BREAKING: DSM Communication on Platforms leaked!

The role and responsibility of online platforms and intermediaries is a key issue in the Digital Single MarketStrategy, which the EU Commission launched last May [see Katposts here, here, here, here and here]. After a number of public consultations, on-line and off-line enthusiasts were anxiously awaiting for the Commission to release a Communication on that very issue by the end of May 2016. A few hours ago, Politico provided for a good remedy against our anxiety by leaking the draft Communication, which bears the lovely title "Online Platforms and the Digital Single Market Opportunities and Challenges for Europe". The draft version is dated 18 April.

The draft Communication addresses a number of DSM initiatives where platforms' liability is involved and shades light upon the general principles that will guide the Commission's reform efforts as regards E-Commerce, AVMS, and IPRED Directives. Overall, the draft Communication describes a strongly pro-competition program that reminds to this Kat the EU he knew when he attended university [i.e., ages ago], when the Commission was perceived as a disruptive Institution aimed at battling status quos, rather than preserving them. Be that as it may, here are the major points that the Communication addresses.  


ISP Safe Harbour is here to stay

During these months, many have pushed for the DSM strategy to significantly amend the liability regime that the E-Commerce Directive provides for Internet Service Providers (ISP) when it comes to user-generated content (UGC) transmitted or stored. A few days ago, the Commission Vice-President for the DSM Mr Andrus Ansip tweeted that it would have not be the case 

In line with Commissioner Ansip's take, the major point of the leaked Communication is that the DSM Strategy won't change the ISP liability regime as we know it. The draft Communication stresses that, whilst "designed at a time when online platforms did not have the scale they have today", the good, old E-Commerce Directive has done a good job in creating a regulatory environment "that has considerably facilitated their scaling-up". Without the shield from liability for UGCs, a crucial element "for the further development of the digital economy in the EU and for the unlocking of investments in platform ecosystems" would be missing, to the detriment of the EU Information Society as a whole.

This is why "the public consultation showed strong support for the existing principles of the e-Commerce Directive", and the EU Commission wishes to maintain it as it is -- apparently without adding new kinds of ISP to the E-Commerce Directive fabulous three (i.e., mere conduit, caching, and hosting), differently from what the public consultation on the E-Commerce envisaged investigating the need to further legal regimes for linking and cloud service providers. 


EU-wide notice-and-take-down procedure postponed

The public consultation on the E-Commerce Directive included a question on the opportunity to harmonise the notice-and-take-down procedure (NTD) EU-wide. As far as this Kat knows, this is not the first time that this happens, as a piece of legislation aimed at harmonise NTD throughout the EU has circulated in Brussels some years ago, before disappearing.  This Kat believes that an EU NTD could actually help to bring certainty and effectiveness in the market of on-line contents, and so does the draft Communication, which acknowledges:

"a need to monitor and improve effective procedures for notice-and-action to ensure the coherence and efficiency of the intermediary liability regime, in a context where there is a risk of fragmentation and incoherence stemming from the multiplicity of reporting mechanisms designed by the platforms themselves or by Member States".

However, the Commission and this Kat must feel different degrees of love towards NTD, as the Commission does not intend to take any action

"before considering launching an initiative, the Commission will assess the impacts of on-going reforms such as the copyright review, the REFIT of the Audio-Visual Media Services Directive and important co-regulatory initiatives such as the EU Internet Forum … The Commission will continue to review the need for formal notice-and-action procedures during the second half of 2016, taking into account the effect of the updated audiovisual media and copyright frameworks on illegal content online".

Sectorial Kat

Voluntary and sectorial self-regulatory actions to address UGC-related problems

The one-size-fits-all strategy does not work for all UGC-related problems:

"[W]ithout jeopardizing online platforms' innovation potential, the Commission considers that specific regulatory action would be more effective through sectorial legislation, on the basis of maximum harmonisation and a problem-driven approach, and without prejudice to the e-Commerce Directive".

Within this sectorial approach, the Commission envisages different actions to contrast different harmful UGCs (those spreading hatred, cyber-bullying, incitement, contents infringing IP, etc.) and to ensure that the value of copyright-protected content available on-line be shared in a fair manner between distributors and right holders.
The way the Commission plans to do so is encouraging "all types of online platforms to take more effective voluntary action to safeguard key societal values" and promoting EU-wide "voluntary self-regulatory actions" among ISPs, which the draft Communication considers "very effective, in particular when subject to a clear set of principles, targeted, and continually improved to keep pace with the challenges as they evolve".  Once again, among those principles the draft Communication mentions the safe harbour, stressing that all sectorial measures will be "fully coherent with the e-Commerce Directive" liability regime for ISPs. For some reasons that this Kat is too basic to get, EDRI is not very happy with that.

Measures to promote self-regulations aimed at protecting minors and tackling online incitement will be issued "in the context of the updated Audiovisual Media Services Directive to be adopted alongside this Communication" [i.e., the 25 of May?]. As to the fair allocation of the value generated by copyright-protected content, the Commission intends to take action "in the next copyright package", that should be adopted later this year.


AVMS and OTTs: don't imitate, deregulate!

Another big news is the general approach that the Commission wishes to adopt in order to create a "level playing field" for traditional and on-line providers in different sectors, Audio Video Media Service (AVMS) included. Since a while, providers subject to the AVMS Directive have been claiming that on-line platforms hosting above-the-network audio-visual content [the so-called Over The Top services, 'OTT'] should comply with their same rules, as the converging environment led them to compete on the internet and in the physical world. In this regard, the draft Communication acknowledges that

"Where the same activities are supplied by different actors, these activities should be regulated in the same way in order to avoid market distortion".

Be that as it may, it also observes that

"comparable activities that are provided under materially different conditions, such as broadcasters controlling content versus online platforms relying on user-generated content, should naturally be treated differently … This modernisation should seek to avoid imposing a disproportionate burden on online platforms business models".

If OTT should not be considered like traditional broadcasters, traditional broadcasters could be made more similar to OTTs, though. In this perspective, the draft Communication suggests that a "level playing field" could be implemented by reducing obligations that traditional AVMS providers have to comply with:

Not so sure it works.

"[I]n areas where competitive pressures have been increased, deregulation of traditional sectors may offer the most beneficial response to achieve a level playing field".

In light of some out-of-time obligations traditional broadcasters have currently to comply with, a substantial deregulation appears to be the smartest solution to fully exploit the disruption that on-line providers have brought in many traditional sectors [like a Katpost on Uber outlined some time ago]:

"Competition from online platforms can provide incentives for traditional market players to innovate and improve their performance, as well as point to a need to simplify and modernise existing regulation".

Transparency, interoperability, fair competition in B2B relations

The public consultations have reported users and businesses' concerns as to the lack of transparency in relation to the collection and storage of both personal and non-personal data. A major deal seems to be that of fake reviews, "where loss of trust can undermine the business model of the platform itself, but also lead to a wider loss of trust, as expressed by many responses to the public consultation".
In this regard, the Commission considers reviewing "the EU consumer and marketing law, including guidance on the Unfair Commercial Practices Directive, as part of its REFIT initiative" by the end of this year, meanwhile calling on

"[I]ndustry to step-up voluntary efforts to prevent trust-diminishing practices, in particular – but not limited – to tackle fake or misleading online reviews".

The draft Communication also addresses the need to ensure the possibility for users to switch providers affordably "and with minimum disruption", allowing them to easily retrieve "all content they have provided or was generated on the basis of their Internet use". The "full implementation of the new General Data Protection Regulation" and pushing forward "the proposed Directive for the supply of digital content" are the tools that the Commission considers more convenient to achieve those objectives.

In view of creating an open and pro-competitive on-line environment, especially "in emerging areas such as virtual reality, smart cities and the Internet of Things", the draft Communication intends to stimulate "the emergence of open online platforms" and to "put forward proposals for effective approaches, including technical standards, to facilitate switching and portability of personal and non-personal data among different online platform and cloud computing services".

From another standpoint, the public consultations revealed that some businesses are concerned about "allegedly unfair trading practices on suppliers". The Commission is gathering further evidence in this regard, and

"by the end of spring 2017, … will determine whether additional EU action is needed beyond self- and co-regulatory efforts that may include dispute resolution mechanisms or the provision of better information or guidance".

What's next?

Next is the official Communication, which is due by [or on] 25 May. If the latter would result to be in line with the leaked draft, we could reasonably expect

-       Some kind of update about the AVMS Directive reform [perhaps the very updated Directive] to be "adopted alongside this Communication". The official version, they mean, due by the end of May;

-       The Copyright package to be issued in the autumn 2016;

-       A multi-stakeholder forum to take place before the end of 2016, assessing self-regulatory measures and common technical standards aimed at tackling illegal contents and ensuring interoperability, fair competition and transparency;

-    Discussions about EU-wide NTD procedure and possible actions re B2B agreements to be postponed to 2017.

Stay tuned!