The new social media intermediary rules could raise compliance costs for players, making it difficult for smaller companies to compete against bigger giants like Facebook, according to industry watchers.
The new rules, announced last week, distinguish between 'social media intermediaries' and 'significant social media intermediaries' with 50 lakh registered users as the threshold for the categorisation.
Significant social media intermediaries will have to follow additional due diligence, including the appointment of a chief compliance officer, nodal contact person and resident grievance officer - with all three officials residing in India.
Large players like Facebook have said they are studying the rules.