On 26 March, the European Parliament adopted the so-called EU "Copyright Directive" with 348 votes in favor, 274 against, and 36 abstentions. This aims to implement stricter copyright protections on the internet, affecting major internet firms such as Google, Facebook, and YouTube, along with other news aggregators or websites that link to or post copyright content, with exceptions for Wikipedia and open-source software platforms. Lighter regulations would apply to start-ups.

The directive's main provision specifies that internet platforms will be directly liable for content uploaded to their sites and may face demands for compensation or lawsuits from copyright owners. It now has to be approved by the Council of the EU, which is likely to consider it by mid-April. Member states will then be required to implement it within their national legislation within two years of its publication in the official EU journal.

Significance

The directive, if passed in its current form, would seriously increase the regulatory burden for online media platforms and news aggregators. It is likely to limit the diversity in their content (promoting large media providers or creators' associations), increase operational costs, and impede market entry for new providers.

However, there is still a likelihood that the Council of the EU will amend some of its provisions, particularly the most contentious articles. These are Articles 11 and 13 concerning links and preventive measures applied to blocking copyrighted content. If introduced, such changes are likely to reduce the regulatory burden compared with the current wording. Such adjustments would also delay adoption of the law by at least several months.

Large-scale protests in multiple EU member states and increased critical media focus would indicate an increased likelihood of such changes. Even if adopted as it stands, the directive's impact is likely to be mitigated by loose alignment of copyright legislation across the EU and low enforceability in several EU member states, for example Poland and Bulgaria. Vocal opposition from such member states during the Council of the EU review would indicate that these countries are likely to delay full implementation of the directive under national legislation beyond the stipulated two-year period.

This post was co-authored by Kinga Jaromin, an analyst at IHS Markit

Posted 03 April 2019 by Petya Barzilska, Sr. Research Analyst II, Europe & CIS Country Risk, S&P Global Market Intelligence