Category: Technology

Employing Blockchain Technology To Systematize Organ Donation in India

Posted on by Tech Law Forum @ NALSAR

[This post has been authored by Sindhu A., a final year student at School of Law, Christ University.]

In terms of organ donation, India is ranked among the lowest globally, with an organ donation rate of a mere 0.86 donors per million. According to a recent study, around 5,00,000 people need organ transplantation every year and 90 percent of the people on the waiting list die without receiving an organ. India was known as the most common source of organ trade and although there was a gradual decline with the enactment of legislations, the illegal underground market persists as a looming threat. The above-mentioned statistics indicate the need for a fundamental change in the way the Indian organ network operates. One of the most efficient ways to remedy this is to appropriate blockchain technology to better manage organ donation and allocation. 

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Technology and CPC (Part I)

Posted on by Tech Law Forum @ NALSAR

[This is the first part of a two-part article by Ankush Rai, a 3rd year student at NALSAR University of Law.]

In a recent case, the Delhi High Court accepted that summons could be served by WhatsApp and also stated that a ‘double tick’ would prima facie imply that summons have been duly delivered. This case serves as an example of how courts in India have gradually allowed for summons to be served through various electronic means. Additionally, this case also brings forth two larger points for consideration. Firstly, law and society are constantly in flux and one should adapt to the changes in the other. In this case, the law has adapted to the technological changes in society with the help of courts. Secondly, technology can be used to fulfil the larger objectives of law and justice in an effective and efficient manner. Herein, sticking to the ancient and rigid means of delivering summons would have further delayed the disposal of the case. By accepting WhatsApp messages as summons the Court fulfilled the larger objective of an efficient and speedy trial.

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Protection for non-expressive use in India

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This post has been authored by Unmekh Padmabhushan, a final year student of National Law University, Jodhpur.

Machine learning is the process by which a piece of software is able to expand upon its capabilities and knowledge in a self-driven manner without any significant human input. This technology has been used, for example, in disaster warning systems and in driverless cars. Another scholarly use of such technology allows robots to derive patterns and significant correlations from enormous databases of texts in a manner impossible for human beings. This has led to led to an explosion in the ability of those working in the field of the humanities to analyse data like their natural sciences counterparts have done for years. [1]

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Chance or Skill: Fantasy Sports Leagues and Gambling

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This piece has been authored by Karthik Subramaniam, a second year student at NALSAR University of Law. It discusses the debate surrounding Fantasy Gaming Leagues and gambling.

Spectator sports have been popular since time immemorial. fantasy sports leagues across the world have gained huge fan bases and manage to rake in massive revenues. The National Football League (NFL), the premier American Football tournament in the United States managed to generate revenue of around 13,680 million USD in 2017, which surpasses the GDP of almost 64 countries. Many individuals see these leagues as geese that lay golden eggs, thereby, motivating them to get involved.

Sports Fantasy leagues are games in which participants accumulate points based on the statistical accomplishments of the athletes they have selected to their teams based on a draft. One of the earliest published accounts of a fantasy sports involved Oakland businessman Wilfred “Bill” Winkenbach who devised fantasy golf in the latter part of the 1950s in the United States.With sports leagues such as the National Football League (NFL), the National Basketball Association (NBA), Major League Soccer (MLS), Major League Baseball (MLB) and the National Hockey League (NHL) present in North America, Fantasy Sports Leagues boasted almost 56.8 Million players in 2015. With people spending an estimated 11 Billion USD on online fantasy leagues in 2013, the need for regulations in the area becomes all the more important. The spending of so much money on a game where the pay-outs are highly uncertain draws a very fine line between such spending and the illegal act of gambling.

The Unlawful Internet Gambling Enforcement Act of 2006(UIGEA) is a legislation in the United States that regulates online gambling and ensures the protection of individuals operating in this rapidly booming field. The UIGEA prohibits gambling businesses from knowingly accepting payments in connection with the participation of another person in a bet or wager that involves the use of the Internet and that is unlawful under any federal or state law. The presence of this legislation has made gambling over the internet illegal. In fact, betting on sports is illegal in all American states apart from Nevada. The reason fantasy football and other such fantasy sports fall outside the ambit of being a gamble or wager is due to the UIGEA. The legislation says that games of “skill” played for a certain reward (money in most cases) can be permitted to continue online, while games that involve an element of “chance” cannot. UIGEA includes a specific exemption for fantasy sports from being considered as gambling, provided that they meet three essential requirements: 1) The value of the prize involved is entirely independent of the number of players involved, 2) the outcome is based on the relative knowledge and skill of the participants and determined by statistical results, and 3) the outcome cannot be determined by the score of the game or based solely on one individual player’s performance in a single real sporting event. These specific exceptions were carved out to accommodate the slowly growing (in 2005) industry of online fantasy gaming. In a letter dated Feb. 1, 2006, the top lawyers from the NFL, NBA, NHL and MLB asked members of Congress to co-sponsor UIGEA, which included the fantasy carve-out. The legality of the same has allowed many states to impose taxes on fantasy gaming, allowing them to join in on the money bandwagon as well.

The Indian standpoint on this is based on the differentiation between games involving chance, and games involving skill as well, as laid out in the American context.

The Fantasy Sports League sector in India has been gaining steam for a while. Recently, in April 2019, Dream11, a Mumbai-based fantasy gaming start-up became India’s first gaming unicorn. The online gaming revenue is expected to increase from around 2,000 crores in 2014 to around 11,900 crores in 2023. The sector has undergone a massive change over the last few years with people rapidly gaining interest.

The current Indian legislations that deal with gaming in India are the Public Gambling Act, 1867(PGA) and the Prize Competitions Act, 1955(PCA). The 1867 Act, being a pre-Independence legislation offers a colonial approach to gambling, which put forward a largely anti-gambling rhetoric.[1] While this legislation looks at predominantly criminalising gambling in most cases, it also tries to distinguish between betting on a “game of chance” and staking on a “game of skill” to provide a safe harbour to activities such as wagering on horse races which were extremely popular amongst the British. While the application of this legislation was limited to the erstwhile British presidencies, the adoption of the principle espoused by the statute in most state legislations illustrates a similar mind-set showcased by Indian states.

Very much like the UIGEA, the Indian position with respect to declaring online-fantasy games as legal lies on the emphasis given on “games of skill”. While the PGA does not clearly mention specific games that constitute as games of “mere skill”, Indian courts have by and large adopted the “dominant factor test” or “predominance test” which requires the court to analyses the case and verify if chance or skill “is the dominating factor in determining the result of the game”.[2] Courts have recognised that no game is a game of pure skill alone and almost all games involve an element, albeit infinitesimal, of chance.

Based on the above, Sports Fantasy games have been exempt from the provisions of the PGA and have been declared as a legitimate business activity protected under Article 19(1)(g) of the Constitution of India. With a high potential for growth in the Indian market, foreign entities have been looking at exploring possibilities in the country. The classification of games into those involving “skill” and those involving “chance”, in India has been very vague, and often left up to the interpretation of courts. In an era of growing acceptance and evolution there is a requirement of an effective legislation specifically classifying activities as illegal gambling, separating it from those involving preponderance of skill.

[1]Vivek Benegal, Gambling Experiences, Problems and Policy in India: A Historical Analysis, in 108, =&0=&, December 2013, 2062-2067.

[2]Dr. K.R. Lakshmanan v. State of Tamil Nadu, AIR 1996 SC 1153; State of Andhra Pradesh v. K. Satyanarayana, AIR 1968 SC 825.

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Algorithms: Can They Collude?

Posted on by Tech Law Forum @ NALSAR

This piece has been authored by Lokesh Vyas, a fourth year law student at Institute of Law, Nirma University, Ahmedabad. Here, he gives a lucid explanation of issues posed by the increasing use of algorithms. 

The Cloak of Algorithms

Unlike the traditional market, the digital economy does not have any geographical limits. Thus, there is fierce competition among all the players. However, due to the unequal availability of resources, it is becoming increasingly difficult for new aspirants to join the market. The use of pricing algorithms, presently adversely  affects the present landscape of online retail.

An algorithm is an established computational procedure that takes a set of values, as input and produces another set of values as output. A catena of algorithms is used in the market to create artificial transparency.[1] These algorithms are called pricing algorithms because competitors in the market use them to set prices after gauging market behavior and competitors. They help competitors to outlive others through optimum pricing. Such a scenario creates artificial algorithmic transparency in the market. However, with an increase in such algorithms in the market, it becomes easy to predict the change in the market. An increase in the accuracy of such predictions, not only strengthens the dominance of certain competitors but also eliminates small competitors altogether, hindering consumer welfare.

Unilateral decision making, the right to make intelligent decisions is a fundamental right of any business, since they aim at maximizing profit. The exercise of such a right effectuates conscious parallelism which is a legitimate and obvious factor in any market. However, the artificial transparency that continues to exist due to algorithms enables competitors to control the market.

Further, the increasing transparency in the market creates interdependency among the competitors, thereby incentivizing collusion. Algorithms create a god’s eye view, enabling competitors to monitor activities in the market in real time. Market players are less likely to deviate because of the instantaneous fear of retaliation.

Hence, the algorithms become a cloak to escape liabilities under competition law. Such tacit collusion has not been considered not barred by the law.

Challenges

The primary question is, does traditional competition law accommodate the recent trends in the market such as pricing algorithms and if so, how? The challenge before competition law authorities is to detect whether tacit collusion exists among competitors, and whether it negatively impacts consumer welfare.

Additionally, questions about communication and liability arise. The absence of explicit communication is a major issue when considering collusion, because in order to prove collusion, there must be an existence of communication. Algorithms have enabled companies to escape the necessity of explicit communication.

Another issue associated with such algorithms is that of liability, because there is no human intervention which facilitates such tacit collusion. Thus, it becomes difficult for authorities to ascertain the liability of the final wrongdoer. The three possible assertions with respect to liability are; the liability of the person who invents such algorithms; the liability of the person who deploys them; the liability of the person who gains from such algorithms.[2]

None of the above acts are explicitly prohibited by law unless a mala fide intention [intentional cartelization] to cause harm is proved. Competition law only outlaws bilateral or multilateral decision making by the competitors because it implies the existence of cartelization. By contrast, the adoption of pricing algorithms through undertakings merely enables them to attain dynamic pricing. The issue arises when competitors maximize their profit by colluding with each other, by entering into automatized virtual agreements. As per the current debate on algorithmic collusion, algorithms are used to facilitate an existing price agreement between the competitors. They simply act as intermediaries, as an extension of the human will. Alternatively, the algorithms are designed to result in a tacitly collusive result. Here, unilaterally designed algorithms learn to tacitly understand each other due to limited market characteristics. Presently, two scenarios emerge when considering algorithms that could cause collusion.

The first is the ‘messenger scenario’, since here algorithms acts as an instrument of collusion, including the implementation of agreed price adjustments as well as the monitoring of such agreements. An example of this is the US Department of Justice and UK Competition and Markets Authority’s proceedings regarding the distribution of posters through the Amazon Marketplace. Here, the companies involved initially agreed via e-mail that they would not underbid each other. After an attempt at the manual adjustment of prices had proved too complex, both companies used (different) repricing software. Pertinently, this software made it possible to monitor competitors’ prices and dynamically adjust one’s own prices according to those of competitors. The software was set so that the products were offered at the same price as long as no third (uninvolved) dealer with a lower price was active on the market.

In the second scenario, a collusive market comes about because the behavior of companies is canonically harmonized by using similar algorithms or by using algorithms which adapt to change in the others. Such agreements do not come under the general definition agreement, however there exists a tacit ‘meeting of mind’ among the competitors. Hence, the traditional definition of a contract under competition law needs to revisited in order to include such collusion. Notably, the definitions of an anti-competitive agreement under Section 3 of the Competition Act, 2002, Section 1 of the Sherman Antitrust Act, 1890, and Article 101 of the Treaty on the Functioning of the European Union do not cover mere ‘meeting of mind’ which exists due to such virtual agreements.

The use of algorithms in the market cannot be curbed altogether, since it would tremble the pillar of the digital economy. However, there is a need for regulatory policies to accommodate for the status quo. Pertinently, mutual price monitoring—the crux of tacit collusion which is not prohibited by Competition Law—must be addressed again.

The meaning of communication, a pre-requisite for constituting anti-competitive behavior also needs to be revisited to prevent ‘algorithm driven cartelization’. Pricing algorithms create a barrier for new entrants which in the long run affects market efficiency. Such a barrier is likely to impede the innovation in the market, which has direct nexus with consumer welfare.

Information Technology Act, 2000

There have been a lot of cases where e-commerce platforms and social media websites have been cleped as intermediaries, however, it is largely connected with the content uploading. Similarly, Section 2 of the recent Motor Vehicles (Amendment) Act, 2019 defined aggregators such as Uber and Ola as digital intermediaries or marketplaces which can be used by passengers to connect with  cabs. The question of intermediary liability primarily deals with content uploading or verification, and attracts the applicability of IP laws or other criminal laws.

However, the competition in the market is so fierce today, that independent firms like Feedvisor and Intelligence Node have started offering algorithmic pricing as a service. Here, the question arises whether such firms are intermediaries under section 2(w) of Information Technology Act, 2000 and do not attract liability (see Section 79 of the Act) because they are a link that collects the information of various competitors and compares them to produce the best results for a third party. Thus, the applicability of the safe harbor provision on algorithm deploying companies also needs to be considered, since they are aware about the effects and utilization of these algorithms.

  • Algo 1- Algorithm P
  • Algo 2- Algorithm P

[The above diagram demonstrates a scenario where a common algorithm (Algo P) is used by two different business entities(Firm A & Firm B).]

Conclusion and Suggestions

There have been four approaches to solving the above problems so far:-

  1. To broaden the interpretation of competition laws;
  2. To insert new provisions in the existing legislation;
  3. To use more rigorous alternative methods of dispute resolution; and
  4. To act in a way that parallel consciousness would not happen.

The underlying assumption of all the above approaches is that algorithms are inherently perilous to the market and pose threats to the fair competition in markets. The heart of the entire pricing algorithms debate revolves around the term ‘contract’ which needs to be revisited and interpreted. The term contract/agreement connotes ‘meeting of mind’ and the meeting of mind suggest the intention of the parties to agree on something. The most strenuous task before the competition law agencies is to ascertain such intention even when such explicit agreement is lacking.In order to curb the above challenges, the intervention can either be in the form of making big legal changes (e.g. Expanding the scope of major offenses like cartelization and abuse of dominant position) or to come up with small interventions (such putting a cap on the price change for more than a certain number of times in a day).

Therefore, competition law authorities can retaliate to such changes by bringing enforcement algorithms which can detect deviant or anomalous behavior in the market and thwart them timely.

[1] See Virtual Competition by Ariel Ezrachi and Maurice E. Stucke.

[2] See Virtual Competition by Ariel Ezrachi and Maurice E. Stucke.

Figure taken from here.

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