Copenhagen Economics has conducted the study ‘Closing the Gap: Indian Online Intermediaries and a liability system not yet fit for purpose’ for The Global Network Initiative (GNI).
Online intermediaries are companies providing a platform for exchange of goods, services, or information between third parties on the Internet. They enhance economic activity, reduce costs, and enable market entry for SMEs, thus inducing competition, which at the end of the day leads to lower consumer prices and more economic activity. However, protection against legal responsibility for third-party content is a crucial framework condition for these benefits to materialise and prosper.
The main conclusions of the study are:
- Online platforms that support user-generated content can become an im-portant part of India’s Internet economy and contribute approximately USD 41 Billion by 2015 – in addition to the contribution of other elements of the Internet economy
- This would mean that two years from now, their GDP contribution may in-crease to more than 1.3 per cent, provided that the current legal liability regime is improved
- Additionally, the positive productivity effects of online intermediaries will be significant – creating an even greater impact in India in areas like e-sales and e-procurement compared to their impact in Europe or the US
- The uncertainty created by the current liability regime in India creates exces-sive costs for online intermediaries and new start-ups, which could otherwise contribute more to the Indian economy and increase growth.