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ETtech Morning Dispatch on March 1, 2021: Govt vs WhatsApp (again)


Good morning,

Many of India’s new rules for digital media companies would be impossible to follow, experts say. One that stands out is the ‘traceability’ requirement, which would require chat platforms such as WhatsApp and Signal to break end-to-end encryption in India.

Find out why this is unlikely to happen, given that
the world is watching how the country’s tough new digital media rules play out.

Elsewhere in today’s newsletter:

  • 🎮 Esports is the new rage in the Arena
  • 📽️ Kuaishou IPO & India’s short-video apps
  • 🚀 ISRO launches Brazil’s Amazonian-1 satellite

Why end-to-end won’t bend

Last week the government of India introduced new rules to regulate ‘digital media’, a sweeping term that includes everything from social media platforms to online news publishers and video streaming services.

The tough new measures have been termed “anti-democratic and unconstitutional” by the
Internet Freedom Foundation.

It’s a trend: But India’s new rules
are part of a worldwide trend of countries seeking to enforce tighter controls on social media companies since the New Zealand shooting of 2019, Pavan Duggal, Supreme Court advocate and cyber expert, told ET.

  • Zoom out: India is among the top three internet markets with close to 700 million users and its digital policymaking is being followed closely.

However: Some experts said the rules infringe upon freedom of expression and privacy, and that some of the rules are simply incompatible with the underlying technology and thus impossible to comply with.

Such as? The new rules have a ‘traceability’ requirement, which requires platforms such as WhatsApp and Signal to trace the ‘first originator’ of any message the government deems illegal.

Why is that so hard? WhatsApp and Signal—and other end-to-to-end encrypted platforms such as Facebook Messenger—say their technology is built in such a way that nobody, not even they, can read users’ messages. That guarantee of privacy, they say, is their USP.

Early signals: WhatsApp has already said it is evaluating “all options” and that it “will not bend” on the issue of user privacy.

That sounds pretty firm: Companies are unlikely to break end-to-end encryption just in India for a variety of reasons, but most importantly because if
they accede to government diktats in India, they can’t refuse to do elsewhere.


Other stringent rules:
Under the new rules, ‘significant social media intermediaries’ will also have to publish monthly blocking and compliance reports and hire large teams in India to take down content deemed problematic by the government (within 36 hours) or individual users (within 24 hours.

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  • They may also have to build automated tools into their platforms to weed out content related to rape and child sexual abuse.

The Great Indian Caveat: What the rules are and how they are enforced can be, and usually are, two very different things in India. On these rules, Duggal said “the teeth are missing” — that they are silent on how they will be enforced. India will have to come up with a robust execution mechanism, he added.

These may be rules about world-altering technology but some things never change.

Also Read:
How Facebook Oversight Board sees India’s new social media rules

Esports is the new rage in the Arena

eSports1_iStockiStock

Inspired by the
rapid growth of the Indian esports sector, Animesh Agarwal, an esports professional, decided to move from being just a player to becoming an entrepreneur. The 25-year old, who launched a gaming talent agency recently, now divides his time between his gaming talent agency and attending invitation-only esports tournaments globally.

Esports, which takes the form of organised, multiplayer video game competitions, particularly between professional players who are playing individually or as teams, is broadcast live for interested audiences, much like athletic sporting events.

“Covid-19 really helped the gaming industry a lot because the only form of leisure apart from OTT platforms was gaming. We saw a huge surge of people following us across YouTube, Instagram, Loco,” said Agarwal. “Since we are very optimistic about how 2021 would be for gaming, we are going heavy with investments that we are putting into our company.”

Tweet of the Day

Learnings from Kuaishou’s IPO in China

short-video appETtech

The fortunes of Indian short-video apps are intertwined with those of their Chinese rivals. First, it was TikTok and now Kuaishou.

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Driving the news: Last month, Kuaishou listed on Hong Kong’s stock exchange at a valuation of $160 billion—that’s very close to what its larger rival TikTok is worth. By way of comparison, the Kuaishou IPO makes the company almost as valuable as Qualcomm, a storied chipmaker and holder of foundational wireless technology patents, whose market capitalisation is $167 billion.

The India angle: These proceedings
are being closely watched by India’s short-video market, which mushroomed in the aftermath of India’s TikTok ban.

“It [Kuaishou IPO] will be a big positive,” said Anand Lunia, founding partner at VC fund India Quotient which is one of the investors in Sharechat’s leading app in the short-video segment, called Moj. “Now you know how to value a non-American early-stage content company. We’re going to see a huge amount of capital now coming into this space in India.”

Sharechat’s Moj and its rivals—Times Group’s MX TakaTak, Dailyhunt’s Josh, InMobi’s Glance, and Chingari—have been consistently among the top free apps on Google Play store in India. Investors are tuned in to the trends but also believe it’s too early to predict the likely impact of Kuaishou’s IPO on the Indian short-video market.

Indiagold’s digital gold lending plans

Indiagold, a gold-based lending startup founded by former Paytm executives Deepak Abbott and Nitin Misra,
plans to pilot borrowing against digital gold, the co-founders said.

“Sometime in the first half of this year we will launch lending against digital gold,” Misra said. “Consumers will be able to take a line of credit or a cash route, depending on our lending partner, and they will be able to borrow against digital gold.”

Indiagold hopes to get Reserve Bank of India’s approval for scaling up the offering by leveraging its refinery partners to create real-time reserves against digital gold and extend a line of credit to its customers.

Infographic Insight

iposETtech

ISRO launches Brazil’s Amazonia-1 satellite

Indian Space Research Organisation (ISRO)
launched Sunday Brazil’s remote-sensing satellite
Amazonia-1, in the first dedicated commercial mission of NewSpace India Ltd., the commercial arm of India’s Department of Space.

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The workhorse PSLV rocket also carried 18 small and micro satellites as co-passengers, including one that carried the Bhagavad Gita and a photo of Prime Minister Narendra Modi.

“India and Isro feel extremely proud and honoured to launch the first satellite designed, integrated and operated by Brazil,” ISRO Chairman K Sivan said.

OAKS’ second PE fund

OAKS Asset Management
has launched its second private equity fund, which will invest in consumer startups and mid-size companies in India.

OAKS Consumer Fund will have a total target of around Rs 500 crore with a green shoe option of another Rs 250 crore, senior company executives told ET. “The fund has already received commitments worth Rs 400-450 crore from Indian family offices and UHNIs [ultra high-net-worth individuals],” said Vishal Ootam, founder and chief executive officer, OAKS Asset Management.

Founded in 2015, OAKS Asset Management raised their first Rs 700 crore fund in 2017, which was deployed across five companies—Foodlinks, Incred, Credable, Hero Electric and Shree.

Other Top Stories We Are Covering

Paytm clocks 1.2 billion transactions in February: Paytm
clocked more than 1.2 billion transactions in February, courtesy a surge in offline payments and financial services, the company said. The Noida-based company, operated by Vijay Shekhar Sharma’s One97 Communications,
has applied for a NUE licence from the Reserve Bank of India.

JioPhone’s new offers unlikely to impact Airtel: Reliance Jio’s
new bundled offers on its 4G feature phone—JioPhone—will have little impact on Bharti Airtel Ltd. as the telecom firm is likely to continue gaining the bulk of the users leaving Vodafone Idea and offset any user losses to Jio, said analysts.

This, they said, is since Jio, unlike Airtel, runs a pure 4G network and Vi’s 2G users wanting to switch to Jio would need to buy a new 4G device, whereas migration to Airtel won’t require any such extra investment as the latter offers both 2G and 4G services.

Global Picks We Are Reading

■ Walmart poaches Goldman bankers for its new fintech startup
(Bloomberg)

■ How the automation economy can turn human workers into robots
(Axios)

■ What’s missing in the EV revolution: Enough places to plug in
(WSJ)





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