Yahoo News Shuts Operation In India; What Forced This Decision?

US-based web service provider Yahoo is calling it a day for its news operations in India. The move is a result of the new foreign direct investment (FDI) regulations that restricts foreign funding of more than 26% in digital news media publications. The company has assured that Yahoo Mail and Search won't be affected by this.

"As of August 26th, 2021 Yahoo India will no longer be publishing content. Your Yahoo Account, Mail, and Search experiences will not be affected in any way and will operate as usual. We thank you for your support and readership," Yahoo stated on its India homepage.

New Regulatory Laws Impacted Business

Verizon Media-owned Yahoo will stop pushing new content on its websites including Yahoo News, Yahoo Cricket, Entertainment, and others in the coming days. The company stated that its operations were impacted by the changes made to regulatory laws in the country, limiting foreign ownership of media outlets that produce digital content.

"There have been changes in the rules limiting foreign ownership of media companies that operate in the news and current affairs space, including a digital media entity that streams, uploads digital news and current affairs content in India and news aggregators," April Boyd, head of Global Public Policy, Verizon Media, said as quoted by Economic Times.

The new FDI regulations will come into act starting October. Verizon was trying hard to receive approval from the Indian Government since November last year but failed to get it.

What Are These FDI Regulations?

These regulations outline rules that digital media firms need to follow to receive foreign funding. The regulations make it mandatory that the CEO and a majority of any digital media firm's board of directors should be Indian citizens. It is also stated that such companies will have to restrict their current investments to 26 percent - the limit set by the BJP government in 2019.

Back then, it was announced that foreign direct investment (FDI) in digital media would be allowed through government approval. In November last year, HuffPost India also shut down its operations after providing content for six years in the country. Many reports suggested that it was a result of the new FDI norms.

A similar pattern has been seen globally as well. To name a few, Singapore's Newspaper and Printing Presses Act restricts foreign firms from controlling newspaper firms; France doesn't allow foreign ownership of capital above 20 percent in any entity that holds a terrestrial broadcasting license. Besides, Non-EU media firms cannot acquire more than a 20 percent stake in French-language media outlets.

More Media Outlets To Face Same Fate?

The demise of Yahoo News in India could be alarming for other international news organizations as well. The new FDI regulations could impact the business of many media outlets that have foreign backing. However, this isn't the end of the line for them, and it's possible that these publications could recruit freelance writers from the country to keep their operations intact.

And, since we live in the age of the internet, international media firms do not necessarily require registering themselves as companies in the country, to publish content about it. So, in such a scenario where regulations are proving counterproductive, the country should take an approach that recognizes the potential of the internet. India should create a regulatory template that brings self-regulation and diversity to empower media growth rather than putting it in shackles.