🔔 India's new IT rules

WhatsApp sues the Indian government, Bitcoin gains after a tough week, Koo raises $30 million and some more updates.

May 26, 2021

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Read Time: 850 words, 4:15 minutes.

There’s so much to cover today so let’s get started.

First up,

Market Snapshot 📈

Sensex: 51,017.52 (+0.75%) ↑

Nifty 50: 15,301.45 (+0.61%) ↑

Dow Jones: 34,312.46 (-0.24%) ↓

Nasdaq 100: 13,657.73 (+0.12%) ↑

Bitcoin: $39,758.52

Top Stories 📰

1. WhatsApp v. India ⚔️

Facebook-owned WhatsApp has filed a lawsuit against the Government of India, hoping to block its new IT Rules that would require the messaging giant to break its crucial privacy policy.

Under the new rule, the government mandates social media intermediaries to trace the origins of content sent on the service.

“Requiring messaging apps to 'trace' chats is the equivalent of asking us to keep a fingerprint of every single message sent on WhatsApp, which would break end-to-end encryption and fundamentally undermines people’s right to privacy," a WhatsApp spokesperson said. The company also said that the traceability provision is unconstitutional as it clashes with the Supreme Court's 2017 Puttaswamy verdict that supported the right to privacy.

The new rules further state that if the companies fail to comply with the rules, they may lose their "intermediaries" status and become liable to criminal prosecution and lawsuits.

But wait, how did we get here? On February 25, 2021, India issued the Information Technology (Intermediary Guidelines and Digital Media Ethics Code) Rules 2021 that listed a host of obligations that social media intermediaries with over 5 million users needed to comply with. Companies like Facebook, Twitter, and WhatsApp, had a three-month-long deadline to fulfil obligations applicable to them. That ended yesterday.

Why it matters? WhatsApp, which previously received backlash over its privacy policy in January, said that it won't break end-to-end encryption since it would essentially take away the privacy of its 400 million Indian users. Moreover, allowing traceability on the platform would mean that they'd have to save billions of user data just to serve law enforcement officials.

2. Bitcoin bounces back! 📈

After having a tumultuous week, Bitcoin shows some signs of hope.

The world's largest cryptocurrency advanced nearly 5.2% to $39,588. Meanwhile, its rivals Dogecoin and Ether also recorded some gains. Overall, the global crypto market saw a 5.85% rise in the last 24 hours, bringing the total market cap to $1.73 trillion.

The rise comes in the backdrop of regulatory rhetoric on digital assets from the US and China. Additionally, Tesla CEO Elon Musk's comments about Bitcoin's energy consumption and his decision to reject the cryptocurrency as Tesla payments further fueled the selloff.

To address cryptocurrencies' sustainability concerns, a group of crypto investors from North America joined hands to form the Bitcoin Mining Council. Hosted by MicroStrategy co-founder Michael Saylor, the meeting saw attendance from Elon Musk and several crypto companies and startups. The group will focus on strategizing shift towards renewable energy and move toward industry-standard environmental, social and governance (ESG) goals.

Despite recent setbacks, cryptocurrencies are still going strong. Since last year, Bitcoin has advanced 342%, Ether is up 1,000%, and Dogecoin gained a whopping 14,000%.

Why it matters? While some crypto enthusiasts believe that Bitcoin's recent fall is just a pause in the bull market, others remain unsure as growing volatility, heightened regulatory scrutiny, and environmental concerns hinder the cryptocurrency's attempt to draw mainstream attention.

3. Today's big deals 🎉

Twitter rival Koo raises $30 million from Tiger Global
As American companies wrestle with the Indian government over the new IT Rules, Bangalore-based startup Koo has raised $30 million in Series B funding, led by Tiger Global. The latest round brings the Twitter rival's valuation to over $100 million. Blume Ventures, 3one4 Capital, Dream Incubator, and Accel participated in the round, along with new investors such as Mirae Asset and IIFL. Koo, which had over 6.5 million monthly active users in April, recently gained popularity after Twitter refused to ban posts and accounts criticising PM Narendra Modi. Additionally, Koo is also the only company that has complied with the new IT Rules that would allow Delhi to take down posts that it deems offensive or harmful in the nation's interest.
Smart Eye acquires Boston AI firm Affectiva for $73.5 million
Sweden-based company Smart Eye has acquired emotion AI pioneer Affectiva for $73.5 million in a cash-and-stock deal. As per the agreement, $67.5 million will be paid in new Smart Eye shares, while the remaining $6 million will be paid in cash. Founded in 2009 at MIT, Affectiva's software detects and understands human emotion, which, combined with Start Eye's AI-based eye-tracking technology, will help both companies to venture into the emerging “interior sensing” market. The deal will allow Smart Eye to offer Affectiva's technology to over 800 partners and customers, including the US Air Force, NASA and BMW. Both companies plan to initially launch the technology in passenger vehicles before entering into the autonomous driving market.