Analysis of the Amendment introduced by MeitY for regulation of Online Gaming (Part 2)

Gaurav Bhalla , Ashneet Hanspal

April 13, 2023

Analysis of the Amendment introduced by MeitY for regulation of Online Gaming (Part 2)

In our continuing series of posts on this subject, we’re analyzing different aspects of the regulatory mechanism introduced by the Amendment Rules. As a first step, we’ve scrutinized the statutory definitions (pertaining to ‘online games’ and ‘online gaming intermediaries’) which have been incorporated in the Amendment Rules [under rules 2(qa) to (qf)].

We now move on to the additional obligations that have been incorporated [under rule 3 of] the Amendment Rules in respect of an ‘intermediary (including an online gaming intermediary as newly defined under the Amendment Rules).

Preliminarily, we note that all due diligence stipulated to be observed by an intermediary under the IT Rules is now prescribed to be carried out by an online gaming intermediary. There have also been some changes in the due diligence required to be carried out by intermediaries, specifically, by online gaming intermediaries as enumerated below.

An intermediary is now expected to make reasonable efforts ‘by itself’ to cause the users of its platform to not ‘…host, display, upload, modify, publish, transmit, store, update or share any information…’ of the nature that is expressly prohibited under the Amendment Rules and otherwise unlawful. The inclusion of this requirement implies that an intermediary will now be held to a much higher threshold of compliance. Further, the categories of prohibited information under the Amendment Rules have been expanded to include the following:

  • An online game that causes ‘user harm’ [For reference, it is clarified under the Amendment Rules that the term(s) ‘harm’ and ‘user harm’ refer to any effect ‘…which is detrimental to a user or child, as the case may be…’];
  • Any information which is in respect of any business of the Indian government [having being ‘…identified as fake or false or misleading by such fact check unit of the…’ Indian government (as may be notified)]; or
  • Any information which is ‘…in the nature of an online game that is not verified [i.e.. not verified by the ‘online gaming self-regulatory body’ proposed to be set up under the Amendment Rules] as a permissible online game (as defined under the Amendment Rules); or
  • is in the nature of ‘…advertisement or surrogate advertisement or promotion of an online game that is not a permissible online game, or of any online gaming intermediary offering such an online game’.

The government has attempted to make the scope of coverage of the provisions of the Amendment Rules as wide as possible (and could have far-reaching consequences for online gaming intermediaries). The definitions of the terms ‘harm’ and ‘user harm’ are quite wide and leave room open for subjective interpretation (by the government appointment self-regulatory bodies) to analyze whether or not they are detrimental to a user or a child. Further, while the restriction on advertisement/surrogate advertisement for an online game that is not a permissible online game seems fine, the restriction on advertisement/surrogate advertisement of an online gaming intermediary that is offering such an online game (which is not a permissible online game) will also be imposed diligence requirements on online gaming intermediaries. This restriction would mean that if an online gaming intermediary hosts numerous games on its platform and even if one of those games is not a ‘permissible online game’, the advertisement/surrogate advertisement of such an online gaming intermediary is not permissible.

Further, we note that specific timelines have been stipulated for online gaming intermediaries (for the purpose of informing users about changes in terms and conditions, privacy policy, or the user agreement, as the case may be) as part of the due diligence required to be discharged under the Amendment Rules. An online gaming intermediary that enables its users to ‘…access any permissible online real money game…’ is obligated to inform its users of this change as ‘…soon as possible, but not later than twenty-four hours after the change is effected…’. Further, such an online gaming intermediary (who ‘…enables the users to access any permissible online real money game…’) is expected to provide any information or assistance as may be lawfully requisitioned by the Indian government (and authorized agencies) under the Amendment Rules within a span of twenty-four hours.

Moreover, some changes have also been made to the grievance redressal mechanism which an intermediary was obligated to maintain under the IT Rules. Under the Amendment Rules, the role and responsibilities of the Grievance Officer appointed by an online gaming intermediary have been stipulated. The Grievance Officer will be responsible for dealing with user complaints in relation to the additional compliances specifically expected to be carried out by an online gaming intermediary [under rule 4 of the Amendment Rules] and timelines within which a response must be addressed to the user (in respect of certain compliances) has further been stipulated.

Lastly, it is pertinent to note that the Amendment Rules have now clarified that the obligation to ‘prominently publish’ terms of use and privacy policy (which is applicable to all intermediaries including online gaming intermediaries) requires that the same should be published by an intermediary ‘…in a clearly visible manner on the home page of the website or the home screen of the mobile-based application, or both, as the case may be, or on a web page or an app screen directly accessible from the home page or home screen…’.

Our follow-up posts (which we’ll be rolling out in the coming week) will cover the analysis of the additional compliances prescribed under the Rules (for online gaming intermediaries as well as significant social media intermediaries).

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