India wants to cut Big Tech down to size. Critics say the new rules may give the state too much power

India’s new rules for social media is a sign that New Delhi is hardening its stance toward Big Tech, experts told CNBC.

Internet giants like Facebook, Amazon and Google — collectively known as Big Tech — have accrued billions of users on their digital platforms globally. They’ve invested billions of dollars over the years as they see India, a country with over 600 million internet users, as a crucial growth engine for the future.

“I do believe the Indian government has become less accommodative over the years,” said Bhaskar Chakravorti, dean of global business at Tufts University’s The Fletcher School.

To be clear, India is not alone.

Regulators around the world have also ramped up scrutiny on the outsized influence of Silicon Valley’s tech titans. From the United States to Europe and Australia, regulators are tightening the rules to keep Big Tech in check.

From tackling fake news to preventing monopolistic practices, the Indian government has come down hard on Big Tech in recent months.

In February, New Delhi announced sweeping reforms to that would hold social media platforms like Facebook, WhatsApp and others more accountable to legal requests. They would be required to take down content the government deems “unlawful” while messaging service providers would be required to identify original posters of certain messages — but that could mean breaking end-to-end encryption promised to users.

The regulation was introduced days after India rebuked Twitter in early February for not promptly complying with orders to take down certain content the government alleged were spreading misinformation about farmers protesting new agricultural reforms.

Misinformation, which often spreads rapidly through social platforms, is a concern in India. For example, three years ago, a rumor circulated on WhatsApp reportedly got several people killed in India.

Anti-competitive practices from the big tech companies have also earned regulatory scrutiny — particularly moves that are seen as putting Indian firms at a disadvantage, according to Trisha Ray, an associate fellow at the Observer Research Foundation’s (ORF) Technology and Media Initiative.

“Content moderation has also been another point of contention,” Ray said, adding that social media companies have come under fire for not taking down certain kinds of content that the Indian government believes threaten public safety.

Chakravorti outlined several reasons why India is becoming less accommodative toward Big Tech.

A big driver is the rise of India’s homegrown platforms such as Reliance Jio, which “benefits from the government taking a more aggressive stance on the US tech companies as it (Jio) looks to develop its own apps and services,” he told CNBC in an email.

Other reasons include the government’s political ambitions, such as Prime Minister Narendra Modi’s push for self-reliance and appeasing the “Hindu religious right,” he said. The landmark “Make In India” policy — which is aimed at reviving India’s manufacturing sector through higher domestic and foreign participation — is another factor, he said.

“Finally, the government increasingly wants to control the media narratives across the country,” Chakravorti said.

“While traditional media is easier to control, social media being user generated and amplified is harder; so it is easy to see why the government wants to exert greater control over the social media companies and set very strong content moderation rules,” he added.

Regulatory scrutiny has increased in recent years around data protection, privacy, election interference and disinformation, Apar Gupta, executive director at the Internet Freedom Foundation, a digital liberties organization in India, told CNBC.

Some of the newer rules have been criticized by digital rights activists and technologists for being too focused on the “political objectives of government in terms of having a greater level of power over social media companies,” he said. They should instead be “serving user interests of privacy, free expression, and a safe online environment,” Gupta added.

Social networks are shaping India’s civic space but there are no mechanisms in place to hold them accountable for the content on their platforms that are not limited by jurisdictional issues, according to Urvashi Aneja, an associate fellow at Chatham House and a founding director at Tandem Research.

“And so you, as a result of that, perhaps you see some of this current flexing right now, which is certainly excessive, and in the long run, likely to be detrimental to civil liberties,” Aneja told CNBC.

Experts have raised concerns about India’s new social media law, which was introduced and implemented without public consultation.

Some say the rules may potentially undermine some user rights that tech companies provide, such as end-to-end encryption.

The rules lack “clarity on precise parameters for content takedown orders, and provisions lend themselves to wide and varying interpretations, which often make them a hammer in search of a nail,” ORF’s Ray said.

Internet Freedom Foundation’s Gupta explained that the conditions specified in the new IT rules go beyond “ordinary post notification takedowns and an ordinary level of due diligence.”

He agreed that changes are needed for social media companies in India to operate in a more transparent and accountable manner in areas such as election disinformation on platforms and data breaches — something his organization advocates. But the new rules do not cater to those outcomes, he said.

“It caters towards a power, which can be held by government over social media companies, which essentially makes social media companies as a media platform for the state, rather than being a democratic sphere of debate for individual citizens,” Gupta added.

Analysts don’t expect Big Tech to retaliate aggressively to India’s law — like how Google and Facebook responded to Australia’s new media law. So far, none of the companies have to threatened to pull their products and services from the market.

Tandem Research’s Aneja explained that India promises a lucrative market for the internet giants and their emphasis will likely be to maintain access and presence.

“I think the bigger problem is going to be for the smaller companies to be able to comply,” she said.

Aneja said India’s institutional and regulatory capacity to implement reforms is still relatively weak. “Too often, the blame is laid at the feet of the tech companies,” she said, adding that India needs to do more in terms of enforcing its rules before any meaningful changes take place.

India also does not have a data privacy law though there is a bill that is currently still in parliament.

Tufts University’s Chakravorti said there is unlikely to be a head-on confrontation between Big Tech and the Indian government, as they are set to be under pressure back in the U.S. in the coming years.

Those companies “will not have the leverage and the managerial will to fight battles on so many fronts. In the near term, I think the Indian government will win,” he said.