Earlier this week, Economic Times reported that Flipkart-owned Myntra is testing a new live commerce model, which involves experts and influencers holding live video sessions on the platform and allowing customers to add products to the cart as and when they are shown in the videos.
“For example, an influencer in the beauty and personal care space would be demonstrating certain makeup hacks and products she/he uses, and the products being used by the expert would be available on the screen to be bought,” ET said. Along with doing live tutorials, influencers will answer the queries of customers and even offer limited-time discounts to encourage customers to buy live.
But if Myntra launches this new feature, will the e-commerce platform be considered a social media intermediary, and will it have to abide by the IT Rules?
What do the IT Rules say?
According to IT Rules notified in February this year, a social media intermediary is defined as:
an intermediary which primarily or solely enables online interaction between two or more users and allows them to create, upload, share, disseminate, modify or access information using its services.
Going by this definition, Myntra fits the bill because its live commerce feature enables the “online interaction” between influencers and customers. “This definition is exhaustive and would cover not only the influencers who are disseminating the information but would also include viewers and sellers who are viewing, sharing, or downloading such information,” Soayib Qureshi, Associate Partner at PSL Advocates & Solicitors, told MediaNama.
Furthermore, Myntra, which reportedly has over 5 crore registered users, will also be a significant social media intermediary (defined as an intermediary with more than 50 lakh registered users). And this further classification comes with responsibilities like setting up a grievance redressal system and publishing periodic transparency reports.
The broad definition for social media intermediary has been problematic since the rules were announced. For example payment gateways that enable chat features between merchants and consumers qualify as social media intermediaries. Other unintended targets are SaaS companies like Freshworks and Zoho, business messaging products like Slack and Microsoft Teams, and edtech platforms like Byjus. For these reasons, multiple stakeholders sought clarification from the government on what qualifies as social media intermediary and what doesn’t.
What do the IT Rules FAQs say?
To address the concerns of the various stakeholders and bring clarity to the IT Rules, the government on November 1 published a set of FAQs:
These FAQs clarify that to be a social media intermediary:
- Online interaction should be primary purpose: “To qualify as a social media intermediary, enabling of online interactions should be the primary or sole purpose of the intermediary.”
- And a platform is enabling online interaction if it is:
- “Facilitates socialization/social networking, including the ability of a user to increase their reach and following, within the platform via specific features like “follow”/“subscribe” etc.”
- “Ability of enabling virality of content by facilitation of sharing. Virality, in this context, means the tendency of any content to be circulated rapidly and widely from one internet user to another.”
- “Offers opportunity to interact with unknown persons or users.”
Myntra doesn’t exactly fit the bill now because:
- On one hand, e-commerce is Myntra’s primary purpose: Myntra is primarily a shopping site. “Given that Myntra is neither ‘primarily’ nor ‘solely’ a live commerce platform and that the live video shows are of limited durations intended for advertisement alone, it prima facie does not qualify as a social media intermediary. Running limited duration live shows for advertisement enabling questions and answers does not ipso facto make an ‘intermediary’ a ‘social media intermediary,’” Nikhil Varma, Managing Partner at Miglani Varma and Co told MediaNama. “It is unlikely for any entity which merely incidentally enables online interactions to be categorized as a social media intermediary,” Rishi Anand, Partner at DSK Legal, seconded.
- But on the other hand, Myntra’s live commerce model fits the criteria for enabling online interaction: On the other hand, when judging Myntra by the three criteria prescribed above for online interaction, the influencers on the live commerce feature will most likely aim to “increase their reach and following, within the platform via specific features like “follow”/“subscribe” etc,” and the feature also “offers opportunity to interact with unknown persons or users,” because customers can interact with influencers and vice versa. There is also the potential for a particular video or product to go viral.
Once again, the IT Rules FAQs add to the arbitrariness and confusion around the rules rather than bring clarity.
Myntra is not the only one in limbo
Myntra is not the only one that will be in limbo as to whether it should follow the IT Rules or not. Its parent company Flipkart is partnering with short video platform Moj to enable video and live commerce. “Users will get a seamless content and commerce experience on Moj wherein they can buy tagged Flipkart marketplace products directly from the video screen,” Flipkart said in its announcement last month.
Flipkart also cited a market report that suggests live commerce is growing:
A recent report published by RedSeer Consulting predicts that the gross merchandise value of live commerce through short videos would touch $5 billion in India by 2025. This growth trend indicates prevalent consumer and market interest in this emerging segment of content-led commerce experiences.
The Flipkart–Moj partnership also raises a different kind of question: will Moj, which is a social media intermediary, also be classified as an e-commerce platform and have to abide by the E-Commerce Rules 2020? We explore this question in another story involving YouTube and its recently acquired video shopping platform Simsim.
- Will The E-Commerce Rules Apply To YouTube Following Simsim Acquisition?
- Summary: IT Rules Clarifications From The Government And Some Comments From Us
- How The IT Rules FAQs Add To The Arbitrariness And Confusion Around The Rules
- What Does The Indian Government’s FAQs On IT Rules 2021 Fail To Answer?
- Guide: All You Need To Know About The New IT Rules, 2021
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