On the second day of this new year, the Ministry of Information Technology (IT) presented new changes to the IT Rules 2021, which aim to regulate online games within the framework of the 2000 IT Act.
But why was this done? To protect people from “potential harm”, the government said. But what does “potential harm” mean? They can have endless meanings, from suicidal tendencies to bad cultural influences on children. The word “harm” has also been used in the amended rules.
In its preliminary comments, the Internet Freedom Foundation (IFF) said: “Since no discussion document is open to the public, which highlights the government’s intention, we are not sure how they assess the ‘potential harm’ to users.” It added: “We ask the ministry to release the discussion/white paper , which clearly sets out the Ministry’s understanding of “user disadvantages” in the Indian context and facilitates stakeholder consultation on the issue.
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[Please note: You can submit your feedback on the proposed rules to the government here by January 17, 2023.]
In addition to this, IFF raised several concerns and ambiguities in the new changes. In its original comments, one of the subheadings reads: “Ongoing saga of disappointing changes to IT regulations, 2021”. Here’s a quick look at what they have to say:
- Why is online gaming regulated? The new amendment says that the term “broker” now also covers “online gaming broker” in the IT Rules 2021 section. Previously, it only included social media and prominent social media brokers. IFF stated that the ministry has not shared logical reasoning and justifications for the introduction of yet another intermediary category.
- Unclear definition of “online gambling agent”: An online games broker is defined as “a broker who offers one or more online games”. There is ambiguity in this definition as to whether non-gambling is also regulated by these rules, the IFF says. It also says that such ambiguity has a negative impact on innovation and growth in this sector. The IFF called the definition of online game brokers “broad”, and it raised another relevant issue – it is not clear whether services that host games (such as the Google Play Store) or games that include only single-player offline modes and online multiplayer modes such as e.g. such as EA Sports games etc. are considered as intermediaries for online gaming. The IFF also considered whether both the game provider and the service provider are considered online gambling intermediaries. The game provider can be the one who actually creates the game, and the service provider can be the one who distributes the game over the Internet.
- Unclear definition of “online game”: The amendment defines an “online game” as “a game offered on the Internet and accessed by a user through a computer resource if he makes a deposit in the hope of earning winnings.” IFF emphasized that the definition of “deposit” and “profit” in the bill includes not only “cash” but also “kind”. Although the “species” component may have been introduced to cover non-monetary “tokens” or “online gaming currencies”, it may result in the inclusion of games that do not require a monetary deposit from the user or promise monetary incentives to be included in “online games” for the purposes of these rules and when such games are regulated,” the IFF says.
- Are the proposed rules unconstitutional? The IFF says these proposed rules are “misleading, undemocratic and may even be unconstitutional” as the regulation of online gaming under the IT Act was directly incorporated into the rules without parliamentary consideration.
- More confirmation: The new amendments list some additional requirements for online gaming intermediaries, including identifying and verifying the user’s identity when the user creates an online gaming account. And this verification procedure is the same as prescribed by the RBI for its regulated entities, the rules state. This is “worrying” because it gives the center “overbroad” powers to classify brokers as online gambling brokers and exercise Know Your Customer (KYC) regulatory powers, “all of which is due to the lack of a clear legislative basis,” the IFF says.
- Self-regulatory body: The new change obliges online gambling brokers to register with a self-regulatory body. The Ministry of Information Technology has the authority to assess and register these self-regulatory bodies. It can also suspend or cancel the registration of a self-regulatory body under the new changes. The IFF said: “While self-regulatory bodies have the power to register online gambling intermediaries, the broad powers given to the ministry add to the Government’s wide discretion in determining which self-regulatory body exercises these powers and, more importantly, how it exercises those powers.”
- The government can declare any game as an online game: Rule 6A empowers the Board to declare any game as an “online game” even if it is available without deposit. This can be done if the government feels that the game can lead to addiction or cause “harm among children”, or if it is for national security, etc.” Here again, the ministry has failed to expand what it means/understands “harm among children” according to the IFF.
- Follow the rules or give up protection: If a broker does not comply with these rules, it will not be protected from third party information hosted on the brokers platform. “Furthermore, the broker is liable for punishment under any law for the time being in force, including the provisions of the IT Act, 2000 and the Indian Penal Code.”
IFF also pointed out how controversial IT rules have been in the past. “In August 2021, the Bombay High Court ordered a stay on the provisions of Part III (IT Rules). In September 2021, the Madras High Court accepted that the IT Rules, 2021 may threaten the independence of the media and also that Article 19(1)(a) of the Constitution may be violated in how the rules can be applied to brokers by coercive means.
Note that these were only preliminary thoughts published by IFF, more detailed views may be published later.
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