· The EU is on a path to create copyright laws aimed at helping publishers of content (e.g. journalists, musicians etc.) get a bigger piece of ad revenues that go to companies like Google and Facebook.
· The EU parliament voted in favor of the directive a couple days ago, but there are several more steps for this to pass.
· The new rules would give publishers the right to ask for paid licenses when a platform shares their stories (i.e. Google News) or video clips. Some are calling it a “link tax." The rules would also put the obligation on platforms to identify what is copyrighted by making them liable for copyright infringement.
· The implications aren’t entirely clear yet. For example, the rules would apply to “commercial platforms” but it’s not clear whether that applies to blogs etc., which would widen the impact.
· Other countries like Spain and Germany tried similar rules in the past and they failed. Google’s response was either to shut down Google News or just remove any news sources that wouldn’t give it free access…which meant traffic to those sites collapsed.
· The regulation might actually reinforce the dominance of the strongest players. The cost burden of this regulation would be easier for large firms like Google to absorb as it would require firms to build technology to identify and filter copyrighted content. Thus it might have the unintended consequence of strengthening Google (and other platform giants) relative to smaller firms/startups. In fact, Google already largely complies with these rules on YouTube with their “Content ID” filter.
· Opponents also say that complying with these rules would limit the free access of information that the internet is designed to offer.
· If this directive keeps progressing their will likely be more vocal industry resistance, as many who have been critical of the big tech firms don’t support it. For example, Tim Berners-Lee (inventor of the world wide web), who has spoken widely about the risks of Google’s and Facebook’s dominance, is ardently against these potential regulations.
Sarah Kanwal
Equity Analyst, Director
Direct: 617.226.0022
Fax: 617.523.8118
Crestwood Advisors
One Liberty Square, Suite 500
Boston, MA 02109