Web Giants Gird for Legal Headaches Under New EU Copyright Rules

(Bloomberg) -- Europe is proposing to do away with key legal protections enjoyed by Google, Facebook Inc. and other internet giants.

When users upload content to social networks, video websites and other digital platforms, the companies running those services aren’t responsible for checking if the material violates copyright.

New European Union rules, set for a vote on Wednesday, could upend this long-standing approach by forcing web services to actively prevent copyrighted content from appearing on their sites and apps. The regulation would also grant publishers new legal rights to seek compensation for snippets of articles that Google and other news aggregators post online.

The vote is part of a broader backlash against technology companies. As the world wakes up to the power and influence of internet giants like Google and Facebook, regulators and policymakers are beginning to question previously hands-off approaches to the sector.

In March, the EU issued new guidelines, giving internet companies an hour to wipe Islamic State videos and other terror content from their services. U.S. President Donald Trump signed a new law in April making websites liable if they knowingly facilitate sex trafficking. And Europe’s tough new digital privacy regulations kicked in last month.

The outcome of Wednesday’s vote will help set the EU parliament’s position on the legislation ahead of final negotiations over adjustments before it becomes law. There has been fierce lobbying, pitting tech giants and internet activists against publishers, authors and artists.

Copyright holders for music, images and other content say rules are needed to negotiate fair compensation for their work from web companies like Google and Facebook, who they say indirectly profit from displaying their content and running advertising.

"Those platforms are really monopolizing the market for access to cultural content on the internet," said Veronique Desbrosses, general manager for GESAC, a European umbrella association of author groups. Tech giants aren’t paying creators fairly, she added.

Current EU rules protect platforms from legal responsibility for what appears on their websites until they are notified, like when users flag terror propaganda. The companies are then required to take illegal content down.

For copyrighted works, services like Google’s YouTube already use technology that scans and identifies protected content that’s uploaded. Copyright owners can then either have the material taken down or choose to make money from it by running ads and sharing revenue with the user.

Google’s system, known as Content ID, has helped the company pay about 2 billion euros to copyright holders in recent years, Marco Pancini, director of EU public policy at Google, said in remarks to the European Parliament on Tuesday.

Under the new rules, Facebook and Alphabet Inc.’s Google could be required to prevent certain works from showing up on their websites in the first place, should rights holders demand it. That will create legal headaches for the companies and likely require them to get licenses for the material.

"If we do the right things, we put in place our content ID systems and things like that, I don’t think you need to regulate," Richard Allan, vice president for policy solutions at Facebook, told the parliament on Wednesday.

Internet activists are concerned that the rules could restrict expression online. Sharing of memes could be caught up in the new rules because they’re often based on copyrighted images, they noted as an example.

"The methods used to try to address these issues are not just inadequate but actually catastrophic," said Julia Reda, a German member of the European Parliament opposed to parts of the copyright rules.

The European Commission, the bloc’s executive body, proposed the regulations in 2016. Member states in May backed the Commission proposal with some amendments, including lowering the duration of the publishers’ legal rights to one year from 20.

Once the parliament votes, the three institutions -- parliament, the Commission and EU member states -- will hash out any final technical details before the package becomes law.