On 2 January, the Narendra Modi government released draft amendments to the IT intermediary rules 2021 for public consultation. The guidelines propose a regulatory framework for online gaming intermediaries, which take consumer deposits and generate expectations of winnings. The draft proposes a template for self-regulation that may set the tone for oversight over other digital industries. The amendments are more detailed than other self-regulation frameworks for a digital India and lay down many granular aspects of the composition and function of self-regulatory organisations.
The guidelines are a welcome sign because they allow the government to address public interest concerns without prescriptive rules, which would otherwise stifle innovation in new markets. However, since they offer the most elaborate scheme for self-regulation yet, they have also introduced novel procedural complexities that will need to be ironed out.
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First, self-regulatory organisations (SROs)must register themselves with the Ministry of Electronics and Information Technology (MeitY). The ministry will look at the composition of the board of directors before registering an SRO. Moreover, one of the five governing body members must be a government nominee. It is unacceptable to have a self-regulation mechanism where the government retains its power to intervene directly. A 2014 report by the Organisation for Economic Co-operation and Development (OECD) on the benefits of industry self-regulation lists lightening government burden and passing it on to theindustry as an advantage. The presence of a government nominee in the SRO neutralises part of this benefit.
Second, the guidelines open doors for online gaming intermediaries to approach or take membership in multiple SROs. It could lead to a situation where vast differences in standards divide the gaming market. For example, SROs must ensure that a game does not prejudice national security and public order. These are broad grounds that each SRO can interpret differently. It leaves scope for online gaming intermediaries to forum-shop for an SRO that interprets these terms in a manner that suits its interest or forms a separate SRO in a race to the bottom.
In 2019, several Indian media houses broke away from the News Broadcasters Association (NBA) and formed the National Broadcasters Federation (NBF) to challengethe “Lutyens media hegemony of NBA”. Since then, the two organizations have taken contrasting positions on crucial issues that impact the industry like publication of Broadcast Audience Research Council (BARC) ratings. A multiplicity of bodies can similarly jeopardise the prospects of common standards to govern the gaming industry, leaving the consumer worse off.
It is imperative to preempt potential conflicts between SROs in nascent markets. A way to address this could be through transparency measures. SROs can be mandated to publish a periodic report detailing the list of online games they assessed for registration purposes, the games they rejected, and the reasons for such decisions. This would inform other SROs whether a game under consideration was previously dismissed,along with a transparent paper trail. Such a move will disincentivise forum shopping and facilitate the development of more coherent standards across various SROs.
Third, the guidelines do not address ambiguity around the operation of state laws within a central government framework for online games. They mandate that an SRO must ensure an online game’s compliance with Indian laws, including state laws on betting and gambling. Tamil Nadu, for instance, prohibits games like rummy and poker, and it is unclear whether an SRO can register such games there. Similarly, there is no clarity on what happens when a game registered by an SRO is outlawed by a state law later. Therefore, the guidelines should include a list of illegal gaming-related activities like offshore betting and gambling, as well as a separate list of game formats known for a preponderance of skill.
The government could work with industry and develop such lists based on jurisprudence, academic research, and practices in other countries. This could, at the very least, inform policy decisions at the state level.
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Guidelines riddled with ambiguity
Fourth, the guidelines adopt a circuitous route to curb illegal advertisements and burden social and digital media platforms. Several offshore companies advertiseunlawful betting and gambling services in India, and the guidelines address this pertinent concern. They state that social and digital media platforms must verify an online game’s registration status with the concerned SRO before they carry an advertisement. More than 4.9 lakh gaming apps are available on Google Play Storeand more than 2.08 lakh on Apple’s App Store. Verifying the registration status of each game before hosting an advertisement is impractical.
Instead, the government could tighten requirements for social and digital media platforms to disclose information on actionstaken against illegal ads that violate advisories and guidelines of the Ministry of Information and Broadcasting (MIB) and the Advertising Standard Council of India (ASCI). Several companies have already published reports on actions taken against illegal content on their platforms, as mandated under the 2021 IT Rules. MIB has issued several advisories in the past to curb illicit betting advertisements, while ASCI has issued guidelines on online gaming advertisements.
Finally, setting the template for meaningful self-regulation is paramount for industry, citizens and the government. IT Rules 2021 and the latest amendments signal the government’s consistent intent to promote self-regulation in digital markets. For industry, it is imperative to negotiate a balance between government intervention and self-regulation, and simultaneously earn consumers’ trust. For the government, it is essential to live up to Modi’s maxim of “Minimum Government—Maximum Governance” in letter and spirit.
The authors work at Koan Advisory Group, a technology policy consulting firm. Views are personal.
This article is part of ThePrint-Koan Advisory series that analyses emerging policies, laws and regulations in India’s technology sector. Read all the articles here.
(Edited by Zoya Bhatti)