Are big techies too big to follow rules?

Are big multinational tech companies who operate in India and derive sizeable revenue from India above the law? Such instances have surfaced, with these tech companies failing to comply with Indian government laid rules. Do we take this affront to our sovereignty lightly? An analysis…

Doing business is an evolving part of our civilisation. India has been an active participant in this arena of business since ancient times. Earlier, people from outside the country used to come to India to do business, as India was considered a golden bird. Today, people from other countries wish to do business with us as we are a big market, being a highly populous country with a big emerging middle-class. This middle-class is very aspirational, has disposable income and the desire to enjoy the best of goods and services that are available globally. As a result, many big international companies are doing business in India. India likes it too, as big investments come to us and we are exposed to world-class goods and services.

BIG FIRMS, BIGGER BOOTS

Big technology companies providing social media platforms and micro-blogging platforms are very popular here. Facebook, WhatsApp, Twitter, Instagram, etc. are doing a sizable business in India and are earning good money while we are enjoying their free services. Their revenue model is to earn from advertising and from our data. There is nothing wrong with the symbiotic relationship between the consumers and these big technology companies, apparently. But, of recent, they are in the news for the wrong reasons, as they pose to be too big to follow Indian laws and rules. Should companies earning big money in India not follow Indian laws? We have to introspect and take appropriate action.

The confrontational attitude of the big social media companies, particularly WhatsApp and Twitter, springs from the enactment of the Information Technology Rules, 2021(Guidelines for Intermediaries and Digital Ethics Code). These rules amount to ‘soft touch oversight’, as termed by the concerned minister and a mechanism to control fake news and to identify the originators of such news, which work against the sovereignty of the country and also disturb the social fabric of our country. Social media platforms enjoy safe harbour protection under the Information Technology Act Section 79. This protection is based on the underlying principle that social media companies are only intermediaries.

MISUSE OF PLATFORMS

Rules were framed in view of large scale misuse of these platforms and the same was even observed by the Supreme Court. WhatsApp messages at times were seen to kindle social disharmony and even riots. WhatsApp refused to divulge the originators of the toxic messages citing their rules. Similarly, in the case of Twitter, inflammatory messages were allowed to be permitted and grievance or complaints were not addressed. Twitter also was seen as purposely ignoring the direction of the government.

These social media platforms have a huge impact on society, as WhatsApp has 53 crore users; YouTube has 44.8 crore users; Facebook has 41 crore users; Instagram has 21 crore users and Twitter has 1.75 crore users. The enacted rules set some guidelines so that the immediate problem is solved while also maintaining the intermediary status of these companies. Twitter, as per the government, cannot be an intermediary, if seen as editing the messages and even playing a partisan role. WhatsApp cannot be held as an unbiased platform if they do not disclose the names of agent provocateurs.

RULES TO COMPLY

As per the new rules, social media companies were required to appoint three important officers in India before 25th May 2021. These officers include Grievance Officer, Nodal Officer and Compliance Officer, and they would be employees of the US companies and not of their Indian subsidiaries. The companies were required to publish information on their apps about the officers, the mechanism of receiving the complaints and their disposal. Grievance redressal was to be done within 72 hours.

The rules say that non-compliance with these requirements will hit the companies hard, as they will lose their intermediary status and expose them to possible legal proceedings, in case of toxic information on their platform. The rules also discuss the circumstances under which the original subscriber of the message on the platform has to be disclosed to the government for the required investigation.

"The nature of business of these technology companies is such that they do not bring significant FDI to the country while taking out huge income earned to outside destinations, which are tax haven countries"

TWITTER NON-COMPLIANT

As reported by the government, Twitter has so far not appointed any officer, while other companies have complied to some extent with this rule. But WhatsApp has gone to the Delhi High Court on the expiry of three months mandated in the rules to obey the direction. The essence of the case of WhatsApp before the court is that it does not want to reveal the identity of the original subscriber of the message even in extreme cases of limited circumstances. It says by doing so it will be violating the right of privacy held as a fundamental right by the Supreme Court.

WHY DO BUSINESS HERE?

It is really ironic that companies doing business are giving sermons on freedom of speech and the right to privacy in our country, which is the biggest democracy in the world. The simple common sense is that if you have come to earn profits by doing business in India then the laws of the land are binding on you. There cannot be pick-and-choose that money earned is good, but the laws of the country are bad. If you do not like the laws or regulations, then there is no compulsion to do business here.

NO FAVOUR TO US

The nature of business of these technology companies is such that they do not bring significant FDI to the country while taking out huge income earned to outside destinations, which are tax haven countries. Tax paid in India is always a modest amount as compared to the income earned. One reputed tech company transferred out $2 billion from India to Ireland and Singapore from 2014 to 2018 on the pretext of booking advertisement space, while it actually was royalty paid to the parent company.

Every country has the sovereign right to frame rules and set up regulators. A foreign company has no right to dispute this sovereign right. The problem of the tech companies is not only India specific. They faced similar problems in Australia and the EU while challenging their laws.

Recently, the Finance Ministers of G-7 countries said that the big multinational companies which include these tech companies do not pay proper tax and the sufferers are the countries from where they get their revenue. It has been proposed that at least 15% of the tax profits should be paid to the countries from where their revenue is generated. India is one of the big sufferers on account of these tech companies, as India is one of their biggest hunting grounds for revenue.

G-20 MIFFED TOO

OECD (Organisation for Economic Co-operation and Development) has approved a higher dose of tax and the matter will be discussed in the G-20 countries’ meet before legal enactments are made by the countries. In the 2018 Budget, India had already foreseen the issue, when the concept of SEP (Significant Economic Presence) was evolved. We are waiting for the G-20 meet decision and OECD direction. It is very sad that these tech companies are giving lessons of loyalty when they themselves choose the path of tax saving and income transfer, harming the country of the revenue origin of their income.

Freedom of speech granted under Article 19 :
1. Of our Constitution forms part of the basic structure of our Constitution and we are all very proud of it. A business company operating from the USA need not question us on this issue. The state has the inherent right to question the misuse of this right as listed under Article 19

2. Of the Constitution. Rights are not absolute. The Constitution does not prohibit the investigation of crime or design to threaten the unity of our country. In very limited cases of serious nature, WhatsApp has the constitutional duty to name the original creator of the problem which may lead to a crime of a serious nature. The enacted rules only ask about it and hence, in my humble understanding, the rules stand on a firm footing.

TAINTED ROLE

Twitter can be faulted as not behaving as an intermediary, if it plays the role of editing messages, without revealing the basis of the editing. The employees of the Indian subsidiary of Twitter say that they are only doing marketing in India and that the content evaluation and the action taken accordingly is done from the US office. The new rules only ask for the appointment of employees of the US head office to be based in India and who can hear the grievances or complaints and then dispose them. There is nothing wrong with the rules and Twitter has so far defied the rules.

Big companies who do business in India to make money but are not law-abiding cannot be said to be behaving ethically. Even Henry Ford had said, “A business that makes nothing but money is a poor kind of business.” It is highly desirable that these companies pay taxes honestly and even do some social service when the country is facing an epidemic and when their users are hit. It is really expected from the big global players that they abstain from serving fake and toxic news in these evil days of coronavirus or even otherwise.