* Suit argues rules violate constitutional privacy protection -sources
* Suit argues rules would end encryption of messaging for all - sources
* New rules on media due to take effect on Wednesday
* Challenge escalates tension between govt and tech giants (Updates to add WhatsApp comment, context on rival apps)
By Joseph Menn
May 25 (Reuters) - WhatsApp has filed a lawsuit in Delhi against the Indian government seeking to block regulations coming into force on Wednesday that experts say would compel Facebook's messaging app to break privacy protections, sources said.
The case asks the Delhi High Court to declare that one of the new IT rules is a violation of privacy rights in India's constitution since it requires social media companies to identify the "first originator of information" when authorities demand it, people familiar with the lawsuit told Reuters.
The WhatsApp lawsuit escalates a growing struggle between Prime Minister Narendra Modi's government and tech giants including Facebook, Google's parent Alphabet and Twitter in one of their key global growth markets.
Tensions rose after police visited Twitter's offices this week. The micro-blogging service had labelled posts by a spokesman for India's dominant party and others as containing "manipulated media", saying forged content was included. (https://reut.rs/3ccSQ7J)
New Delhi has also pressed tech companies to remove what it has described as misinformation on the COVID-19 pandemic ravaging India, and some criticism of the government's response to the crisis, which is claiming thousands of lives daily.
While the new law only requires WhatsApp, which has half a billion users in India, to unmask people credibly accused of wrongdoing, it says it cannot in practice do that alone.
WhatsApp says that because messages are encrypted end-to-end it would have to break encryption for receivers of messages as well as the originators to comply with the new law.
"Requiring messaging apps to 'trace' chats is the equivalent of asking us to keep a fingerprint of every single message sent on WhatsApp, which would break end-to-end encryption and fundamentally undermines people's right to privacy," WhatsApp said in a statement when asked to comment on the lawsuit.
The sources familiar with the lawsuit declined to be identified due to the sensitivity of the issue.
FIND A WAY
A government official said WhatsApp could find a way to track originators of disinformation, a long-standing stance of Prime Minister Narendra Modi's administration, and that the U.S. company was not being asked to break encryption.
WhatsApp said it would continue to engage with the government. Its Indian operations were continuing to operate as normal on Wednesday.
India's technology ministry did not respond to a request for comment.
While Signal and Telegram downloads have surged in India, neither app commands as massive a user base as WhatsApp. They have yet to comment on India's demand for traceability.
The response of the companies to the new rules has been a subject of intense speculation since they were unveiled in February, 90 days before they were due to come into force. (https://reut.rs/34m9Bc9)
India's new Intermediary Guidelines and Digital Media Ethics Code designates "significant social media intermediaries" as standing to lose protection from lawsuits and criminal prosecution if they fail to adhere to the code.
WhatsApp, its parent Facebook and tech rivals have all invested heavily in India. But company officials worry privately that increasingly heavy-handed regulation by the Modi government could jeopardise their prospects.
Among the new rules are requirements that big social media firms appoint Indian citizens to key compliance roles, remove content within 36 hours of a legal order, and set up a mechanism to respond to complaints. They must also use automated processes to take down pornography.
Facebook has said it agrees with most of the provisions but is still looking to negotiate some aspects. Twitter, which has come under the most fire for failing to take down posts by government critics, declined to comment.
Some in the industry are hoping for a delay in the introduction of the new rules while such objections are heard.
The WhatsApp complaint cites a 2017 Indian Supreme Court ruling supporting privacy in a case known as the Puttaswamy judgment, the people familiar with it said.
The court found that privacy must be preserved except in cases where legality, necessity and proportionality all weighed against it. WhatsApp argues that the new law fails all those tests, starting with the lack of explicit parliamentary backing.
Experts have backed WhatsApp's arguments.
"The new traceability and filtering requirements may put an end to end-to-end encryption in India," Stanford Internet Observatory scholar Riana Pfefferkorn wrote in March. (https://brook.gs/3um1PJY)
Other court challenges to the new rules are already pending in Delhi and elsewhere.
In one, reporters argue that the extension of technology regulations to digital publishers, including the imposition of decency and taste standards, is not supported by the underlying law. (https://bit.ly/3yBbG1I) (Reporting by Joseph Menn in San Francisco; Additonal reporting by Sankalp Phartiyal and Aditya Kalra in New Delhi; Editing by Jonathan Weber, Kenneth Maxwell and David Clarke)
Our Standards: The Thomson Reuters Trust Principles.