Unintended consequences of regulation

A three-hour deadline can reshape the internet. Under India’s new AI r ules, platforms must remove flagged content almost immediately or risk losing legal protection. The goal is to combat deepfakes and synthetic generative information (SGIs). The risk is creating a system where deletion becomes the safest response, even when speech is lawful. The concern driving these rules is real. Generative AI has made it easier to manipulate images, clone voices and fabricate speeches at scale.

Impersonation, fraud, and non-consensual imagery demand firm enforcement. Clear labelling of AI-generated content can also serve as a reasonable transparency measure. But regulation is defined not just by its intent, but by its incentives. The new framework reduces the takedown window from thirty-six hours to just three hours. When safe harbour protections hinge on speed, platforms will prioritise compliance over deliberation. Remove first, assess later. In heated political climates, complaints can b e weaponised. Satire or criticism may disappear not due to illegality, but due to liability. [1] [2] That incentive structure matters. An internet governed by accelerated liability risks is becoming an internet governed by defensive moderation.

The rules also introduce mandatory technical markers, effectively embedding traceability into AI-generated files. While metadata may help investigators trace criminal misuse, universal traceability requirements expand oversight beyond clearly defined harms. Infrastructure built for accountability can quickly become infrastructure for monitoring. There is also a competitive consequence. Large global platforms can absorb compliance costs, automated detection systems, rapid response teams, and metadata authentication tools. Smaller Indian startups may struggle. A rigid regulatory structure often favours incumbents and erects entry barriers, reducing competition in the name of safety. Other jurisdictions offer contrast.

In the United States[3] [4] [5] , Section 230’s safe-harbour framework protects platforms from liability for user-generated content while enabling them to remove illegal content in good faith. It preserves free speech while enforcing accountability, instead of promoting pre-emptive censorship. Speed is not treated as a substitute for safeguards. India’s digital ecosystem has thrived when policy struck the right balance. In telecom and digital payments, predictable rules and competitive neutrality unlocked innovation. AI governance should follow the same logic: clear disclosure rules, strong action against fraud and impersonation, protection of safe harbour, and due process before content disappears. A safer internet is a legitimate goal.

But safety achieved through constant acceleration comes at a cost. If platforms respond to every complaint with immediate removal to protect themselves, the result will not be greater trust. There will be narrower debate, higher compliance barriers, and fewer entrants willing to innovate in India’s digital space. The real challenge is not whether to regulate AI. It is whether India can do so without replacing one risk, misinformation, with another: a digital environment shaped by liability-driven caution rather than considered judgment.

(The writer is Indian Policy Associate, Consumer Choice Center.)

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Unintended consequences of regulation

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