[This post has been authored by Adhyasha Samal of the Hidayatullah National Law University, Raipur.]
[This post has been authored by Adhyasha Samal of the Hidayatullah National Law University, Raipur.]
This post has been authored by Aryan Babele, a final year student at Rajiv Gandhi National University of Law (RGNUL), Punjab and a Research Assistant at Medianama.
On 23rd October 2019, the Delhi HC delivered a judgment authorizing Indian courts to issue “global take down” orders to Internet intermediary platforms like Facebook, Google and Twitter for illegal content as uploaded, published and shared by users. The Delhi HC delivered the judgment on the plea filed by Baba Ramdev and Patanjali Ayurved Ltd. requesting the global takedown of certain videos which were alleged to be defamatory in nature.
The Delhi High Court ordered Facebook, Google and Instagram to remove search result, posts and any content containing allegations of sexual harassment against artist Subodh Gupta. These include blocking/removal of social media posts, articles and Google Search result links. The allegations were made about a year ago, by an unknown co-worker of Gupta on an anonymous Instagram account ‘Herdsceneand’. These allegations were also posted on Facebook and circulated by news reporting agencies. An aggrieved Subodh Gupta then filed a civil defamation suit, stating these allegations to be false and malicious. Noting the seriousness of the allegations, the Court passed an ex-parte order asking the Instagram account holder, Instagram, Facebook and Google to take down this content. The Court has now directed Facebook to produce the identity of the person behind the account ‘Herdsceneand’ in a sealed cover.
A student from National Law School of India, Bengaluru filed a petition in the Kerala high court seeking a ban on the mobile application – Telegram. The reason cited for this petition is that the app has no checks and balances in place. There is no government regulation, no office in place and the lack of encryption keys ensures that the person sending the message can not be traced back. It was only in June this year that telegram refused to hand over the chat details of the ISIS module to the National Investigation Agency. As compared to apps such as Watsapp, Telegram has a greater degree of secrecy. One of the features Telegram boasts of is the ‘secret chat’ version which notifies users if someone has taken a screenshot, disables the user from forwarding of messages etc. Further, there are fewer limits on the number of people who can join a channel and this makes moderation on the dissemination of information even more difficult. It is for this reason that telegram is dubbed as the ‘app of choice’ for many terrorists. It is also claimed that the app is used for transmitting vulgar and obscene content including child pornography. Several countries such as Russia and Indonesia have banned this app due to safety concerns.
In a significant ruling, the European Court of Justice ruled that Facebook can be ordered to take down posts globally, and not just in the country that makes the request. It extends the reach of the EU’s internet-related laws beyond its own borders, and the decision cannot be appealed further. The ruling stemmed from a case involving defamatory comments posted on the platform about an Austrian politician, following which she demanded that Facebook erase the original comments worldwide and not just from the Austrian version worldwide. The decision raises the question of jurisdiction of EU laws, especially at a time when countries are outside the bloc are passing their own laws regulating the matter.
The Digital Trade Agreement was signed by USA and Japan on October 7, 2019. The Agreement is an articulation of both the nations’ stance against data localization. The trade agreement cemented a cross-border data flow. Additionally, it allowed for open access to government data through Article 20. Articles 12 and 13 ensures no restrictions of electronic data across borders. Further, Article 7 ensures that there are no customs on digital products which are electronically transmitted. Neither country’s parties can be forced to share the source code while sharing the software during sale, distribution, etc. The first formal articulation of the free flow of digital information was seen in the Data Free Flow with Trust (DFFT), which was a key feature of the Osaka Declaration on Digital Economy. The agreement is in furtherance of the Trump administration’s to cement America’s standing as being tech-friendly, at a time when most other countries are introducing reforms to curb the practices of internet giants like Google and Facebook, and protect the rights of the consumers. American rules, such as Section 230 of the Communications Decency Act shields companies from any lawsuits related to content moderation. America, presently appears to hope that their permissive and liberal laws will become the framework for international laws.
The media industry in recent times is witnessing a revolution when it comes to censorship of streaming content. As compared to theatres it has become comparatively much easier for the web industry to dodge any moral scrutiny when releasing its work. While the release of the Narendra Modi biopic during the 2019 Lok Sabha Elections caused significant controversy, a web series on the same subject was allowed to air without any issues, though it was later removed by the Election Commission for having violated the Model Code of Conduct.
There have been many instances where the content of a web series has been objected to for promoting vulgarity, violence and attacking political and religious sentiments. The Delhi HC recently witnessed a PIL filed by an NGO called Justice for Rights Foundation seeking framing of guidelines to regulate the functioning of online media streaming platforms such as Netflix, Amazon and others alleging that they show unregulated, uncertified, and inappropriate content. However, the current situation indicates that content produced by such platforms continues to be outside the purview of censorship laws, thereby requiring a regulatory mechanism to balance out the conflicting views of the government, attempting to play a watchkeeping role and the advocates of creative and artistic freedom.
“Over-the-top (OTT)” is the buzz-word for services carried over networks that deliver value to customers without the involvement of a carrier service provider in the planning, selling, provisioning and servicing aspects. Essentially, the term refers to providing content over the internet unlike traditional media such as radio and cable TV.
The entertainment industry in recent times has gradually moved towards releasing content on streaming platforms such as Netflix and Amazon Prime. This is due to consumer preferences as expressed in a survey report by Mint and YouGov, which reveals millennials’ preference for online streaming as against cable TV. Another finding by Velocity MR expects the audience movement to reach 80% following the implementation of the new tariff regime for pay-television by TRAI, and the positive responses to series like Sacred Games and Mirzapur from critics and audience shows that quality of content is the key factor influencing the move to streaming services.
Considering its increasing popularity it becomes important to understand OTT with an Indian perspective. In 2015, amid the burning debates of net neutrality, TRAI floated a Consultation Paper On Regulatory Framework for Over-the-top (OTT) services to “analyze the implications of the growth of OTTs”. In this paper it defined the term “OTT provider” as a “service provider which offers Information and Communication Technology (ICT) services but does not operate a network or lease capacity from a network operator.”. Instead, such providers rely on global internet and access network speeds ( to reach the user, thereby going “over-the-top” of a service provider’s network. Based on the kind of service they provide, there are three types of OTT apps:
In November, 2018, TRAI came out with another consultation paper considering a “significant increase in adoption and usage” since its last paper. In order to bring clarity with regard to the understanding of OTT, chapter 2 of this Consultation Paper on Regulatory Framework for Over-The-Top (OTT) Communication Services discussed the definitions adopted for OTT in various jurisdictions. However, it failed to formulate a definition due to the lack of consensus at the global level. Moreover, the earlier definition of the 2015-Consultation paper, which has been reiterated in 2018, also appears to lose context because it was more oriented towards the telecom service providers.
TRAI’s approach while discussing OTT services has been to restrict itself to the telecom industry so as to address their complaints regarding interference by OTT services in the domain traditionally reserved for telecom service providers. Even though it includes “video content” as its third category, a lack of clarity for defining web series within the ambit of OTT in India is evident which explains the absence of a regulatory mechanism for the same.
Conventional media vests the broadcaster with the discretion to air particular content. The viewer in this case involves all age groups and classes who have no control over the content being broadcasted, as a result of which governmental authorities are in charge of determining whether particular content is suitable for being shown to the public. However, the emergence of streaming has enabled a switch to a more personalized platform that caters to individual consumers enabling them to decide for themselves own what they wish to watch, which completely removes the role of government discretion and intervention.
Although there exist rules and restrictions to regulate pay-television operators, they fail to put any checks and balances on the newly emerged online streaming platforms for the significant differences in their structure and technology. The individualized viewing experience that has come up with the OTT media channels has clearly reduced the amount of surveillance, any existing regulatory bodies could have, over these platforms.
The censorship of films in India is governed by the Cinematograph Act of 1952, which lays down certain categories in order to certify the films which are to be exhibited. Cable Broadcast is governed by the Cable Television Networks (Regulation) Act, 1995 and Cable Television Networks Rules, 1994. The Cable TV rules explicitly lays down the program and advertising codes that need to be followed in every broadcast.
Although it can be argued that that online streaming of content can be treated like cable broadcast, this would fail to comply with the legal test when it comes to application of the statute to streaming platforms. Certification for cable television does not require a separate mechanism but rather is done by the Central Board of Film Certification itself, and the cable TV rules restrict any program from being carried over cable if it is in contravention of the provisions – specifically Rule 6(n) of the Cable TV Rules – of the Cinematograph Act.
The problem here arises when defining the category within which web series will fall under the existing laws. Under the Cable TV Act, cable service means “the transmission by cables of programs including re-transmission by cables of any broadcast television signals.” Cable television network is defined as “any system consisting of a set of closed transmission paths and associated signal generation, control and distribution equipment, designed to provide cable service for reception by multiple subscribers.” However, the mode of transmission for OTT platforms is substantially different insofar as the content travels through Internet service providers which are difficult to regulate given their expanding nature. This makes the existing broadcasting laws inapplicable to OTT services.
Censorship has always prevailed in the Indian television and cinema industry. Despite accusation of moral policing the CBFC has continued to censor moves to bring them in line with its understanding of public morality. This involves issues of free speech and expression which has seen the courts get involved in these matters, adjudicating upon directions issued by the CBFC in various instances.
TRAI is presently assessing a consultation process to construct a framework to regulate online video streaming platforms like Netflix, Amazon Prime and Hotstar, etc. on requests made by some of the stakeholders of the film industry. Some major tycoons of the industry such as Netflix, Hotstar, Jio, Voot, Zee5, Arre, SonyLIV, ALT Balaji and Eros Now signed a self-censorship code that prohibits the over-the top (OTT) online video platforms from showing certain kinds of content and sets up a redressal mechanism for customer complaints. However, Amazon declined to sign this code, along with Facebook and Google, stating that the current rules are adequate.
Considering the fact that the OTT media industry is increasing rapidly, sooner or later it will require a regulatory body. Portals like Netflix are not even India-run, which furthers the socio-political pressure to scrutinize western content on the government. Moreover, the spread of this industry to the vulnerable group will always remain a concern. Another problem that might come up with time could be of regulating the prices of the services as seen recently with the Cable TV. This may, in fact, lead to conflicts between this emerging online streaming industry and the pre-existing cable TV industry. The courts are already being approached, against the violent and obscene content of some of the series, indicating the need of immediate attention of the legislature to take appropriate steps. The OTT-boom in the Indian entertainment market has certainly revolutionized the viewing experience but it has posed many questions and loopholes that need to be addressed in the near future.
 Section 2(b), Cable Television Networks (Regulation) Act, 1995.
 Section 2(c), Cable Television Networks (Regulation) Act, 1995.
In 2018, Anthony Clement Rubin and Janani Krishnamurthy filed PILs before the Madras High Court, seeking a writ of Mandamus to “declare the linking of Aadhaar of any one of the Government authorized identity proof as mandatory for the purpose of authentication while obtaining any email or user account.” The main concern of the petitioners was traceability of social media users, which would be facilitated by linking their social media accounts with a government identity proof; this in turn could help combat cybercrime. The case was heard by a division bench of the Madras HC, and the scope was expanded to include curbing of cybercrime with the help of online intermediaries. In June 2019, the Internet Freedom Foundation became an intervener in the case to provide expertise in the areas of technology, policy, law and privacy. Notably, Madras HC dismissed the prayer asking for linkage of social media and Aadhaar, stating that it violated the SC judgement on Aadhaar which held that Aadhaar is to be used only for social welfare schemes.
Facebook later filed a petition before the SC to transfer the case to the Supreme Court. Currently, the hearing before the SC has been deferred to 13 September 2019 and the proceedings at the Madras HC will continue. Multiple news sources reported that the TN government, represented by the Attorney General of India K.K. Venugopal, argued for linking social media accounts and Aadhaar before the SC. However, Medianama has reported that the same is not being considered at the moment and the Madras HC has categorically denied it.
Adding to the chaos and despair for the Rohingyas, the Bangladeshi government banned the use of mobile phones and also restricted mobile phone companies from providing service in the region. The companies have been given a week to comply with these new rules. The reason cited for this ban was that refugees were misusing their cell phones for criminal activities. The situation in the region has worsened over the past two years and the extreme violation of Human Rights is termed to be reaching the point of Genocide according to UN officials. This ban on mobile phones, would further worsen the situation in Rohingya by increasing their detachment with the rest of the world, thus making their lives at the refugee camp even more arduous.
Alphabet Inc.’s Google and YouTube will be paying a $170 million penalty to the Federal Trade Commission. It will be paid to settle allegations that YouTube collected the personal information of children by tracking their cookies and earning millions through targeted advertisements without parental consent. The FTC Chairman, Joe Simons, condemned the company for publicizing its popularity with children to potential advertisers, while blatantly violating the Children’s Online Privacy Protection Act. The company has claimed to advertisers, that it does not comply with any child privacy laws since it doesn’t have any users under the age of 13. Additionally, the settlement mandates that YouTube will have to create policies to identify content that is aimed at children and notify creators and channel owners of their obligations to collect consent from their parents. In addition, YouTube has already announced that it will be launching YouTube Kids soon which will not have targeted advertising and will have only child-friendly content. Several prominent Democrats in the FTC have criticized the settlement, despite it being the largest fine on a child privacy case so far, since the penalty is seen as a pittance in contrast to Google’s overall revenue.
Recently, researcher Sanyam Jain located online unsecured servers that contained phone numbers for over 419 million Facebook users, including users from US, UK and Vietnam. In some cases, they were able to identify the user’s real name, gender and country. The database was completely unsecured and could be accessed by anybody. The leak increases the possibility of sim-swapping or spam call attacks for the users whose data has been leaked. The leak has happened despite Facebook’s statement in April that it would be more dedicated towards the privacy of its users and restrict access to data to prevent data scraping. Facebook has attempted to downplay the effects of the leak by claiming that the actual leak is only 210 million, since there are multiple duplicates in the data that was leaked, however Zack Whittaker, Security Editor at TechCrunch has highlighted that there is little evidence of such duplication. The data appears to be old since recently the company has changed its policy such that it users can no longer search for phone numbers. Facebook has claimed that there appears to be no actual evidence that there was a serious breach of user privacy.
Addressing the growing data protection concerns Mozilla Firefox will now block third party tracking cookies and crypto miners by its Enhanced Tracking Protection feature. To avail this feature users will have to update to Firefox 69, which enforces stronger security and privacy options by default. Browser’s ‘Enhanced Tracking Protection’ will now remain turned on by default as part of the standard setting, however users will have the option to turn off the feature for particular websites. Mozilla claims that this update will not only restrict companies from forming a user profile by tracking browsing behaviour but will also enhance the performance, User Interface and battery life of the systems running on Windows 10/mac OS.
Delhi airport would be starting a three-month trial of the facial recognition system in its T3 terminal. This system is called the Biometric Enabled Seamless Travel experience (BEST). With this technology, passenger’s entry would be automatically registered at various points such as check-in, security etc. Portuguese company- toolbox has provided the technical and software support for this technology. Even though this system is voluntary in the trial run the pertinent question of whether it will remain voluntary after it is officially incorporated is still to be answered. If the trial run is successful, it will be officially incorporated.
In one of the first cases of its kind a British court ruled that police use of live facial recognition systems is legal and does not violate privacy and human rights. The case, brought by Cardiff resident Ed Bridges, alleged that his right to privacy had been violated by the system which he claimed had recorded him at least twice without permission, and the suit was filed to hold the use of the system as being violative of human rights including the right to privacy. The court arrived at its decision after finding that “sufficient legal controls” were in place to prevent improper use of the technology, including the deletion of data unless it concerned a person identified from the watch list.
A lot of people use YouTube videos to enhance their online articles or webpages. Some provide a regular link to the YouTube video while some provide with an embedded link of the same. While embedding, the video itself appears on the webpage and the user is not redirected to YouTube, in contrast to the previous case, where it only appeared as a link. Now, this is problematic because someone else’s video appears on one’s own webpage. A lot of people argue that this is similar to using someone else’s work for your gain without their permission, amounting to a copyright violation. However, there is ambiguity and a lot of questions are yet to be answered in such cases to prove an infringement. So, the broader question remains, is embedding a YouTube video legal?
Section 6 (c) of YouTube’s official terms of service reads:
“by submitting Content to YouTube, you hereby grant YouTube a worldwide, non-exclusive, royalty-free, sublicensable and transferable license to use, reproduce, distribute, prepare derivative works of, display, and perform the content in connection with the service and YouTube’s (and it’s successors’ and affiliates’) business, including without limitation for promoting and redistributing part or all of the Service (and derivative works thereof) in any media formats and through any media channels. You also hereby grant each user of the service a non-exclusive license to access your Content through the Service, and to use, reproduce, distribute, display and perform such Content as permitted through the functionality of the service and under these Terms of Service.”
The most significant part in the aforementioned terms is that the owner of the video grants every YouTube user a license to access his content, and to use, reproduce, distribute, display, and perform such content as permitted through the functionality of YouTube and its terms of service. In other words, when any owner uploads his video, he has an option to either enable or disable embedding, and since by choosing to leave it enabled, he grants the user a limited license to embed the video.
Based on the Terms of Service as discussed above, one can ideally conclude that if there is an option in the video to embed, then there is nothing illegal in embedding such a video. However, the phenomena of embedding too comes with some conditions and restrictions attached to it. Section 4 (f) of the Terms of Service states, “If you use the Embeddable Player on your website, you may not modify, build upon, or block any portion or functionality of the Embeddable Player, including but not limited to links back to the YouTube website.”
Put simply, an embeddable player is made available on one’s webpage by inserting a code to a website, linking to a video that’s hosted at another location, and surfacing a video player without using any resources from the website itself. However, post this if there is any modification made to the embeddable player as had been generated, Section 4 (f) of the Terms of Service will be attracted. Such conditions and restrictions attached to embedding, can be better understood in light of the observations made by the courts of U.S. and EU in the cases discussed below.
In Flava Works, Inc. v. Gunter the Seventh Circuit Appellate District faced a situation where members of an adult site were listing videos from the paid area of the site on a separate social media bookmarking site. The bookmarking site would then create a video preview with the embedded code. The Court however found that no copy was being made by the social media bookmarking site, thereby resulting in the termination of the infringement claim. Put more succinctly; merely embedding the video on your site does not give rise to liability.
Further, in Perfect 10 v. Amazon the Ninth Circuit made it clear that in situations where just in-line links are concerned, there is absolutely no direct copyright infringement liability.
The ECJ however brought a new dimension to the question of infringement. In BestWater International GmbH v Michael Mebes it was held that that as long as the embedding doesn’t make the video available to new audiences, there is no infringement. In this case, the water filter ad in question had already been available to the entire internet on YouTube, so the court observed that merely embedding it didn’t make it available to any new audiences that previously didn’t have access to it. In conclusion, it does not constitute a public communication within the meaning of Article 3 (1) of the Information Society Directive as it does not appeal to a new public.
However, all of the above cases fail to address a situation when there is embedding of a video which is already infringing. Could this amount to contributory infringement by aiding and abetting?
Judge Posner in the Flava Works Case observes, “myVidster (the defendant) is not an infringer, at least in the form of copying or distributing copies of copyrighted work. The infringers are the uploaders of copyrighted work. There is no evidence that myVidster is encouraging them, which would make it a contributory infringer. If myVidster encouraged or induced that party to upload the infringing video, it would be a contributory infringer to that infringement. But users of myVidster who thereafter merely stream that infringing video are not infringers of the reproduction or distribution rights since they have made no copies.”
The observation made above does seem satisfactory to an extent, however, is very situational in nature as there was no evidence that someone actually made a copy using the link provided. Had users copied the infringing video using the link, the observation made by Judge Posner could have been different. To conclude, proving infringement in cases where a YouTube video has been embedded will depend, for the most part, on the factual situation concerned and will vary from case to case. As technology keeps evolving with time, there can never be a strait jacket formula for proving infringement. In any event, with regard to the question we have raised presently, yes, embedding a YouTube video is legal, as long as the video being embedded is not an infringing video in itself.
Freedom of speech and expression is the bellwether of the European Union (“EU”) Member States; so much so that its censorship will be the death of the most coveted human right. Europe possesses the strongest and the most institutionally developed structure of freedom of expression through the European Convention on Human Rights (“ECHR”). In 1976, the ECHR had observed in Handyside v. United Kingdom that a “democratic society” could not exist without pluralism, tolerance and broadmindedness. However, the recently adopted EU Copyright Directive in the Digital Single Market (“Copyright Directive”) seeks to alter this fundamental postulate of the European society by introducing Article 13 to the fore. Through this post, I intend to deal with the contentious aspect of Article 13 of the Copyright Directive, limited merely to its chilling impact on the freedom of expression. Subsequently, I shall elaborate on how the Copyright Directive possesses the ability to affect censorship globally.
The adoption of Article 13 of the Copyright Directive hints towards the EU’s implementation of a collateral censorship-based model. Collateral censorship occurs when a state holds one private party, “A” liable for the speech of another private party, “B”. The problem with such model is that it vests the power to censor content primarily in a private party, namely “A” in this case. The implementation of this model is known to have an adverse effect on the freedom of speech, and the adoption of the Copyright Directive has contributed towards producing such an effect.
The Copyright Directive envisages a new concept of online content sharing service providers (“service providers”), which refers to a “provider… whose main purpose is to store and give access to the public to significant amount of protected subject-matter uploaded by its users…” Article 13(1) of the Copyright Directive states that such service providers shall perform an act of “communication to the public” as per the provisions of the Infosoc Directive. Further, Article 13(2a) provides that service providers shall ensure that “unauthorized protected works” shall not be made available. However, this Article also places service providers under an obligation to provide access to “non-infringing works” or “other protected subject matter”, including those covered by exceptions or limitations to copyright. The Copyright Directive’s scheme of collateral censorship is evident from the functions entrusted to the service providers, wherein they are expected to purge their networks and websites of unauthorized content transmitted or uploaded by third parties. A failure to do so would expose service providers to liability for infringement of the content owner’s right to communication to the public, as provided in the Infosoc Directive.
The implementation of a collateral censorship model will serve as a conduit to crackdown on the freedom of expression. The reason for the same emanates from the existence of certain content which necessarily falls within the grey area between legality and illegality. Stellar examples of this content are memes and parodies. It is primarily in respect of such content that the problems related to censorship may arise. To bolster this argument, consider Facebook, the social media website which boasts 1.49 billion daily active users. As per an official report in 2013, users were uploading 350 million photos a day, the number has risen exponentially today. When intermediaries like Facebook are faced with implementation of the Copyright Directive, it will necessarily require them to employ automated detecting mechanisms for flagging or detecting infringing material, due to the sheer volume of data being uploaded or transmitted. The accuracy of such software in detecting infringing content has been the major point of contention towards its implementation. Even though content like memes and parodies may be flagged as infringing by such software, automated blocking of content is prohibited under Article 13(3) of the Copyright Directive. This brings up the question of human review of such purportedly infringing content. In this regard, first, it is impossible for any human agency to review large tracts of data even after filtration by an automatic system. Second, in case such content is successfully reviewed somehow, a human agent may not be able to correctly decide the nature of such content with respect to its legality.
This scenario shall compel the service providers to resort to taking down the scapegoats of content, memes and parodies, which may even remotely expose them to liability. Such actions of the service providers will certainly censor freedom of expression. Another problem arising from this framework is that of adversely affecting net neutrality. Entrusting service providers with blocking access to content may lead to indiscriminate blocking of certain type of content.
Though the Copyright Directive provides certain safeguards in this regard, they are latent and ineffective. For example, consider access to a “complaints and redress mechanism” provided by Article 13(2b) of the Copyright Directive. This mechanism offers a latent recourse after the actual takedown or blocking of access to certain content. This is problematic because the users are either oblivious to/ unaware of such mechanisms being in place, do not have the requisite time and resources to prove the legality of content or are just fed up of such repeated takedowns. An easy way to understand these concerns is through YouTube’s current unjustified takedown of content, which puts the content owners under the same burdens as expressed above. Regardless of the reason for inaction by the content owners, censorship is the effect.
John Perry Barlow had stated in his Declaration of the Independence of Cyberspace that “Cyberspace does not lie within your borders”. This statement is true to a large extent. Cyberspace and the internet does not lie in any country’s border, rather its existence is cross-border. Does this mean that the law in the EU affects the content we view in India? It certainly does!
The General Data Protection Regulation (“GDPR”) applies to countries beyond the EU. The global effect of the Copyright Directive is similar, as service providers do not distinguish European services from those of the rest of the world. It only makes sense for the websites in this situation to adopt a mechanism which applies unconditionally to each user regardless of his/ her location. This is the same line of reasoning which was adopted by service providers in order to review user and privacy policies in every country on the introduction of the GDPR. Thus, the adoption of these stringent norms by service providers in all countries alike due to the omnipresence of internet-based applications may lead to a global censorship motivated by European norms.
The UN Special Rapporteur had envisaged that Article 13 would have a chilling effect on the freedom of expression globally. Subsequent to the Directive’s adoption, the Polish government protested against its applicability before the CJEU on the ground that it would lead to unwarranted censorship. Such action is likely to be followed by dissenters of the Copyright Directive, namely Italy, Finland, Luxembourg and the Netherlands. In light of this fierce united front, hope hinges on these countries to prevent the implementation of censoring laws across the world.
A recent dispute between PVR and Justdial has highlighted the connection between various facets of networking and IP infringement that ensues through the use of regular networking tools like deep links, meta tags and frames. With the interim order by the Delhi High Court against Justdial, it seems that new age digital awareness is catching up with the old and still relevant IP laws in the country. Before discussing the facts of the dispute, it is relevant to discuss the implications of the networking tools forming the dispute.
The parties PVR Pvt. Ltd. and Justdial were parties to a non-exclusive ticketing agreement that gave Justdial access to PVR’s ticketing software to book tickets for the cinema halls. The agreement expired in August 2018 after two subsequent extensions in 2016.
The defendants, i.e. Justdial, continued to offer online ticket booking services even after the expiry of the arrangement. The bookings were redirected to the BookMyShow platform through deep-links. The plaintiffs (PVR) approached the defendants regarding the same and were orally assured that the service will be discontinued.
Subsequently, in January 2019, a third party informed the plaintiff that the defendant was still offering online ticket booking for PVR Cinemas. It made web pages that displayed images of the defendant’s cinema halls and used their registered trademark to give the impression that the two parties were still commercially associated. PVR’s registered trademark was used in meta-tags of the web pages that had deep links to the websites of authorised third-party sellers.
While these networking tools are a great way of maintaining a good web presence, they can also be a notorious means of stealing the rightful web traffic of websites. The issue of deep links arises when the web traffic of the homepage of a website is deviated to an internal webpage of the same that reduces the possible revenue for the websites from the advertisements on the homepage.
While meta tags are not visible on the website, it still is a contentious tool discussed extensively in global and Indian jurisprudence. It is very common that a business uses a competitor’s trademark in the meta tags of its own website so that the search engine indexes the website in the search results when the keyword is entered. This again, results in diversion of web traffic to the competing website.
However, some people use meta tags to describe their services without the mala-fide intention of diverting traffic and still become entangled in an IP infringement suit. While ignorance of the law is no excuse, unawareness about a particular trademark is often possible and may result in unfair punishment. For instance, a second-hand car dealer might use descriptors like Honda or Maruti to index his website in the search engine. While his act might lead the user to click the link believing it to be the intended website, (thereby qualifying the initial interest confusion doctrine) it will not materially harm the companies if the website states that the owner deals in second hand cars. The diverted web traffic will not be of any utility to the shop owner if he has no advertisements listed on his website and the user has to re-surf the web for the intended address. While consent from the party whose trademark has been used can be a way to evade the infringement, it is not practically possible for small businesses to receive permission from all the companies in the field. Hence, the dealer may find himself in a suit for infringing IPR of various companies, despite the mere intention to publicise.
An individual employing framing is likely to be held liable for trademark or copyright infringements if the material is modified without authorisation in the framed page or if the framed page endorses the parties’ commercial association when there is no such commercial relation between the two sites.
The jurisprudence around deep linking/meta tagging and IP rights has been varied. Canada, Denmark, Italy and the Netherlands have mostly ruled in favour of the party alleging IP infringement.
The Imax Corporation case, in the Federal Court of Canada, was an IP infringement suit filed by Imax against Showmax for framing web pages in a manner that would convey commercial connections between the two parties. The Court, in this case passed an injunction against the defendants due to harm caused to the plaintiff’s goodwill and reputation.
The Courts of Rome and Milan have ruled in favour of the plaintiffs in cases of deep linking and framing web pages that could confuse users as to the relation between the parties. The Court of first instance Leeuwarden, a case adjudged in Netherlands followed similar rationale as discussed above.
However, cases in USA tend to sway both ways. While the Ninth Circuit Court in the Brookfield Communications case injuncted the defendant, West Coast Co. from using “moviebuff.com” which would have infringed on their trademark of ‘Moviebuff’. The Court discussed the doctrine of initial confusion according to which when the user browses the internet, the link by west coast could create a confusion in the mind of the user about Brookfield’s Moviebuff website.
On the other hand, the District Court of California, in the case of Ticketmaster Corporation held that Microsoft’s unauthorised deep linking of its ‘sidewalk.com’ to Ticketmaster’s events pages circumventing the plaintiff’s homepage did not constitute unfair competition or passing off because the ultimate sale of tickets was done through the plaintiffs. The present controversy between PVR and Justdial is similar to the Imax and the Ticketmaster’s Case.
The Jurisprudence around meta tags/deep links and IP infringement in India has been pro-plaintiff. The Court has followed a similar reasoning as was discussed in the global scenario in various Indian cases like Mattel, Inc, Consim Info Ltd. vs Google, Kapil Wadhwa vs. Samsung, and Christian Louboutin.
However, in cases of meta tagging, the Court has also accepted the defence for use of meta tags by competing businesses. The Madras High Court discussed “nominative use” of meta tags while referring to some cases of the Ninth Circuit in USA. The Court laid down the following parameters for a meta tag to qualify for nominative use:
However, these conditions are quite onerous to prove and hence, in practice, Courts often rules in favour of the party alleging infringement. While this protects the goodwill of the plaintiff, it invariably restricts the bona fide users of trademark who use the trademarks for purely descriptive purposes.
In the present dispute, between PVR and Justdial, the Court has passed an order holding it to be a prima facie case of infringement and passing off in favour of the plaintiff. It has said that unless an interim injunction was passed, the plaintiff would suffer irreparable harm and hence, restrained the defendants from using the registered trademark for PVR or any deceptive variant.
This dispute provides an opportunity to the judiciary to instate guidelines to regulate the use of different networking techniques and prevent piling of litigation. It should be acknowledged that IPR awareness in relation to the use of the internet is not enough and explainers for different avenues that internet provides for proliferating e-business and regulations around them to ensure a reduction in IPR suits would help.
In favour: Oppedahl & Larson v. Advanced Concepts, United States District Court for the District of Colorado, Civil Action Number 97-CV-1592 ; Playboy Enterprises, Inc. v. Netscape Communications Corp., 354 F.3d 1020 (9th Cir. 2004) ; Nissan Motor Co., et al. v. Nissan Computer Corp. 378 F.3d 1002 (9th Cir., 2004) ; SFX Motor Sports Inc., v. Davis, 2006 WL 3616983.
Against: Bijur Lubricating Corp. v. Devco Corporation 332 F.Supp.2d 722, Civ. No. 00-5157 (WHW) (D.N.J., August 26, 2004) ; Online Policy Group v. Diebold, Inc., 337 F. Supp. 2d 1195; 72 U.S.P.Q.2d 1200 ; Perfect 10, Inc. v. Amazon.com, Inc., 487 F.3d 701, 2007 U.S. App. LEXIS 11420, 99 U.S.P.Q.2D (BNA) 1746, Copy. L. Rep. (CCH) P29,380 (9th Cir. Cal. May 16, 2007); Kelly v. Arriba Soft Corp. (U.S. Court of Appeals for the Ninth Circuit, July 7, 2003) 336 F.3d 811.
In the previous post, we saw how once the relevant market is defined, Apple could be found to hold a dominant position. This post will highlight the different abuses under Article 102 of TFEU that Apple could be guilty of, and the tests to be fulfilled for each. It is important to note that the offences listed under Article 102 are not exhaustive, and allegations against Apple may give rise to new categories of harm.
Spotify’s grievances relate to two categories: commission fees and access to users. It has alleged that the 30% fees for using the in-app purchase feature is discriminatory, since Apple Music does not have to pay it. Apple also does not allow Spotify complete integration into Apple devices, routinely tightens its app guidelines and rejects updates for the Spotify app. ACM’s market study identified problematic practices such as favoring of own apps by Apple and Google, lack of transparency and unequal treatment. It would be interesting to assess where these allegations Spotify and by the ACM figure in the existing categories of abuse. Furthermore, competition law also recognizes certain efficiency justifications for anticompetitive conduct which would have to be addressed.
II. Types of Abuse
These allegations stem from the fact Apple is vertically integrated in the app store market, that is, it is present at two stages—it controls where apps are downloaded from, while also making the apps. In Spotify’s words, Apple acts as “both referee and player”. Therefore, Apple’s conduct would fall under those anticompetitive practices which involve these two different markets. For the 30% fees, Apple could be liable for discrimination and margin squeeze; for other practices, it could be liable for refusal to deal and tying.
Drawing from the Google Shopping case, Apple’s conduct with respect to third-party app developers could be discriminatory. In Google, it was held that Google was using its market power in the search engine market to give its own shopping service a prominent place and demoting rival shopping services in its search results. Essentially, Google gave differential treatment to its own downstream service and tried to drive out its competitors, using its upstream market power. This can be analogically applied to Apple’s conduct.
Spotify and Apple Music are direct competitors, but only Spotify is made to pay the 30% commission on subscriptions. While Apple Music can freely communicate with its users, Spotify isn’t allowed to the same or at least do it as effectively as Apple Music. Thus, Apple treats Spotify less favorably than Apple Music. The Dutch Competition Authority’s decision to investigate Apple also reveals that such discriminatory practices extend beyond the music streaming market. The investigation will first focus on Dutch apps for news media offered on the App Store; here as well, Apple plays a dual role as it recently started a news service called Apple News Plus. This could also be the reason Scandinavian news publishers have supported Spotify’s battle against Apple.
B) Margin Squeeze
In the past, the concept of margin squeeze has been applied in the telecommunications in cases like Deutsche Telekom and TeliaSonera. However, the theory of margin squeeze can be extended to online platforms as well. A margin squeeze can occur when a firm is dominant in an upstream market and supplies a key input to its competitors in a downstream market. As explained previously, this is the situation with Apple and its dominance in the upstream app store market. By charging the 30% commission from Spotify and other music streaming apps, it can be said that Apple leaves a narrow margin for Spotify to make profits in the downstream market.
The constitutive elements of margin squeeze theory are dominance in the upstream market, the as-efficient-competitor test and the requirement of anti-competitive effect. The first element has already been explained. The pivotal question that would then have to be answered is whether Spotify is an ‘as efficient competitor’. Traditionally, the test is whether the vertically integrated undertaking could compete profitably in the downstream market if it were made to pay its own upstream prices. However, as pointed out here, this test may not be applicable since neither app is profitable to begin with. As a result, the two would have to be compared on parameters such as comparing their losses. Nonetheless, the test may be applied and Spotify could be deemed an as-efficient competitors. Even then, the potential anticompetitive effects of margin squeeze would have to be checked. Although Apple’s practices do not force its competitors to exit the market, reduction of innovation and increased prices could constitute anticompetitive effects.
C) Refusal to Supply
In some circumstances, refusal by a dominant firm to supply goods or services can amount to an abuse of dominant position. Most refusal to supply cases in EU law concern a vertically integrated undertaking that is dominant in an upstream market and which refuses to supply an existing or new customer in a downstream market on which the dominant firm is also present. The refusal to deal can be constructive, i.e. where supply is offered on unreasonable terms. Thus, if Apple does not allow its downstream competitors like Spotify access to the App Store, it could be liable for refusal to supply.
Currently, the standard to be met in refusal to supply cases is strict. The first condition to be satisfied is that the product to which access is sought should be indispensable to downstream competitors. This is also known as the ‘essential facilities doctrine’. Therefore, app developers would first have to prove that the App Store is indispensable for them to reach consumers. It is not sufficient that it would be convenient or useful for app developers to have access to the app store; access must be essential. The market study shed some light on this by finding that no realistic alternatives to the App Store and the Play Store exist and therefore, the App Store forms a bottleneck for app providers to reach iOS users. This concept of the bottleneck would be helpful in ascertaining Apple’s liability. Another requirement is that the refusal should lead to ‘elimination of effective competition’, which would require more information about the market.
Tying is the practice of a supplier of one product, the tying product, requiring a buyer to also buy a second product, the tied product. The dominance needs to be proved in the tying market, which in our case is the market for app stores. The dominant firm must be guilty of tying two distinct products, and this is where difficulties arise since it is necessary for the two products to be distinct. In Apple’s case, Spotify would be hard-pressed to prove that Apple is guilty of tying iOS and Apple Music.
However, there is also the question of coercing app developers to use Apple’s in-app payment feature. Apps that deal in digital goods must use Apple’s IAP service and pay the 30% commission. If they decide to bypass this, Apple allegedly imposes unfair conditions on them by, inter alia, restricting their access to the users. Therefore, an argument for tying could be made with respect to the IAP.
III. Are there any ‘Objective Justifications’?
Finally, a balancing act between harm and efficiency would have to be carried out. If Apple can show that its practices ultimately enhance efficiency, it could escape liability. In its response to Spotify’s allegations, Apple pointed out that after using the App Store to expand its business, Spotify seemed to want to enjoy the benefits of the App Store without paying for it. This is like the free-rider criticism of the essential facilities doctrine; imposing an obligation on dominant firms to supply to their competitors would lead to ‘free-riders’ taking advantage of investments made by the dominant firm. The downstream firm could also be dis-incentivized from making similar investments. Other factors such as consumer welfare would also need to be investigated; Apple’s entire business model is based on safety, security and privacy of its users, and not allowing Apple to regulate its own App Store could ultimately be detrimental to consumers.
In conclusion, there appears to be a strong case to be made against Apple for using the App Store to tilt competition in its favor, as evidenced by at least 3 different jurisdictions deciding to investigate Apple’s conduct. However, once the allegations are tested against existing legal doctrine and case law, several issues are yet to be resolved and traditional concepts need to be evolved further. For these reasons, Spotify’s case, Apple v. Pepper and the ACM’s investigation will be followed closely across the world for they mark a new era in the interplay between technology and competition law.
To go back to Part I, click here.
 R Whish & D Bailey, Competition Law, 754 (7th Ed., 2012).
 R Whish & D Bailey, Competition Law, 698 (7th Ed., 2012).
 Ibid at 701.
 Ibid at 703.
 Ibid at 707.
 Ibid at 689.
 Ibid at 692.
 Supra note 2 at 697.
Recent developments have seen a significant amount of discussion on the activities of tech giants such as Google and Apple and their anti-competitive effects. One of the focal points of these discussions has been the app store. Last month, Spotify’s allegations against Apple for, inter alia, imposing unfair conditions and giving preferential treatment to Spotify’s competitor Apple Music brought these issues into the limelight. In addition to this, the Dutch Competition Authority launched an investigation into app store related competition law concerns. Across the Atlantic, the US Supreme Court also ruled against Apple when it held that customers could sue Apple for the 30% commission it charges, even though it is paid by the app developers. Clearly, the case against Apple for using its App Store to stifle competition has gained traction. Such cases would prove to be instructive for future action against tech giants for using online platforms to abuse their dominance and the purpose of this post is to provide a brief idea of how such cases could proceed.
There are two steps for finding abuse of dominant position in any Competition Law jurisdiction: first, establishing that the firm has a dominant position in the relevant market and second, establishing that it has abused this dominance. Consequently, Part I of this post focuses on the first step i.e. market definition and dominance while Part II will examine what activities of Apple could be abusive, their impact on consumers and whether there is any justification for these.
This May, Swedish music streaming app Spotify filed a complaint with the European Commission against Apple, stating that the latter used its ownership of the App Store to distort competition in favor of Apple Music. The complaint specifically dealt with the 30% commission charged by Apple for subscriptions to Spotify made using the App Store. The argument appears simple enough: by not imposing the same conditions on Apple Music, Apple is stifling its competitors and forcing Spotify to inflate its prices.
Now, before we define the relevant market, it is important to note that in these cases, two markets are generally involved: the upstream market and the downstream market. The upstream market is the market for app store-like platforms and the downstream market is where the platform owner tries to drive out competition. In Spotify’s case, for example, the downstream market could be the market for music streaming apps where Apple Music is also a competitor. This distinction will prove important in Part II.
The starting point for market definition is the identification of the product or service with respect to which the undertaking is alleged to be dominant. Defining the relevant product market is important, because it gives a clear picture of who the competitors of a firm are and how it holds a dominant position. To take a simple example, in United Brands v. Commission, the Commission defined the relevant market as the market for bananas, since bananas and other fruits are not substitutable.
Online platforms such as app stores bring together smartphone owners and app providers; they introduce the user to various apps and the app provider to numerous consumers. The core product or service they provide is, therefore, facilitation of the interaction between different customer groups. When Spotify says that Apple is using the App Store to abuse its dominance, it means to say that Apple enjoys market power over the interaction between app developers and consumers, which enables Apple to impose unfair conditions on its downstream competitors. Now, the relevant product market is predominantly defined based on demand side substitutability. For this purpose, let us start broad by including all platforms for smartphone apps.
But all platforms can be included only when realistic alternatives to app stores exist. Otherwise, the market would have to be defined as the market for app stores. In this context, an important phenomenon is network effects. Network effects emerge when the value of a product increases as more consumers use it. Two-sided markets, which cater to two different sets of consumers, are characterized by indirect network effects. Here, the value of the product or service increases as the size of either set of customers (users and app developers) increases. Both Apple and Google allow third-party app developers to create and offer apps for Google’s Android and Apple’s iOS. This activates indirect network effects; as more people start downloading apps from an app store, more app developers provide their apps on that store, and this attracts more customers and so on. One of the implications of this is that once an established app store is in place, neither set of customers would be willing to switch to an alternative.
While alternatives to app stores exist, they do not provide the same features as app stores and could even be risky. The question then boils down to substitutability: whether consumers and app developers could readily turn to these alternatives. Clearly, app stores have certain distinguishing features, the most important being discoverability for app developers. Other methods for downloading apps can be used only when one knows about the app and seeks it out specifically. On app stores, consumers generally discover new apps by browsing and this gives the app developers a wide reach. The app store gives security, automatic updates, and allows customers to compare different apps based on ratings, reviews, etc. For this reason, the upstream market should be defined as the market for app stores
The next and final issue that would have to be addressed is whether the App Store and the Play Store can be in the same market. When buying a smartphone, iPhones and Android phones are perhaps substitutable. Some Android phones these days are as sophisticated as the iPhone. Popular apps such as Facebook, WhatsApp, Instagram etc. are available on both app stores. However, once you buy the smartphone, you can’t change the OS and thus cannot change the app store. An iOS user has only one option for downloading apps: App Store. If Apple acts unfairly, users can’t easily switch to another app store without buying an entirely new phone.
Even from the perspective of app developers, the two are different markets. If the app developer submits an app only on the App Store, he is entirely cutoff from Play Store users and vice versa. In other words, to reach iOS users the app developer must go through the App Store and to reach Android users, he must go through the Play Store. This is only possible when App developers can multi-home, that is, develop apps for both sets of users. Multi-homing, however, is very costly since it involves developing two different versions of the app. Therefore, a more appropriate definition in Spotify’s case would be the ‘market for app stores for iOS users.’
When firms act unilaterally, they can be held liable under competition law only when they enjoy a dominant position. Dominant position relates to a firm’s power to behave independently of its competitors and its customers. The Google Shopping case could be instructive for assessing Apple’s dominance. If the relevant market is defined as above, Apple naturally enjoys a dominant position since the App Store has no competitors in the relevant market.
However, if App Store and Play Store are in the same market. the argument becomes more nuanced. The European Commission has repeatedly stressed that high market shares can in themselves be indicative of dominance. The market share of Android is around 75% while that of iOS is around 22%. A market share of 50% or even 40-45% has been held to indicate dominance, and the only occasion on which an undertaking with lower than 40% market share was held to be dominant was Virgin/British Airways. Nonetheless, Apple could still be held liable.
Market shares only indicate actual competition, and do not represent the competitive pressure exerted by firms which could potentially enter the market. These include economic advantages such as control of an essential facility, superior technology and integration. As discussed previously, network effects can also be a barrier to entry as noted in Microsoft. Taking these into account, iOS may still be found to be enjoying a dominant position.
Therefore, before Apple and Google are found to be abusing their dominant position, a careful market analysis would need to be undertaken. The next part will focus on the types of abuse under Article 102 of TFEU which correspond to Apple’s activities, and the defenses that could be taken by the company.
Part II can be found here.
 R Whish & D Bailey, Competition Law, 180 (7th Ed., 2012).
 United Brands v. Commission,  1 CMLR 429.
 Supra note 1 at 183.
 Ibid at 185.