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Introduction

In 2019 India got its bill on Data protection in the form of the Personal Data Protection Bill 2019. This bill focused on digital rights and duties pertaining to data privacy. However, the bill was scrapped by the Govt in mid-2022, and a new bill was drafted, Successor bill was introduced as the Digital Personal Data Protection Bill, 2022 on 18th November 2022, which was made open for public comments and consultations and now the bill is expected to be tabled at the parliament in the Monsoon session.

What is DPDP, 2022?

Digital Personal Data Protection Bill, is the lasted draft regulation for data privacy in India. The bill has been essentially focused towards data protection by companies and the keep aspect of Puttaswamy judgement of data privacy as a fundamental right has been upheld under the scope of the bill. The bill comes after nearly 150 recommendations which the parliamentary committee made when the PDP, 2019 was scrapped.

The bill highlights the following keen aspects-

• Data Fiduciary- The entity (an individual, company, firm, state, etc.) which decides the purpose and means of processing an individual’s personal data.
• Data Principle- The individual to whom personal data is related.
• Processing- The entire cycle of operations that can be carried out concerning personal data.
• Gender Neutrality- For the first time in India’s legislative history, “her” and “she” have been used to refer to individuals irrespective of gender.
• Right to Erase Data- Data principals will have the right to demand the erasure and correction of data collected by the data fiduciary.
• Cross-border data transfer- The bill allows cross-border data after an assessment of relevant factors by the Central Government.
• Children’s Rights- The bill guarantees the right to digital privacy under the protection of parents/guardians.
• Heavy Penalties- The bill enforces heavy penalties for non-compliance with the provisions, not exceeding Rs 500 crore.

Data Protection Board

The bill lays down provisions for setting up a Data Protection Board. This board will be an independent body acting solely on the factors of data privacy and protection of the data principles and maintaining compliance by data fiduciaries. The board will be headed by a chairperson of essential and relevant qualifications, and members and various other officials shall assist him/her under the board. The board will serve grievance redressal to the data principles and can conduct investigation, inquiry, proceeding, and pass orders equivalent to a Civil court. The proceeding will be undertaken on the principle of natural justice, and the aggrieved can file an appeal to the High Court of appropriate jurisdiction.

Global Comparison

Many countries have data protection laws that regulate the processing of personal data. Some of the notable examples include:

• European Union: The EU’s General Data Protection Regulation (GDPR) is one of the world’s most comprehensive data protection laws. It regulates public and private entities’ processing of personal data and gives individuals a wide range of rights over their personal data.
• United States: The US has several data protection laws that apply to specific sectors or types of data, such as health data (HIPAA) or financial data (Gramm-Leach-Bliley Act). However, there is no comprehensive federal data protection law in the US.
• Japan: Japan’s Personal Information Protection Act (PIPA) regulates the handling of personal data by private entities and gives individuals certain rights over their personal data.
• Australia: Australia’s Privacy Act 1988 regulates the handling of personal data by public and private entities and gives individuals certain rights over their personal data.
• Brazil: Brazil’s General Data Protection Law (LGPD) regulates the processing of personal data by public and private entities and gives individuals certain rights over their personal data. It also imposes heavy fines and penalties on entities that violate the provisions of the law.

Overall, while there are some similarities in data protection laws across countries, there are also significant differences in scope, applicability, and enforcement. It is important for organisations to understand the data protection laws that apply to their operations and take appropriate steps to comply with these laws.

Parliamentary Asscent

The case of violation of the privacy policy by WhatsApp at the Hon’ble Supreme Court resulted in a significant advocacy for Data privacy as a fundamental right, and it was held that, as suggested otherwise in the privacy policy, Whatsapp was sharing its user’s data with Meta. This massive breach of trust could have led to data mismanagement affecting thousands of Indian users. The Hon’ble Supreme Court has taken due consideration of data privacy and its challenges in India and asked the Govt to table the bill in Parliament. The bill will be tabled for discussion in the monsoon session. The Supreme Court has set up a constitutional bench to check the bill’s scope, extent and applications and provide its judicial oversight.  The constitution bench of Justices KM Joseph, Ajay Rastogi, Aniruddha Bose, Hrishikesh Roy and CT Ravikumar has fixed the matter for hearing in August in order to enforce the potential changes and amendments in the act post the parliamentary discussion.

Conclusion

India is the world’s largest democracy, so the crucial aspects of passing laws and amendments have always been followed by the government and kept under check by the judiciary. The discussion over bills is a crucial part of the democratic process, and bills as important as Digital Personal Data Protection need to be discussed and analysed thoroughly in both houses of Parliament to ensure the govt passes a sustainable and efficient law.

Introduction

Privacy has become a concern for netizens and social media companies have access to a user’s data and the ability to use the said data as they see fit. Meta’s business model, where they rely heavily on collecting and processing user data to deliver targeted advertising, has been under scrutiny. The conflict between Meta and the EU traces back to the enactment of GDPR in 2018. Meta is facing numerous fines for not following through with the regulation and mainly failing to obtain explicit consent for data processing under Chapter 2, Article 7 of the GDPR. ePrivacy Regulation, which focuses on digital communication and digital data privacy, is the next step in the EU’s arsenal to protect user privacy and will target the cookie policies and tracking tech crucial to Meta's ad-targeting mechanism. Meta’s core revenue stream is sourced from targeted advertising which requires vast amounts of data for the creation of a personalised experience and is scrutinised by the EU. 

Pay for Privacy Model and its Implications with Critical Analysis

Meta came up with a solution to deal with the privacy issue - ‘Pay or Consent,’ a model that allows users to opt out of data-driven advertising by paying a subscription fee. The platform would offer users a choice between free, ad-supported services and a paid privacy-enhanced experience which aligns with the GDPR and potentially reduces regulatory pressure on Meta. 

Meta presently needs to assess the economic feasibility of this model and come up with answers for how much a user would be willing to pay for the privacy offered and shift Meta’s monetisation from ad-driven profits to subscription revenues. This would have a direct impact on Meta’s advertisers who use Meta as a platform for detailed user data for targeted advertising, and would potentially decrease ad revenue and innovate other monetisation strategies.

For the users, increased privacy and greater control of data aligning with global privacy concerns would be a potential outcome. While users will undoubtedly appreciate the option to avoid tracking, the suggestion does beg the question that the need to pay might become a barrier. This could possibly divide users between cost-conscious and privacy-conscious segments. Setting up a reasonable price point is necessary for widespread adoption of the model.

For the regulators and the industry, a new precedent would be set in the tech industry and could influence other companies’ approaches to data privacy. Regulators might welcome this move and encourage further innovation in privacy-respecting business models. 

The affordability and fairness of the ‘pay or consent’ model could create digital inequality if privacy comes at a digital cost or even more so as a luxury. The subscription model would also need clarifications as to what data would be collected and how it would be used for non-advertising purposes. In terms of market competition, competitors might use and capitalise on Meta’s subscription model by offering free services with privacy guarantees which could further pressure Meta to refine its offerings to stay competitive. According to the EU, the model needs to provide a third way for users who have ads but are a result of non-personalisation advertising.

Meta has further expressed a willingness to explore various models to address regulatory concerns and enhance user privacy. Their recent actions in the form of pilot programs for testing the pay-for-privacy model is one example. Meta is actively engaging with EU regulators to find mutually acceptable solutions and to demonstrate its commitment to compliance while advocating for business models that sustain innovation. Meta executives have emphasised the importance of user choice and transparency in their future business strategies.

Future Impact Outlook

• The Meta-EU tussle over privacy is a manifestation of broader debates about data protection and business models in the digital age. 
• The EU's stance on Meta’s ‘pay or consent’ model and any new regulatory measures will shape the future landscape of digital privacy, leading to other jurisdictions taking cues and potentially leading to global shifts in privacy regulations. 
• Meta may need to iterate on its approach based on consumer preferences and concerns. Competitors and tech giants will closely monitor Meta’s strategies, possibly adopting similar models or innovating new solutions. And the overall approach to privacy could evolve to prioritise user control and transparency.

Conclusion

Consent is the cornerstone in matters of privacy and sidestepping it violates the rights of users. The manner in which tech companies foster a culture of consent is of paramount importance in today's digital landscape. As the exploration by Meta in the ‘pay or consent’ model takes place, it faces both opportunities and challenges in balancing user privacy with business sustainability. This situation serves as a critical test case for the tech industry, highlighting the need for innovative solutions that respect privacy while fostering growth with the specificity of dealing with data protection laws worldwide, starting with India’s Digital Personal Data Protection Act, of 2023.

Reference:

• https://ciso.economictimes.indiatimes.com/news/grc/eu-tells-meta-to-address-consumer-fears-over-pay-for-privacy/111946106 
• https://www.wired.com/story/metas-pay-for-privacy-model-is-illegal-says-eu/ 
• https://edri.org/our-work/privacy-is-not-for-sale-meta-must-stop-charging-for-peoples-right-to-privacy/ 
• https://fortune.com/2024/04/17/meta-pay-for-privacy-rejected-edpb-eu-gdpr-schrems/ 

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The rapid innovation of technology and its resultant proliferation in India has integrated businesses that market technology-based products with commerce. Consumer habits have now shifted from traditional to technology-based products, with many consumers opting for smart devices, online transactions and online services. This migration has increased potential data breaches, product defects, misleading advertisements and unfair trade practices. 

The need to regulate technology-based commercial industry is seen in the backdrop of various threats that technologies pose, particularly to data. Most devices track consumer behaviour without the authorisation of the consumer. Additionally, products are often defunct or complex to use and the configuration process may prove to be lengthy with a vague warranty. 

It is noted that consumers also face difficulties in the technology service sector, even while attempting to purchase a product. These include vendor lock-ins (whereby a consumer finds it difficult to migrate from one vendor to another), dark patterns (deceptive strategies and design practices that mislead users and violate consumer rights), ethical concerns etc. 

Against this backdrop, consumer laws are now playing catch up to adequately cater to new consumer rights that come with technology. Consumer laws now have to evolve to become complimentary with other laws and legislation that govern and safeguard individual rights. This includes emphasising compliance with data privacy regulations, creating rules for ancillary activities such as advertising standards and setting guidelines for both product and product seller/manufacturer. 

The Legal Framework in India

Currently, Consumer Laws in India while not tech-targeted, are somewhat adequate; The Consumer Protection Act 2019 (“Act”) protects the rights of consumers in India. It places liability on manufacturers, sellers and service providers for any harm caused to a consumer by faulty/defective products. As a result, manufacturers and sellers of ‘Internet & technology-based products’ are brought under the ambit of this Act. The Consumer Protection Act 2019 may also be viewed in light of the Digital Personal Data Protection Act 2023, which mandates the security of the digital personal data of an individual. Envisioned provisions such as those pertaining to mandatory consent, purpose limitation, data minimization, mandatory security measures by organisations, data localisation, accountability and compliance by the DPDP Act can be applied to information generated by and for consumers.

Multiple regulatory authorities and departments have also tasked themselves to issue guidelines that imbibe the principle of caveat venditor. To this effect, the Networks & Technologies (NT) wing of the Department of Telecommunications (DoT) on 2 March 2023, issued the Advisory Guidelines to M2M/IoT stakeholders for securing consumer IoT (“Guidelines”) aiming for M2M/IoT (i.e. Machine to Machine/Internet of things) compliance with the safety and security standards and guidelines in order to protect the users and the networks that connect these devices. The comprehensive Guidelines suggest the removal of universal default passwords and usernames such as “admin” that come preprogrammed with new devices and mandate the password reset process to be done after user authentication. Web services associated with the product are required to use Multi-Factor Authentication and duty is cast on them to not expose any unnecessary user information prior to authentication. Further, M2M/IoT stakeholders are required to provide a public point of contact for reporting vulnerability and security issues. Such stakeholders must also ensure that the software components are updateable in a secure and timely manner. An end-of-life policy is to be published for end-point devices which states the assured duration for which a device will receive software updates.

The involvement of regulatory authorities depends on the nature of technology products; a single product or technical consumer threat may see multiple guidelines. The Advertising Standards Council of India (ASCI) notes that cryptocurrency and related products were considered as the most violative category to commit fraud. In an attempt to protect consumer safety, it introduced guidelines to regulate advertising and promotion of virtual digital assets (VDA) exchange and trading platforms and associated services as a necessary interim measure in February 2022. It mandates that all VDA ads must carry the stipulated disclaimer “Crypto products and NFTs are unregulated and can be highly risky. There may be no regulatory recourse for any loss from such transactions.” must be made in a prominent and unmissable manner.

Further, authorities such as Securities and Exchange Board of India (SEBI) and the Reserve Bank of India (RBI) also issue cautionary notes to consumers and investors against crypto trading and ancillary activities. Even bodies like Bureau of Indian Standards (BIS) act as a complimenting authority, since product quality, including electronic products, is emphasised by mandating compliance to prescribed standards. 

It is worth noting that ASCI has proactively responded to new-age technology-induced threats to consumers by attempting to tackle “dark patterns” through its existing Code on Misleading Ads (“Code”), since it is applicable across media to include online advertising on websites and social media handles. It was noted by ASCI that 29% of advertisements were disguised ads by influencers, which is a form of dark pattern. Although the existing Code addressed some issues, a need was felt to encompass other dark patterns.

Perhaps in response, the Central Consumer Protection Authority in November 2023 released guidelines addressing “dark patterns” under the Consumer Protection Act 2019 (“Guidelines”). The Guidelines define dark patterns as deceptive strategies and design practices that mislead users and violate consumer rights. These may include creating false urgency, scarcity or popularity of a product, basket sneaking (whereby additional services are added automatically on purchase of a product or service), confirm shaming (it refers to statements such as “I will stay unsecured” when opting out of travel insurance on booking of transportation tickets), etc. The Guidelines also cater to several data privacy considerations; for example, they stipulate a bar on encouraging consumers from divulging more personal information while making purchases due to difficult language and complex settings of their privacy policies, thereby ensuring compliance of technology product sellers and e-commerce platforms/vendors with data privacy laws in India. It is to be noted that the Guidelines are applicable on all platforms that systematically offer goods and services in India, advertisers and sellers.

Conclusion

Consumer laws for technology-based products in India play a pivotal role in safeguarding the rights and interests of individuals in an era marked by rapid technological advancements. These legislative frameworks, spanning facets such as data protection, electronic transactions, and product liability, assume a pivotal role in establishing a regulatory equilibrium that addresses the nuanced challenges of the digital age. The dynamic evolution of the digital landscape necessitates an adaptive legal infrastructure that ensures ongoing consumer safeguarding amidst technological innovations. As the digital landscape evolves, it is imperative for regulatory frameworks to adapt, ensuring that consumers are protected from potential risks associated with emerging technologies. Striking a balance between innovation and consumer safety requires ongoing collaboration between policymakers, businesses, and consumers. By staying attuned to the evolving needs of the digital age, Indian consumer laws can provide a robust foundation for security and equitable relationships between consumers and technology-based products.

References:

• https://dot.gov.in/circulars/advisory-guidelines-m2miot-stakeholders-securing-consumer-iot
• https://www.mondaq.com/india/advertising-marketing--branding/1169236/asci-releases-guidelines-to-govern-ads-for-cryptocurrency
• https://www.ascionline.in/the-asci-code/#:~:text=Chapter%20I%20(4)%20of%20the,nor%20deceived%20by%20means%20of
• https://www.ascionline.in/wp-content/uploads/2022/11/dark-patterns.pdf