Gamers, have you been Pwned? We send our comments on the proposed amendments to the IT Rules, 2021 in relation to Online gaming

tl;dr

Just when we thought that no new set of stakeholders could be further negatively impacted by the IT Rules, 2021, the government released the proposed amendments to the IT Rules, 2021 in relation to Online gaming. Not only will these proposed amendments significantly increase compliance burden for a diverse range of gaming entities, it also, once again, attempts to expand the scope of the IT Act, 2000, which does not regulate online gaming. After publishing an initial analysis and conducting a members’ briefing call, we have sent our detailed comments to MeitY on the proposed amendments. We list our range of concerns, several of which were incorporated after speaking to stakeholders who will be directly impacted by them, such as online game developers, and online gamers.

Introduction

On January 02, 2023, the Ministry of Electronics and Information Technology (“MeitY”) proposed amendments to the Information Technology (Intermediary Guidelines and Digital Media Ethics Code) Rules, 2021 (“IT Rules, 2021”), in relation to online gaming (“Proposed Amendments, 2023”). The Ministry has invited feedback from the public on the Proposed Amendments, 2023 till January 17, 2023. The Proposed Amendments, 2023 have been published a week after MeitY was appointed as the nodal ministry for online gaming by notifying a change in Allocation of Business rules. While this confers administrative clarity on which ministry gets to administer the sector, it does not, in fact, create the power to exercise it. For this, a clear parliamentary enactment is necessary, as online gaming was not previously regulated under the provisions of the IT Act, 2000.

The IT Rules, 2021 have been contested and criticised by various stakeholders since its inception, primarily for introducing unreasonable restrictions on online free speech and user rights. Despite these long standing concerns, the Proposed Amendments, 2023, which bring with it a new set of concerns especially for the online gaming community, have been introduced.

Key concerns with Proposed Amendments, 2023

Through our submission, we aim to provide an in-depth analysis of the Proposed Amendments, 2023. A brief summary of our four main concerns are listed below:

  1. Contentious legality: The IT Rules, 2021 are contrary to the mandate of the Supreme Court in Shreya Singhal v. Union of India. There are multiple court orders that record the legal deficiencies and constitutional injuries caused by the IT Rules, 2021. Given that it causes injury to the constitutional and democratic rights of Indian internet users, it deserves a complete recall.
  2. Definitional vagueness: Several definitions are very broad in its application, such as “online gaming intermediary” and “online game”, and thus may become impossible to implement consistently. Vagueness around classification of online gaming intermediaries due to definitional ambiguity will not just negatively impact the innovation in the industry but also hinder its growth.
  3. Lack of clear legislative basis: The obligation on online gaming intermediaries to undertake know-your-customer (“KYC”) procedure for registration of the account of a user is concerning because it vests with the Union Government overbroad powers of classifying an intermediary as an online gaming intermediary and exercising regulatory power for KYC. Since the IT Act, 2000 does not expressly contemplate the regulation of online gaming entities, their regulation via such Rules issued by the executive, without parliamentary deliberation, is misguided, undemocratic, and may even be unconstitutional.
  4. Maximal governmental interference: The government has been assigned overbroad powers, including the power to register a self-regulatory body (“SRB”), and to suspend or revoke the registration of a SRB. The grounds for doing so are extremely vague and arbitrary, thus leaving room for the government to apply its discretion.

Recommendations

Our concerns with the IT Rules 2021 have been prominently voiced by us since it first began the consultation process back in 2018. 5 years later, the Ministry continues to overlook the concerns raised by affected stakeholders. The need for legal as well as regulatory clarity is pressing, and must not be avoided any longer. We urge the Government to address the issues highlighted by Constitutional /Courts before introducing any further amendments that increase executive control. Given that the IT Rules have been widely criticised as well as legally challenged for undermining freedom of speech and expression, our broad recommendation remains its withdrawal in their entirety. Further, we urge MeitY to publish a white-paper detailing the government's intent with respect to online gaming regulation as well as ‘user harm’.

Important documents:

  1. IFF’s comments on the Proposed Amendments, 2023 (link)
  2. Draft amendments proposed to the IT Rules, 2021 in relation to online gaming (link)
  3. Public notice for draft amendments, 2023 (link)
  4. IFF’s first read on the Proposed Amendments, 2023 (link)
  5. IFF’s members’ briefing call on the Proposed Amendments, 2023 (link)