WhatsApp, which sued the government over the new IT rules last month, got a breather earlier today. The Kerala High Court dismissed a petition that had called for the platform to be banned for not complying with the new rules.
Also in this letter:
🛒 Draft e-comm rules and their impact explained
🚨 UK cracks down on crypto exchange Binance
👩💻 Nasscom chairperson on what’s driving IT growth
Kerala High Court dismisses petition seeking ban on
The Kerala High Court has dismissed a writ petition that had called upon the central government to ban WhatsApp for allegedly not complying with the country’s revised IT rules.
What was the petition? Filed by software engineer Omanakuttan KG, the petition said that false information is widely circulated on the platform and that it is used for various criminal activities, and that WhatsApp must be compelled to share information that would help trace the source of unlawful activities.
The bench of chief justice S Manikumar and justice Shaji P Chaly, however, said it was premature and that it should be the job of investigating agencies and courts to decide whether messages from WhatsApp could be used as evidence or not.
The rules: The IT Rules 2021, which came into effect on May 26, mandate that “significant
WhatsApp, however, has said this traceability requirement would force it to keep track of every message because it cannot predict which ones the government will want it to trace. This would break end-to-end encryption and fundamentally undermine people’s right to privacy, “effectively mandating a new form of mass surveillance”, it said.
WhatsApp sued the government in the Delhi High Court last month over the new IT Rules. Union minister Ravi Shankar Prasad later claimed the government had no intention of violating the privacy of individuals. Read our explainer on the government’s rules and WhatsApp argument against them.
Another important development: The Delhi High Court refused to stay the new IT rules, which also seek to regulate digital media. It was hearing a petition by The Foundation for Independent Journalism (The Wire), Quint Digital Media Ltd and Pravda Media Foundation (Alt News). The court has now listed the applications for stay before the roster bench on July 7.
- Mahatme was previously director at Amazon Pay India, leading its product, engineering, and growth teams. He’s also had stints at Airtel and Citibank, and over 17 years of experience in the digital financial services and payments industry.
WhatsApp Pay went live in India in November 2020, albeit with restrictions, after months of facing regulatory hurdles and courtroom battles. It is off to a slow start, accounting for a tiny share of UPI transactions.
- WhatsApp processed only 0.51 million transactions worth Rs 48.15 crore in May 2021. In comparison, rival PhonePe processed 1,149.84 million transactions worth Rs 2,34,123.57 crore during the month while Google Pay processed 880.59 million transactions worth Rs 1,87,136.95 crore, as per the latest NPCI data.
Explained: New draft
India’s new draft e-commerce rules, announced last week, have kicked up a storm.
Tell me more: The changes proposed by the Department of Consumer Affairs are wide-ranging, spilling into multiple aspects and sectors beyond e-tailers such as Flipkart, Amazon India and their flash sales. The changes could also affect a wide range of online companies such as travel company MakeMyTrip, food delivery firms Zomato and Swiggy, ride-hailing firms Ola and Uber, and home services provider Urban Company.
Indian government’s clarification on flash sales has further compounded confusion for e-tailers, since it said the proposed rules won’t apply to ‘conventional’ flash sales, without clearly stating what it means by a conventional flash sale.
Here’s a look at some of the key proposals
Stating country of origin: E-tailers must ensure product listings have the details of the country of origin — an arduous task given that Flipkart and Amazon have millions of products on their platforms. Another big challenge will be recommending local alternatives every time a consumer views an imported product or service.
No selling through related parties: E-tailers such as Amazon India could see a huge impact on their operations if related parties are not allowed to sell on the marketplace. Amazon owns minority stakes in sellers such as Cloudtail and Appario, which are prominent on the company’s India marketplace. Legal experts are still split on this.
No manipulating search results: The jury is still out on how search algorithms work on online marketplaces in India and abroad. In India, Flipkart and Amazon India have faced allegations of promoting their brands and sellers by favouring them in search results.
Read our full explainer on the impact of the new proposed e-commerce rules here.
Meanwhile, commerce minister Piyush Goyal has accused US e-commerce giants such as Amazon and Walmart of “arrogance” and flouting local laws by indulging in predatory pricing. These companies were using their global scale and access to large pools of capital to indulge in predatory pricing practices “to the detriment of mom-and-pop stores”, he said.
Tweet of the day
ETtech Done Deals
Jupiter founder Jitendra Gupta
■ Jitendra Gupta’s neobank Jupiter has acquired Y Combinator-backed Easyplan money savings app. This is the company’s second acquisition after Mitter.io in 2019.
What’s the plan? The acquisition will allow Jupiter to expand its customer base and enhance its saving and investment capabilities. It will continue to operate as an independent plan under Jupiter, Gupta said.
- Jupiter has raised more than $25 million in seed funding from notable investors such as Sequoia Capital, Matrix Partners, 3One4 Capital, and Tanglin Venture Partners. The startup recently launched its Firstlist programme and onboarded more than 40,000 consumers within the first three weeks, ahead of a wider rollout next month.
■ Mastercard has backed Instamojo, a Bengaluru-based digital solutions provider for micro, small and medium enterprises (MSMEs). The investment is aimed at digitising and scaling millions of MSMEs and gig workers by helping them set up online stores, accept digital payments and reach out to customers.
Over the years, the global card network operator has backed several Indian startups including merchant payments startup Pine Labs, sound-based payments firm Tonetag, and artificial intelligence-based financial services firm Signzy.
Britain cracks down on crypto exchange Binance
The United Kingdom’s financial watchdog has taken one of its most significant regulatory moves against the cryptocurrency exchange giant Binance as the sector faces increased scrutiny in several countries.
Driving the news: The Financial Conduct Authority (FCA) has said in a notice that Binance’s London-based affiliate Binance Markets is not permitted to undertake any regulated activities in the region without its prior written consent.
- Binance Markets must also confirm it has removed all advertising and financial promotions by June 30 and make it clear on its website and social media channels that it is not permitted to operate in the United Kingdom.
Binance’s response: Binance had acquired a FCA-regulated entity in May 2020 and had previously stated plans to use it to offer cryptocurrency trading services using pounds and euros. The company said it has not yet launched its UK business or used its FCA regulatory permissions, hence this notice has no direct impact on services provided on Binance.com.
India angle: Binance owns India’s largest crypto exchange WazirX, which is facing its own set of problems. Earlier this month, the Mumbai wing of the Narcotics Control Bureau (NCB) recently sought details from cryptocurrency exchange WazirX about an alleged drug dealer who, according to the agency, used its platform to deal in contraband.
A week before that, the Enforcement Directorate (ED) had asked WazirX to explain transactions worth Rs 2,790.74 crore under Foreign Exchange Management Act, 1999, (FEMA). Do read our explainer on this case.
Meanwhile, Binance has pulled out of Ontario and said it will no longer service users in the Canadian province. Users have until December 31, 2021 to close all active positions. This comes amid regulatory pressure over crypto asset trading platforms to comply with the country’s securities law.
The company is also being investigated by the US Internal Revenue Service and the Department of Justice in relation to money laundering and tax offences, Bloomberg reported last month.
Nasscom chairperson on what’s driving IT growth
A rising appetite for digital transformation, more focus on automation, and industrialisation of artificial intelligence is driving the growth in Indian IT sector, Rekha Menon, chairperson of Nasscom said in an interview.
Menon, who is the first woman chairperson of Nasscom, discussed a wide range of topics including the ongoing debate between the government and social media platforms, the roadmap of the software lobby group and cultural challenges that might arise out of remote work.
Here are some key takeaways:
Govt vs social media: While compliance is vital, there is also a need to understand the challenges in the current rules or legislations and decriminalise offences, Menon said. “This will require a strong industry-government partnership to build the right processes and a sustainable and robust framework for higher accountability”
Sustaining growth: Talent and skill development must become a national priority. “We need to reimagine the future of work for our industry, drive business model reinvention to bolster business continuity, and expand ecosystem partnerships to drive value creation for our clients’ businesses.”
Cultural challenges: The changes are creating new physical, mental and relational needs for people and will affect the way organisations engage with them. “We can expect innovative ideas which combine technology-enabled experiences with human interaction to become more common,” she said.
Read the full interview: Digital transformation, automation and industrialization of AI driving IT growth: Nasscom’s Rekha Menon