Is Europe About to Break the Internet?
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The European Parliament is about to vote on contentious new regulations that threaten to reshape how the internet operates. This will end a debate started in 2016 over two key provisions to the EU’s Copyright Directive, Article 11 and Article 13. These changes turn internet policy on its head, moving the web from a world of permissionless innovation to a world where platforms and websites must proactively police internet users. And given the borderless nature of the internet, America and the rest of the world also will suffer the consequences of Europe’s internet makeover.

Article 11, often termed the “link tax,” would allow publishers to charge search engines and news aggregators such as Flipboard or Apple News if they include more than a single word or short extract of a published work. While the uncertainty surrounding the definition of a “short extract” is enough to have a litigious drag on the flow of information, there is plenty of evidence pointing to the dangers of such policies. In the past, both Spain and Germany adopted regulations along these lines with little success.

When Spain enacted a law imposing fees on news aggregators, Google News simply shut down, to the detriment of consumers, newspapers, and their advertisers. Germany fared somewhat better when it passed a similar law, only because the law allowed publishers the option to grant free licenses to aggregators, enabling them to continue their services.

Raising the cost of a newsfeed actually makes it more difficult for smaller, more independent news sources to participate in the digital news market. News aggregators currently provide smaller publishers and startups an opportunity to reach a larger market, and, in fact, create positive value for them. Raising the cost of providing links will reduce incentives to do so, thereby reducing the exposure of smaller groups and making it more difficult for them to compete with larger publishers. In fact, Google actually ran a simulation of the proposed changes to Article 11 that found a 45 percent drop in traffic to news sites.

Article 13 is also problematic, stating that any commercial platform where users can post material — Twitch, YouTube, Facebook, etc. — must preemptively act to avoid any copyright infringements on their site, as opposed to current policy of quickly removing any infringements when identified. Does this mean acquiring licenses that cover the practically countless quantity of material that may end up online because some user somewhere decided to post without the platform’s knowledge? More realistically, requirements to catch potentially infringing material before it goes online means deploying upload filters to flag infringing materials. In other words, platforms will invest much more in monitoring what internet users are up to online.

Even setting the question of expansive new surveillance aside, these upload filters are costly and controversial. Tech giants like YouTube and Facebook can afford them and already employ algorithms to constantly search for infringing material. But medium and small-sized online enterprises will struggle to afford expensive upload filters. For the smallest of firms, Article 13 provides exemptions, but this creates a hurdle that may keep these firms small rather than innovating. Growth imposes new costs, creating an ecosystem favoring existing large tech companies with the resources to deploy algorithmic filters. Innovation that could create future platforms to rival today’s tech giants may prove too costly for dynamic new innovators.

At the same time, designing effective upload filters is made much more difficult by the fact that copyright is not always clear-cut. It is not uncommon for the rightsholders themselves to disagree over questions of ownership, and there is a large body of “orphan works” where ownership is simply unknown. Imposing a new liability on platforms under these circumstances creates a breeding ground for costly and lengthy legal disputes, something that smaller firms cannot afford.

All of this is a far cry from U.S. internet policy, which was designed to let the internet evolve and flourish. As the internet first made the jump from universities and research facilities to a broader public, U.S. lawmakers opted for a light touch of regulation to provide an open and flexible framework for innovation. In fact, U.S. law specifically included safe harbors that limited the liability of platforms with respect to what individual users posted online. Barring criminal activity, Section 230 of the Communications Decency Act of 1996 provides platforms protections over what their users post. And with respect to music, movies, and other copyrighted materials, Section 512 of the Digital Millennium Copyright Act of 1998 allowed platforms a degree of liability protection for posts by third parties on their sites. Crucially, this protection hinged upon platforms putting policies in place to quickly remove any infringing material that is identified.

Under these broad parameters the internet flourished, making it the staple of everyday life that it is today. It provides instant access to information, friends and family, shopping, and even politics. Articles 11 and 13 redefine how this system works and not necessarily with the consumer in mind. At its core, the debate over changes to the EU directive focus on the distribution of rents created by the internet. Publishers and others, seeing the profits generated by the large tech platforms, are seeking to change the law to redistribute some of these profits and boost their bottom line.

For consumers, this does not end well. First, it entails greater surveillance of internet users at a time when privacy concerns have peaked. Second, there is a decline in the information available to consumers as newsfeeds adapt to the new policies. And third, these changes will have global ramifications. Web companies in the United States and elsewhere with European customers will need to change their policies to ensure compliance. Alternatively, smaller companies and those with few or no customers in Europe may simply opt for geo-blocking European nations where compliance costs exceed the benefits of maintaining a website in that country. All of this reduces global access to information, leaving consumers poorer for the experience. The internet has been one of history’s greatest tools for individual empowerment; consumers should be wary of efforts to reshape the web driven by special interests.

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