Last week saw a leak of the EU Commission's Communication on Online Platforms and the Digital Single Market, which presents the Commission's political approach to supporting the development of online platforms in Europe.

Importantly, the Commission confirms that it intends to preserve the existing intermediary liability regime in the E-Commerce Directive. However, it notes the need to clarify certain concepts, including the scope of the safe harbour for intermediary liability. Online platforms will be encouraged to take more effective voluntary action to safeguard key societal values and the Commission promises further certainty regarding their liability when taking these good faith measures.

The Commission will continue to review the need for formal notice-and-action procedures during the second half of 2016. The next copyright package will be adopted in Autumn 2016 and will aim at ensuring fair allocation of the value generated by the online distribution of copyright-protected content by online platforms.

Growing Importance of Online Platforms in the Digital Economy

The Communication acknowledges how online platforms have dramatically changed the digital economy over the last 20 years – they are now of key and growing importance to the digital economy. Their activities are wide-ranging and include: advertising platforms, marketplaces, search engines, social media and creative content outlets, communications services and payment systems. Online platforms can be defined as undertakings "that are capable of facilitating direct interactions between users via online systems and that capitalise on data-driven efficiencies enabled by network effects". This definition is not exhaustive and does not include activities that are limited to single-sided content distribution such as Netflix.  

The Commission notes that Europe is not driving the online platform revolution: at present the EU represents only 4% of the total marketing capitalisation of the largest online platforms, with the vast majority of platform enterprises originating in the US and Asia. Accordingly, the Commission wants the proposed European Innovation Council to identify how to foster the development of competitive European online platform ecosystems in key strategic sectors.

Implementing DSM principles for online platforms in the EU – copyright related issues

  1. Responsible behaviour of online platforms
    1. E-Commerce Directive

The recent public consultation showed strong support for the existing principles of the E-Commerce Directive. The Commission thinks this has created a regulatory environment that has facilitated the scaling up of online platforms, partly because of the exemptions for all types of online platforms for illegal content they do not control.  The Commission therefore intends to preserve the existing liability regime. It also notes the need to clarify certain concepts, including the scope of the safe harbour for intermediary liability, including for online platforms. However,  there is no further suggestion of adding to the current categories of safe harbour:"mere conduit", "caching" and "hosting".

Online platforms should behave responsibly and have frameworks in place to take reasonable and effective action to protect their users from illegal and harmful activities. However, the Commission considers that specific regulatory action would be more effective through sectorial legislation, without prejudice to the E-Commerce Directive. Any initiatives affecting online platforms liability will therefore be fully coherent with the E-Commerce Directive and the Commission will explore ways to clarify certain concepts in the E-Commerce Directive.

  1. Voluntary action

All types of online platforms should be encouraged to take more effective voluntary action to safeguard key societal values and the Commission will encourage coordinated EU-wide self-regulatory efforts. By the end of 2016 there will be a multi stakeholder forum and by Spring 2017 there will be a plan to complete all self-regulatory actions before the end of 2018.

Providing certainty to online platforms with regards liability in light of voluntary measures will be central to encouraging voluntary responsible behaviour. The Commission will therefore issue guidance on the liability of online platforms when putting in place voluntary good faith measures to fight illegal online content.

  1. Notice and action

The Commission recognises the need to improve effective procedures for notice and action to ensure coherence and efficiency of the intermediary liability regime. It will therefore continue to review the need for formal notice-and-action procedures during the second half of 2016. The Commission first wants to assess the impacts of other reforms such as the copyright review.

  1. Fair allocation of revenues from copyright protected content

In the next copyright package, to be adopted Autumn 2016, the Commission will aim at ensuring fair allocation of the value generated by the online distribution of copyright-protected content by online platforms. This is because:

  •          An increasing number of online content platforms are effectively supplying audio-visual content, without having editorial responsibility over it so they do not have an obligation to take action to protect eg minors from harmful content.
  •          New forms of content distribution have emerged, which may involve several actors e.g. where platforms distribute content uploaded by end-users.

The Communication should be officially published on 25 May 2016