Privacy is now a right in India. Here's what that means for the tech industry

India's richest man on India's digital age
India's richest man on India's digital age

India's top court has put tech companies on notice.

In ruling that privacy is a fundamental right, the country's Supreme Court singled out tech firms for gathering huge amounts of data: Facebook knows who we are friends with, the justices wrote, while Alibaba studies our shopping habits and Airbnb tracks our travel.

"This can have a stultifying effect on the expression of dissent and difference of opinion, which no democracy can afford," the court said last week. "There is an unprecedented need for regulation regarding [how] such information can be stored, processed and used."

Related: India rules privacy a 'fundamental right' in landmark case

Indian internet activists hailed the decision, but warned that the debate about how tech giants collect and use data is only just beginning.

"These companies must brace for [legal action]," said Sunil Abraham, executive director of the Bangalore-based Centre for Internet and Society. "Individuals who are unhappy with the treatment of their personal information can now take them to court, because it is an infringement of a fundamental right."

The UN Conference on Trade and Development said that while the United States, European Union, China and other nations have established similar protections, roughly 60 developing countries have no rules that govern how the tech industry should collect and use personal data.

Activists say legal protections are needed to keep tech firms from irresponsibly harvesting data. Internet giants including Facebook and Google have built their business models around aggregating information about their users, and then marketing it to retailers. Some firms sell the data to third parties.

The global battle lines are being drawn: The U.S. government recently asked the Supreme Court to compel Microsoft (MSFT, Tech30) to hand over user data stored overseas, and the U.K. has proposed legislation that would allow users to ask platforms to delete their posts. The EU has taken several tech firms to task over privacy concerns.

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Now the debate is heating up in the world's largest democracy. Nikhil Pahwa, an internet activist and founder of tech website MediaNama, said the Indian court's ruling gives campaigners a major tool in the fight to keep data private.

"We've now been given a right which allows us to argue for our rights against practices of different companies," Pahwa said.

The ruling could even cause problems for the Indian government, which is pushing its own controversial biometric ID card program. Nearly 1.2 billion people -- 92% of India's population -- have registered for the Aadhaar scheme, which links their fingerprints and iris scans to a unique 12-digit number.

The program is designed to make welfare payments and medical services much more efficient. But skeptics have bristled at recent orders that seek to make the biometric ID mandatory when opening a bank account or filing taxes.

"I don't want an Aadhaar number," Pahwa said. "I want to have the right to live in my country ... in a manner that I'm not being surveilled and watched."

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Activists are also worried about how their data may be used and protected by third parties. Microsoft, for example, announced in July that it had integrated the biometric program with Skype Lite, a low-bandwidth version of the communications app made for the Indian market.

"If ... your fingerprints are your passwords -- and they're passwords that you can't change -- once they're gone they're gone forever," Pahwa said or potential data leaks.

The Indian government, which argued before the Supreme Court that privacy was not a fundamental right, said following the ruling that it was working on a stringent data protection law. Technology minister Ravi Shankar Prasad told local media that the new rules would be in place by December.

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The National Association of Software and Services Companies, which represents India's tech industry, welcomed the Supreme Court's verdict.

"This landmark judgment will ensure that protection of citizen's privacy is a cardinal principle in our growing digital economy," NASSCOM president R Chandrashekhar said in a statement. "It will enhance citizens' trust in digital services."

Microsoft (MSFT, Tech30), Google (GOOGL, Tech30), Facebook (FB, Tech30) and Uber, which all operate in India, did not respond to requests for comment. Local tech players including Ola and Flipkart also did not respond. Amazon (AMZN, Tech30), which is investing heavily in the country, said that it complies with local laws and "has a high bar" for data protection and privacy.

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Abraham, from the Centre for Internet and Society, said that "regulatory innovation" is needed to rein in large firms without making life difficult for Indian startups.

"We need to prevent the internet giants from dancing around the regulations with large legal teams, and we need to prevent onerous regulations from crushing emerging firms," he said. "If our lawmakers and parliament are innovative, we can leapfrog straight to the age of big data."

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