Takshashila Issue Paper - Economic Implications of WhatsApp’s Lawsuit against the Government of India

High Tech Geopolitics
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Executive Summary

India’s new Information Technology (Guidelines for Intermediaries and Digital Media Ethics Code) Rules (IT rules, 2021) enforced a requirement on platforms that provide messaging services to trace the “first originator” of unlawful content. This presents fundamental difficulties for encrypted platforms. Challenging this requirement, WhatsApp filed a lawsuit against the Government of India in Delhi High Court on 26th May 2021.In this document, we attempt to assess the likely implications of the lawsuit on the instant messaging market in India. In our assessment:

1. If the court rules in favour of WhatsApp, the status quo is likely to be maintained, with a possibility of WhatsApp further consolidating the market.

2. If the court rules against WhatsApp, WhatsApp can either choose to comply and remain in India or leave. If it complies, it is likely to remain the dominant player. Platforms that are end-to-end encrypted, meanwhile, might be blocked if they are unwilling to comply.

3. If WhatsApp leaves, at first, there would be a void in the market. Until there is a standardised platform of communication, there could be a fall in consumer surplus.

4. The traceability requirement might not serve the intended public interest benefit.

Authors

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Suchir Kalra
Suchir Kalra

Suchir Kalra is currently an Economics and Computer Science undergrad at Ashoka University. He is interested in AI Art and Perspectives research having authored a paper on a cross linking study of Piketty's Capital and Ideology and Boo's Behind the Beautiful Flowers. His research interests lie at the intersection of technology and policy.

Atish Padhy
Atish Padhy

Atish used to manage Takshashila’s digital properties, including its website and social media pages. He also designed collaterals for branding & outreach, and was involved in the organizing public and alumni-only events.

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