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Twitter invests in Sharechat’s $100 million Series D funding round; Sharechat’s policy position on online platform regulation

Twitter has invested in Bengaluru-based regional social network ShareChat’s $100 million Series D funding round.  Apart from Twitter, the round saw participation from another new investor Trustbridge. Existing investors namely Shunwei Capital, Lightspeed Venture Partners, SAIF Capital, India Quotient and Morningside Venture Capital also participated in this round. According to the company, this funding will be used for developing its technology infrastructure, onboard new talent and introduce more features. ShareChat said that with this, it has raised a total of $224 million till date.

ShareChat’s focus on regional language

ShareChat was founded in 2015. It is an Indic language social networking app which puts together features of WhatsApp, Facebook and Instagram, and targets the non-English conversant users in India. It allows users to make posts to a ‘wall’, add images, GIFs, videos and audio clips, view posts from others, add and follow friends, and so on. It also has a ‘treasure’ section, where it lists posts based on categories like romantic, humorous etc. It also lists news, horoscopes, daily tips, devotional services and other miscellaneous services.

The app offers services in regional languages such as Hindi, Marathi, Gujarati, Punjabi, Malayalam, Telugu, Bengali, Tamil, Kannada, Odia, Assamese, Bhojpuri, Haryanvi and Rajasthani.

Previous funding rounds

  • In September 2018, ShareChat had raised Rs 720 crore in a round led by existing investor Shunwei Capital. Morningside Ventures of Hong Kong, Jesmond Global, an affiliate of DST Global, Xiaomi, SAIF Partners and Lightspeed Venture Partners also participated in the round. The funding was raised to develop its core product offering to diversify into other categories.
  • In January 2018, the company secured Series B funding of $18 million (approx Rs 116 crore), for improving its machine learning & AI capabilities and also to manage increasing cloud infrastructure costs.
  • In November 2016, it raised $4 million in a Series A funding from Lightspeed Venture Partners and participation from existing investors SAIF Partners and India Quotient.
  • In July 2016, ShareChat had also raised $1.25 million from SAIF partners.

ShareChat’s policy positions on online platform regulation

(Nikhil adds)

In regulatory filings and at industry events, ShareChat has often taken a stand against regulatory advantages for “offshore”, “global and regional multi billion dollar incumbents”. Some excerpts from its filing on OTT regulation:

  • Wants regulation of platforms, but not licensing: “While we welcome regulation of platforms, we would like to highlight that any form of licensing would deter local innovation”…

“Teams such as ours, which are home grown, are often better suited to understand the nuanced needs of the next billion users in India. The alternative lies in the dominance of global and regional multi bullion dollar incumbents with deep pockets to avoid to meet any compliance costs.”

  • Lack of regulatory clarity helps global firms: “On the other hand, lack of regulatory clarity or the threat of regulatory barriers often incentivize global organisations to either structure their key entities offshore or avoid a presence in India altogether. Moreover, non-resident organizations currently run communications applications in violation of domestic laws, and often at cross-purposes with domestic interests.”

Moreover, non-resident organizations currently run communications applications in violation of domestic laws, and often at cross-purposes with domestic interests. Therefore, we would recommend identification of malpractices by offshore applications, and ensuring parity in regulatory burden and action with domestic technology companies.

  • Interconnection between Telecom operators and online communications platforms: “…charges to a TSP for interconnection with a competing network. In such cases, the TSP should ideally be rewarded for making available their network, as the ultimate beneficiary does not remunerate the TSP for the service provided.”
  • On interoperability between OTT players: “The need for inter-operability arises from ensuring a fair and competitive environment, especially in situations where the regulation by design creates monopoly like structures.”…”On the other hand, online communications platform currently operate in a highly competitive market. Given that their services are provided at near zero cost, with the constant risk of new competitors, no such risk exists in the market in its current form. “
  • On dealing with online monopolies: “future competition risks arising from the online communication platform economy. These risks would relate to the lock in effects of users in online platforms, especially in ancillary services such as payments, financial services, and ecommerce. However, given the cross sectoral nature of risks, they would be better resolved by the subject matter regulator (i.e. the Competition Commission) rather than the TRAI. “
  • On interception of OTT communications by law enforcement agencies: “we regularly engage with several regulatory and law enforcement authorities on issues relating to illegal content on our platforms. Our measures include responding to specific legal requests to take down offensive content.”

“…while Indian organisations such as ours are proactive in taking these measures. In our experience, we note that several global and regional applications operate in the OTT eco-system disregarding local obligations that have been clearly enshrined in the Information Technology Act, 2000, the Indian Penal Code, 1860 among others. We also welcome some of the measures suggested by the government in reforming the Intermediary Guidelines Rules, 2011 to address these issues.

  • Online companies should appoint local officers and establish domestic units: “The appointment of local officers, establishment of domestic response units, and use of technology to proactively comply with domestic norms should be required from all social media and OTT communications entities operating in the Indian market. However, we would request that the regulatory obligations on platforms be streamlined and limited. “
  • Wants sectoral regulation: “We believe that the key public policy goals discussed in the Consultation Paper can be met through sectoral regulation, rather than licensing, with equal efficacy”…”Establishing multiple regulators, and mandating compliance with differing standards in law would only increase the cost of compliance, and achieve limited public policy benefit for the government as a whole. “
  • TSP’s are different from online platforms, but…: “Both TSPs and online platforms are equally liable to provide a duty of care to its consumers, and take measures to prevent the proliferation of unlawful content. Moreover, both TSPs and online platforms are equally required to be responsive to legitimate requests from law enforcement authorities.”

We do recognize that some non-resident online platforms are non compliant with Indian regulatory standards. However, we believe that this is better resolved by reform in special regulation (in relation to intermediary regulations) and improvement of cross border law enforcement processes (such as letter rogatory’s and mutual legal assistance treaties).”

  • No licensing of online platforms, but…:” we do not see any case for licensing of online platforms.

We would welcome any measure to level the playing field between resident and offshore online platforms, which often flout domestic regulatory standards and act against domestic interests. We would recommend that these entities be made as responsive to law enforcement requests as Indian owned and resident technology companies such as Sharechat.

Sharechat has had it’s run ins particularly with Chinese platforms. The company had gone to court against Bytedance’s Helo platform, accusing it of being a “complete copy” of its own app, saying that Helo had copied its design, features and the look of individual icons, and was bidding on the keyword ‘ShareChat’ on Google Adwords. Delhi High Court disposed of the case filed by ShareChat earlier this year.

Corrigendum: An earlier version of this article suggested that Sharechat supports proactive takedowns. A Sharechat representative pointed us towards a filing where they have opposed proactive takedowns. The error is regretted and has been corrected.

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