R. Jai Krishna
Jan. 26, 2014 8:23 p.m. ET
An Indian Supreme Court hearing on whether the local unit of Google Inc. GOOG -1.95% is liable for allegedly defamatory comments posted on its blogging site will help decide how Internet companies do business in the growing South Asian market.
The Supreme Court is scheduled to start hearing arguments Monday from the U.S. technology company in a case brought by Visaka Industries Ltd. 509055.BY -1.04% , a construction-materials company based in the southern Indian city ofHyderabad. Visaka says an activist used Google's blogging site, Blogspot.com, to spread false information about the company.
Google India challenged the charges at the High Court in the state of Andhra Pradesh and lost in 2011. It appealed to the Supreme Court, saying it shouldn't be held responsible for everything on its sites, as it cannot control what users post.
Google didn't respond to an email seeking comment on the case.
Other search engines, blog sites, social-media sites and even online retailers could be affected by the outcome of the case, lawyers said. The hearing could take months before a final judgment is delivered.
"People may not even roll out new products" in India, depending on the outcome of the case, an executive at a global technology firm said. "It's not worth the effort of investing."
India represents one of the last great untapped markets for Internet companies. The number of Internet users in Asia's third-largest economy is likely to jump to more than 500 million by 2015 from about 200 million today, according to an estimate by consulting firm McKinsey & Co.
The case against Google was brought by Visaka, which makes corrugated cement and asbestos fiber sheets, after an anti-asbestos blog hosted by Blogspot contained allegations Visaka was being protected because it was backed by leaders of the ruling Congress party. Visaka said it had no connection to the party and filed a case charging Google India with criminal conspiracy, defamation and publishing content that is defamatory.
The author of the post, Gopala Krishna, said he still stands by his post, though he hasn't been formally informed of the charges or the case.
"Whatever Google has said [in court] has supported freedom of expression," Mr. Krishna told said. "They have done the right thing by not removing the content."
A spokesman for the Congress party couldn't be reached for comment.
If Google loses again, it will be "liable for criminal activities on its network" and have to step up its monitoring of what goes on online in India, said New Delhi-based cyberlaw expert Pavan Duggal. "Exercising of due diligence is a critical aspect for limiting liability of intermediaries."
Google managers could be punished with up to life imprisonment and fines from 100,000 rupees, or about $1,600, to one million rupees and be asked to pay damages of up to 50 million rupees per violation.
India has started restricting Internet freedom in recent years, raising concerns among free-speech activists. In 2009, it amended its laws to hold Internet firms liable for "offensive," "defamatory" or "blasphemous" content. The amendments have been challenged in the Supreme Court, which has yet to rule. In 2011, India's technology and telecommunications minister, Kapil Sibal, urged Internet companies to take down derogatory content from their websites.
India needs to ease these rules, regulations and political pressures or risk missing out of the Internet revolution, said Mishi Choudhary, executive director of the Software Freedom Law Center, based in New Delhi.
"We should be rooting for effective, easy-to-implement safe-harbor provisions with no liability for the intermediaries for third-party content," she said.