Europe lunges towards a pyrrhic victory in copyright ‘modernisation’ effort

DISCLAIMER: All opinions in this column reflect the views of the author(s), not of EURACTIV.COM Ltd.

YouTube spent $60 million on filtering technology alone; no startup could afford even a fraction of that, argues Josh Kallmer. [Mediablix/YouTube]

Maintaining the existing balanced approach to intermediary liability – consistent with both EU and US commitments to both a free and open internet and meaningful copyright protections – will enable European startups and other firms to thrive, writes Josh Kallmer.

Josh Kallmer is Senior Vice President for Global Policy at ITI.

This autumn, the European Commission will start down the home stretch of much of its Digital Single Market (DSM) strategy. As we have noted in the past, the DSM strategy has the potential to turbo-charge growth, investment, and job creation in Europe by reducing regulatory fragmentation and creating a more enabling environment for innovation and entrepreneurship. Unfortunately, in the area of copyright, the Commission is considering a set of regulatory measures that would actually increase fragmentation, inhibit innovation, and thwart economic growth.

A recently leaked draft of an impact assessment of options for changes to the European Union’s (EU) legal framework for copyright indicates that the Commission is pursuing two main forms of copyright ‘modernisation’ which and could fundamentally change the way we access news and information online.

First, the Commission is considering creating a new quasi-copyright called a “neighboring right,” which would give news publishers the right to charge online services a fee when they show even a small amount of news content, such as headlines, on their platforms. Second, the Commission is considering significantly changing existing principles of “intermediary liability” by requiring online services to create content filtering technology to identify copyright protected material. Both measures would cause considerable damage to the attractiveness of Europe for major technology companies, as well as for the startups, scale-ups, and other entrepreneurs that the EU says it wants to entice.

An EU level “neighboring right” would likely fail in the same ways that similarly misguided measures failed in Germany and Spain. Rather than paying to include headlines or other news “snippets,” online services might simply stop showing such content, causing traffic to news publishers to plunge. Alternatively, as happened in Germany, many publishers might effectively decline to charge the fee, undermining the entire purpose of the measure.

The European Commission calculates unpersuasively that a single, EU-wide rule would not have these risks of failure. Yet it fails to recognise the positive and symbiotic relationship between online services and news publishers. Searching for news and information online, especially during times of crisis, is as ubiquitous as turning on a television or radio. Online services direct significant traffic to news publishers and in a very real way support their businesses; a “neighboring right” would jeopardise that traffic (which is precisely why German publishers didn’t exercise it).

In addition, requiring that online services deploy content filtering technology would represent a significant departure by the EU from its shared approach with the United States on the foundational principles of a free and open internet. The Internet is a vibrant, democratising, and economically valuable platform in large part because of balanced intermediary liability laws, which permit people to post material–such as videos, reviews, and pictures–online without being unduly exposed to liability for the content of that material. Indeed, both the United States (under the Digital Millennium Copyright Act, or DMCA) and the EU (under the eCommerce Directive) create a “safe harbor” that protects online services from being liable for what their users do, as long as the service acts responsibly (such as by taking down content after being given notice that it infringes copyright).

The economic value of these laws is tremendous. In 2012, it was estimated that online intermediaries contributed around €430 billion to the GDP of the EU-27, and that intermediary liability laws were fundamental in unlocking that value. Mandatory filtering (which is not required under the DMCA) would cut directly against the idea of such “safe harbors.” Moreover, filtering technology is incredibly expensive to develop and maintain. YouTube spent $60 million on filtering technology alone; no startup or entrepreneur could afford even a fraction of that, and no venture capitalist would fund a company that required so much money to create a rights enforcement tool.

The Commission is due to release its final impact assessment in the coming days. The global technology industry–along with the startups, scale-ups, and other entrepreneurs with which we work closely–implore the executive to reconsider the path that it is on with respect to copyright.

Maintaining the existing balanced approach to intermediary liability–consistent with both EU and US commitments to both a free and open internet and meaningful copyright protections – will enable European startups and other firms to thrive, whereas moving forward with these measures would stifle them.

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