Govt-Twitter faceoff escalates over India IT rules

Good morning,

A day after it was reported that WhatsApp had sued the government of India over its new information technology rules, Twitter and Google said they would strive to comply with local laws, but remained committed to free speech and an open internet.

Also in this letter:

• BigBasket board clears stake sale to Tatas
• How Dream Sports plans to diversify
• Influencer marketing guidelines kick in from June 14

Twitter and Google yesterday broke their silence on India’s new IT rules.

Twitter said it will “strive to comply with applicable law“, but plans to ask for changes to portions of the rules that inhibit free speech. The company is in the midst of a clash with the government over the ‘manipulated media’ label it has put on tweets by various BJP leaders that contain a debunked document.

• “To keep our service available, we will strive to comply with applicable law in India. But, just as we do around the world, we will continue to be strictly guided by principles of transparency, a commitment to empowering every voice on the service, and protecting freedom of expression and privacy under the rule of law,” said a Twitter spokesperson.

Google CEO Pichai said, “It’s obviously early days and our local teams are very engaged… we always respect local laws in every country we operate in, and we work constructively. We have clear transparency reports, when we comply with government requests, we highlight that in our transparency reports.”

‘Intimidation tactics’: In response to the Delhi police visiting their offices on Monday, Twitter said it was “concerned by recent events regarding our employees in India… We, alongside many in civil society in India and around the world, have concerns with regards to the use of intimidation tactics by the police in response to enforcement of our global Terms of Service, as well as with core elements of the new IT Rules.”

Government’s response: The government later accused Twitter of refusing to comply with the rules and seeking to undermine the country’s legal system. “Twitter’s statement is an attempt to dictate its terms to the world’s largest democracy,” the Ministry of Electronics and Information Technology (MeitY) said.

• “Twitter has a large user base in India, it earns significant revenue from its Indian operations but is also the most reluctant to appoint an India based grievance redressal officer and mechanism, chief compliance officer and nodal officer to whom its own users can complain, when they are subjected to offensive tweets” MeitY added.

On Tuesday, WhatsApp sued the Indian government over the traceability requirement in the new IT rules, which it said would force it to compromise the privacy of its users and lead to mass surveillance.

BigBasket’s board has approved the Tata group’s purchase of a 64% stake in the company, a source told us. The Bengaluru company has received a primary capital infusion of $200 million at a valuation of around $2 billion.

Chief executive Hari Menon and other co-founders – who collectively held about 5% in the firm — will continue to lead operations.

Farewell: BigBasket’s biggest shareholders Alibaba (25%) and Actis, (16.77%) have exited the company as part of the deal, as have Ascent Capital, Zodius, Sands Capital and serial entrepreneur K Ganesh.

IPO in two years: Even as BigBasket prepares for its journey under the Tatas, it aims to go public in the next two years, our source said.

Tata’s digital play: This comes a day after we reported that the Tatas were in talks to buy health and fitness startup Curefit and give its founder Mukesh Bansal a bigger role in its digital businesses.

Prasanna Krishnan (left) and Yannick Colaco, cofounders, FanCode

Dream Sports, the parent company of online fantasy gaming platform Dream11, is looking to build and scale up several sports-technology businesses through its year-old investment arm.

Dream Sports Investment will back both in-house and external platforms that are beyond its core fantasy gaming business.

• Chief executive Harsh Jain had told us in March: “We have no plans to IPO…we want to go public as a sports tech company. For that, we need to have a substantial portion of our business coming from non-fantasy sports.”

First investment: For starters, Dream Sports has invested $50 million in its in-house sports content and commerce platform FanCode.

Incorporated in 2019, FanCode offers sports statistics and content to its 20 million users.

It plans to use the fresh funds to grow its user base to 100 million by July 2022 and expand sports content and commerce beyond metros.

What’s next? Dream Sports Investment plans to continue funding health, sports and related verticals. It has also invested in a sports aggregator platform and is looking to make investments in the internet of things, and virtual and augmented reality.

Digital payments firm Paytm is planning a $3-billion initial public offering (IPO) in India later this year, Bloomberg reported.

Biggest Indian IPO: If the plan goes through, it would be the biggest IPO ever in India, surpassing that of Coal India in 2010, which raised over $2 billion.

Details: Paytm is targeting a valuation of $25 billion to $30 billion, a big jump from its last valuation of $16 billion, when it raised $1 billion in a round led by US asset manager T Rowe Price in November 2019. The Noida firm, which also counts Berkshire Hathaway among its investors, is currently India’s most valuable startup, although edtech major Byju’s is hot on its heels.

The float is expected to be a mix of new equity and a share sale by existing investors. Paytm is reportedly aiming to list by November.

Over the years, Paytm has expanded beyond digital payments into banking, financial services, credit cards, stock-broking, mutual funds, wealth management, and digital gold.

Amazon’s acquisition of MGM Studios is its second-biggest to date after Whole Foods, which it bought for $13.7 billion in 2017.

Influencers will be required to add a disclosure label to their promotional posts from June 14, as per final guidelines released by the Advertising Standards Council of India (ASCI).

‘Clear, identifiable prominent’: The guidelines say disclosure labels should be clear, identifiable and prominent (not buried under hashtags). They also specify exactly where, how, and for how long these labels must appear. ASCI said it has identified AI-enabled tools from a French technology provider Reech to monitor potential violations. Read the guidelines here.

Leading influencers and their marketing agencies welcomed most of the rules, noting that it was largely advertisers who have been reluctant to include disclosure labels.

Yes, but: ASCI is a self-regulatory body and its guidelines are not legally binding. It can ask influencers who fail to abide by the new guidelines to make changes or take the post down, depending on the situation, but cannot enforce these guidelines.

Fintech startup Kodo has secured $8.75 million in its seed round from a slew of investors such as Brex, Goat Capital, and Pioneer Fund along with a few others from Silicon Valley, the company said on Thursday.

Mobile-based agritech platform FarMart has raised around $2.4 million in funding led by Omidyar Network India and Avaana Capital. Existing investors Indian Angel Network and LetsVenture also participated in the round.

Zetwerk to foray into aerospace, defence: Consumer and capital goods startup Zetwerk has set up a fully owned subsidiary to manufacture critical products for the aerospace and defence sector, the company said. The subsidiary- Zetwerk Aerospace – will manufacture satellites, composite products and rocket casings for the Indian defence sector.

Indian IT companies to grow at 15% in FY22: Indian IT services companies are expected to grow at a faster pace this fiscal year as businesses across the world continue to step up spending on digital transformation, HDFC Securities said in a report. Most services companies grew at about 10% on average in the previous fiscal. They are predicted to grow at a compounded annual growth rate (CAGR) of 15% in 2021-22.

India’s first privately made engine for micro satellites: Space technology startup Bellatrix Aerospace has successfully tested India’s first privately developed hall-effect thruster, an electric propulsion engine for micro satellites weighing 50-500 kg. The thruster will be ready for commercial use by the end of this year, the company said.

ZebPay sets up crypto-lending platform: ZebPay has set up a crypto-lending platform that will allow users to lend their coins to the cryptocurrency exchange. In the initial phase, the platform will accept limited tokens from users.

Infibeam Avenues subsidiary GoPayments to foray into neo-banking: GoPayments, a subsidiary of Infibeam Avenues, will foray into neo-banking to provide digital and mobile-first financial solutions payments and money transfers, secured money lending, express settlement, corporate credit card, prepaid cards among other services, it said.

■ UK restarts media watchdog search following tech lobbying (Bloomberg)

■ Facebook ends ban on posts asserting Covid-19 was man-made (WSJ)

■ Big Tech mergers: EU prepares new rules but three countries want more control (CNBC)

Today’s ETtech Morning Dispatch was curated by Zaheer Merchant and Karan Dhar in Mumbai.

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