-sharing model.

Apart from including regulations to address AI-generated deep fake videos, electronic contracts, & digital signatures, DIA is also expected to address the issues of liability of intermediaries. The recent instances of increase in the use of social media platforms thereby leading to issues related to misinformation, hate speech, cyberbullying, and defamation has forced the MEITY to establish mechanisms for content takedown, and hold intermediaries accountable for illegal or harmful content.

Regulatory Framework of Intermediaries under IT Act:

India's intermediary liability regime flows from Section 79 of the IT Act, which also accords safe harbour (“Safe Harbour”) to intermediaries and exempts them from any liability for third-party content on their service provided they are meeting the requirements to avail such exemptions as provided under Section 79(2) and 79(3) of the IT Act. Under Section 79(2)(c) of the IT Act, an intermediary is expected to observe due diligence and any other guidelines prescribed by the Central Government while discharging its duties under the IT Act to claim Safe Harbour. However, Safe Harbour lapses if despite receiving the “actual knowledge” of any information or data connected to the computer resource of the intermediary being used to commit an unlawful act, or on being notified of such content, it fails to remove, or disable access to it.

The true ambit of the Safe Harbour principle as provided under Section 79 of the IT Act for intermediaries has been etched out through a series of judgments including Shreya Singhal vs Unionof India which held that the 'knowledge' of content to be taken down, must only be construed as being brought to the intermediary through the medium of a court order. Recently, the High Court of Delhi also extended the Safe Harbour exemptions available to intermediaries in criminal proceedings as well in the case of Flipkart Internet Private Limited vs. State of NCT of Delhi.

Safe Harbour exemptions to Intermediaries

By way of DIA, the MEITY is also planning to reconsider the Safe Harbour exemptions which are currently available to all the intermediaries including e-commerce and AI-based platforms irrespective of their nature and functions to be performed. The Central Government is of the opinion that social media intermediaries should not enjoy a free pass in the garb of 'Safe Harbour' and it cannot be an excuse to let any objectionable or controversial posts remain on it.

While it is safe to conclude from the reports that Safe Harbour has often led to a lack of content moderation, inadequate fact-checking, and content violations on platforms, and thus default exemption to intermediaries is likely to be provided only on a “case-to-case basis” upon the enactment of the DIA. If reports are to be believed, it would be the Central Government which would be notifying which class of section of intermediary shall be eligible to claim Safe Harbour protection.

Safe Harbour or No Harbour?

The intermediaries in India are always looked at from a social media lens and they are also regulated accordingly and this trend is increasing day by day. However, all intermediaries cannot be controlled and regulated in the same way. Therefore, removing the default exemption available to intermediaries might prove to be a harsh step especially for e-commerce-based intermediaries, thus disqualifying them as intermediaries capable of availing Safe Harbour exemption for any violations under Section 79 of the IT Act. This is simply because the Central Government needs to understand that certain intermediaries simply cannot function without availing Safe Harbour protection.

Intermediaries in India are anyways abiding by draconian and tight government regulations, thanks to InformationTechnology (Intermediary Guidelines and Digital Media Ethics Code) Rules, 2021 (“IT Rules 2021”) which places more onerous obligations on them to avoid liability for third party content on their platform. The proposed changes go beyond regulating intermediaries and grant unbridled powers to the government and its agencies to control intermediaries. Such an approach giving the authority to the government with no judicial oversight will open the door for those authorities to harass such intermediaries who might be implicated unnecessarily in any random FIR or proceedings for any third-party information, data, or communication link made available or hosted by them.

Despite the existence of Section 79 of the IT Act providing Safe Harbour to intermediaries, even today, the prosecution agencies have failed to follow the same resulting in constant harassment of the social media intermediaries wherein FIR(s) have been lodged against the e-commerce-based intermediaries for allegedly selling the fake or counterfeited products merely because the same was put for sale by third-party sellers on their platform. Now, if the intermediaries are further obligated to comply with the proposed changes and the Safe Harbour protection available to intermediaries is taken away, it will lead to a situation wherein the intermediaries could be named as a party or respondent in an FIR or a criminal complaint every time an offensive post or tweet is made by any individual or any fake or counterfeit products are listed for sale on their platform, thereby giving more leverage to the prosecution agencies to harass and make things difficult for them. The fact that an intermediary ought to be protected because of the Safe Harbour protection is still not clear to the prosecution agencies and thus changing the law could prove dangerous because such intermediaries will have a tough time wherein, they will have to specifically apply for this exemption every time a case is registered against them and present their case leading to a full-fledged trial which will make difficult for them to function in the normal course.

In effect, the proposed changes with respect to removal of Safe Harbour under Section 79 of the IT Act might also spur censorship by intermediaries, especially the social media intermediaries. Further, to avoid any adverse orders against them and shield themselves from liability and criminal prosecution, the intermediaries will have no option but to comply with the proposed changes. Compliance with the proposed changes will lead to a situation where intermediaries will start monitoring content on their platforms and filter out contents, going against their basic tenet wherein they are not responsible for creating any content, to avoid such third-party data being published on the platform which would make intermediaries liable for any offence under any law. Therefore, clubbing e-commerce intermediaries with social media intermediaries will be an unfair and irrational classification as far as the removal of Safe Harbour is concerned.

Further, the proposed changes with respect to removing the blanket exemption available to the intermediaries will impact certain small-scale intermediaries who will have to incur heavy costs in deploying AI tools to control and monitor contents on their platforms to avoid any legal responsibility for any harmful, controversial, or objectionable content being shared on their platforms.

By way of DIA, MEITY might even consider fixing the gaps in the implementation of the IT Rules 2021 as the Central Government in its new term is expectedto carry forward key IT policies that it enacted or proposed in its previous term. MEITY might incorporate amendments with respect to due diligence to be observed by intermediaries brought in by way of IT Rules 2021 including to bring the enable the identification of the first originators of information on end-to-end encrypted messaging services within the ambit of the parent statute itself i.e. DIA rather than regulating through subordinate legislations since that was the main point of contention in the petitions challenging IT Rules 2021 wherein intermediaries contended that the IT rules 2021 consists of provisions which travel beyond the parent statute and thus is ultra vires to the IT Act.

The draft of the DIA is yet to be released in the public domain which was supposed to be out for public comments in July 2023 only, so it remains to be seen whether the MEITY can preserve the Safe-Harbour principle in the DIA. But in the above backdrop, one thing is clear that a one-size-fits-all approach will not work for all kinds of intermediaries and MEITY will have to think twice before embracing heavy-handed approaches to intermediary regulation. By removing Safe Harbour exemption, intermediaries will end up being at the mercy of the government and its agencies and subject to their harassment in different forms including compelled apology, issuance of summons and notices to comply and prosecution.

In contrast, MEITY can consider regulating intermediaries through Self-Regulatory Bodies rather than stricter laws and compliance obligations which might just defeat their objectives. Bringing new laws to control criminal activities and flow of deep fake videos or fake news or harmful content on platforms shouldn't mean that intermediaries bear the brunt because they are merely content providers and not creators of the content. Therefore, it is high time the MEITY realises that regulations concerning the intermediaries should be flexible rather than tight and strict regulations like the proposed changes else this might not only reduce the scope of creativity and innovation by intermediaries but they might think of scaling down their operations in India which would cost India in the longer run.

Views are personal.