Whether India Needs a Law to Protect Internet Companies

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Internet‑based companies generate revenue through online sales, financial transaction fees, paid advertising, cloud services, and a host of other business lines. Because Internet businesses are highly dynamic, innovation and advances in the tech space mean that new entrants can grow quickly and displace current leaders.

E-commerce (electronic commerce)

E-commerce (electronic commerce) is the activity of electronically buying or selling of products on online services or over the Internet. Electronic commerce draws on technologies such as mobile commerce, electronic funds transfer, supply chain management, Internet marketing, online transaction processing, electronic data interchange (EDI), inventory management systems, and automated data collection systems. E-commerce is in turn driven by the technological advances of the semiconductor industry and is the largest sector of the electronics industry. In the age of Internet wherein entire domain has been transformed into one digital platform.

In this era it becomes very crucial to have legal statutes to regulate the companies which are wholly operational on digital platforms. Everyday millions of people are spending their half-hearted time on digital platforms and are publishing several contents which may create a threat for the service providers of these digital platforms of cyber security, data privacy, and criminal offences.

Foreign Legislation

In the United States of America (US) the situation for the protection these internet-based companies a long time ago. The Communications Decency Act of 1996 (CDA) was the first notable attempt by the United States Congress to regulate pornographic material on the Internet. Under section 230 of Communication Decency Act, 1996 provides for the Protection for private blocking and screening of offensive material. The objective behind the enactment of this provision was to promote the continued development of Internet and other interactive computer services in the USA by providing them with a shelter from the inappropriate contents published by the users on the internet. The CDA was passed to enhance the service provider’s ability to alter, modify, delete, and monitor content without treating them as publishers.

It elucidates the protection or a shield to the online intermediaries or Internet Service Providers (ISP) and companies operating on digital platforms such as YouTube, Facebook etc. from the third-party contents which may result into the violation the law or may otherwise become illegal. Section 230 of CDA has played a dual role of Sword & Shield; it provides a shield to companies from the liability of the contents published by users on the internet and digital platforms and also acts as a sword to companies by providing the powers to moderate and delete the contents from the internet if found inappropriate. It is quite evident that the US is Internet heaven and a hub for maximum Internet-based and Social Media companies to flourish since inception.

The prompt action by the US Government to curtail the immunity provided in Section 230 of CDA will put all these companies into dark shallows with lots of civil and criminal liabilities arising from the actions of users.

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In Jane Doe No. 14 v. Internet Brands, Inc., the plaintiff filed an action alleging that Internet Brands, Inc.’s failure to warn users of its modelmayhem.com networking website caused her to be a victim of a rape scheme. On May 31, 2016, the US Court of Appeals for the 9th Circuit ruled that the Communications Decency Act does not bar the plaintiff’s failure to warn claim.

In February 2020, the US Department of Justice has proposed several reforms in Section 230 of CDA. Reforms includes the proposal to enact a new law namely, Eliminating Abusive and Rampant Neglect of interactive Technologies Act, 2020 (EARN IT, 2020). EARN IT primarily focus on the prohibition of Child Sexual Abuse Material (CSAM). The proposed Bill will create a National Commission on Online Child Sexual Exploitation Prevention.

Like FASTO, EARN IT also curtails Section 230 of CDA to allow new civil and state criminal claims. However, EARN IT Act, 2020 also suffers from several negative views pertaining to its application in line with the objective of Section 230 of CDA. Time will be the essence to see the interplay between Section 230 of CDA and EARN IT Act 2020. Another legislation which was passed in April 2018, the US Government passed a new law namely Fight Online Sex Trafficking Act (FOSTA), the law that prima facie aims to fight sex trafficking by reducing legal protections for online platforms. FOSTA resulted in a new exception to Section 230 of the CDA, which provides a strong shield to website operators from liability for user-generated contents.

It states that the scope of Section 230 of CDA, does not apply to civil and criminal charges of sex trafficking, or to conduct that “promotes or facilitates prostitution.” The FOSTA has retrospective effect.

Legislations in India

Situation in India is that there is no specific law which provides a legal roof to the Internet Service Provider (ISP) and Social Media companies from the liability of the contents published by the users. In order to encourage and enable government agencies to make use of this dynamic medium of interaction, a Framework and Guidelines for use of Social Media by government agencies in India has been formulated. These guidelines will enable the various agencies to create and implement their own strategy for the use of social media.

Critical characteristics of social media are

  • Connectedness: This attribute showcases the media’s ability to connect and reconnect like-minded people or people interested in same topics and domains. Through this media, 24*7 connectedness is possible through a variety of media and access devices including PCs, Laptops, mobile phones etc. Individuals re-tweeting & following other people’s comments and status and updating their own account at all hours are examples of this attribute.
  • Collaboration: The connections achieved on this media, enable people to collaborate and create knowledge. Such collaborations can be either open or closed. Wikipedia is an example of open collaboration which enabled creation of an open web-based encyclopaedia through contribution from hundreds of thousands of people. Gallop is an example of closed collaboration wherein experts’ groups contribute on specific policy matters.
  • Community: Connectedness and collaboration helps create and sustain communities. These communities can create awareness about various issues and can be used for seeking inputs into policy making, building goodwill, or even seeking feedback into delivery of public services.
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The Social Media Framework for the Government of India

The Social Media Framework for the Government of India has been created to enable government agencies to use these platforms more effectively and reach out to their stakeholders and understand their concerns and hear their voices. The Framework comprises of the following 6 elements:

  1.  Objective: Why an agency needs to use social media
  2.  Platform: Which platform/s to use for interaction
  3. Governance: What are rules of engagement
  4. Communication Strategy: How to interact
  5. Pilot: How to create and sustain a community
  6. Engagement Analysis: Who is talking about what, where and what are the main points of conversations
  7. Institutionalisation: How to embed social media in organisation structure

Challenges of E-commerce disputes resolution

It is obvious that e-commerce related issues are not easy to manage. E-commerce disputes resolution is even more difficult and challenging especially when Indian Courts are already overburdened with court cases. Of course, establishment of e-courts in India and use of online dispute resolution (ODR) in India are very viable and convincing options before the Indian Government. There should be introduction additional features for e-commerce companies and online consumers. This would also include online filing of complaints and grievance by the consumers and other aggrieved individuals/companies against the e-commerce companies of India and abroad. Such complaints and grievances would be openly available for public access to general public, regulatory authorities, and other e-commerce stakeholders.


There is a need to create a legislation by the parliament to prevent and protect internet companies from any such circumstance which may cause a problem in the effective and efficient management of such internet company. A statutory body should be appointed or created with power enforced in such a legislation to regulate the matters and cases at hand.