Internet industry is bracing itself for the new Copyright Directive

Hyperlink tax and upload filters

One of the issues addressed by the new Directive is the 'value gap'. Copyright holders considered it unfair that platforms such as Facebook and YouTube were able to earn money from content that wasn't theirs. Income derived from the sharing of copyrighted material should go to the people who owned that material, it was argued. For two years, the issue was the subject of discussions involving EU policy-makers, copyright holders, internet companies and other stakeholders. In the end, the content industry lobby prevailed, and on 17 April 2019, the Copyright Directive was passed. The new law implies far-reaching changes and has given rise to many questions.

"The Copyright Directive is part of the EU's strategy for the Digital Single Market. For the internet industry, Articles 15 and 17 are the most significant. Both are extremely controversial," explains Michiel Steltman. Previously, a platform or hosting service provider was regarded merely as a facilitator, who wasn't responsible for what users posted. That's no longer the case. The two articles give authors the right to negotiate fees for the online publication of their content with anyone who may be regarded as a distributor of that content. Distributors are now responsible for the legality of their distribution activities, meaning that they need content licences, for which they have to pay. Article 15 provides for a so called 'link tax': if a search engine provides a hyperlink to copyrighted content it has to pay the copyright holder. Article 17 additionally makes platforms and providers responsible for ensuring that no copyrighted material is uploaded to their systems. If a user does upload copyrighted material, the platform itself is required to take the content down and prevent its re-uploading. The underlying principle is generally referred to as 'notice and stay down'.

Major implications for digital infrastructure

EU member states now have to implement the Directive in local law and align their regulatory frameworks accordingly. That gives rise to various practical issues. How should the boundaries be defined? Where do you draw the line between a platform and a hoster? What terms are permissible and are they defined in a way that is clear to the businesses concerned? Legislative lawyers don't generally use technical terms, such as 'hosting', as a result of which the distinctions between the various actors is currently somewhat vague. "Digital infrastructure providers could find themselves intentionally or unintentionally included within the scope of the definitions provided in the implementing laws," says Michiel. "That could force relatively small cloud or hosting service providers to invest heavily in expensive monitoring systems in order not to fall foul of general filtering obligations, for example. The consequences could therefore be very far-reaching, because major outlays may not be economical or affordable for smaller players." One practical consequence of the new system is that it actually works against copyright holders, due to the legislature's failure to fully understand the dynamics of supply and demand. "The industry warned EU policy-makers about this," observes Steltman. "Google said, quite rightly, that it aided authors' earning power by indexing their content. Google is not obliged to include links to content in its results. Consequently, if providing a link is going to cost money, Google may choose not to. You cannot oblige platforms to provide links and pay content providers for the privilege. In France, the first country to introduce laws implementing the Directive, links to copyrighted content are now being omitted from search results, with the result that content providers are complaining that Google is censoring them."

Digital Infrastructure Netherlands provides advice

DINL is taking various initiatives to smooth the Copyright Directive's introduction in the Netherlands. The Foundation is providing input as the government considers how best to translate the Directive into Dutch law. The media and parliament are also being informed about the potential adverse effects and the risks presented by the Directive. "Our aim is to ensure that SMEs in the internet industry aren't burdened with huge costs or expected to do more than is realistically possible," explains Michiel. "Here at DINL, we want to make internet companies of all sizes aware of the importance of engaging in conversation with officials, politicians and the media. Newer businesses in particular often have no idea that these channels exist for lobbying decision-makers. Even though, by presenting their case, they can ultimately save themselves millions. Here at DINL, we therefore want to be present wherever possible and we're encouraging firms to facilitate that," Michiel adds.

The importance of engagement

EU member states are currently considering how to implement the Copyright Directive. DINL is therefore working with players such as NL Digital to ensure that the legislation ultimately introduced has as little adverse effect as possible on the internet industry. The only way that players in the industry can exert an influence is by lobbying. "The message I want to get across to people at SIDN Connect is the importance of engagement in this context. How the legislation views businesses and how a business, particularly a newer business, can counter that view. My aim is to inform businesses and to warn them about what could happen to those that don't pay enough attention to this issue," Michiel concludes.