Google Once Cited EU’s Copyright Reforms as a Business Risk. Now They’re a Reality

Google fought the European Union’s new Copyright Directive for years, as it went through the legislative process. So now that EU lawmakers passed the law on Tuesday, what does that mean for Google and its users?

Two parts of the new legislation are particularly relevant here. Article 17 (widely known under its original name, Article 13) says big online platforms are now liable for the copyright infringements that users make there—YouTube, owned by Google parent Alphabet, is the biggest target here. And Article 11 extends across the EU a concept called ancillary copyright that lets press publishers charge the likes of Google for reproducing snippets of article text in, for example, search results.

Upload filters

In earlier drafts of the law, the first of those articles clearly called for online platforms to have to install upload filters, so that copyright-infringing content can be stopped before going live on the platforms. The final version does not explicitly say this must happen, but there is no other way for the platforms to avoid legal liability—unless they sign sweeping licensing agreements with copyright owners.

As tech law expert Andres Guadamuz recently wrote: “[Rightsholders] are using the spectre of piracy (which by all accounts is falling across the board) to justify the deployment of a system that will force tech giants to share some of their profits to creators. Filtering is not the desired result, it is the stick used to gain compliance.”

Now, YouTube already has a system called Content ID that it uses to scan all the videos people upload, in an attempt to match them with copyrighted videos in its database. The system cost Google around $100 million to develop and support—way more than most companies could manage.

It’s still far from perfect, but the question now is whether it would be enough to get Google off the hook once the new Copyright Directive comes into force in 2021. The new law is certainly still enough of a risk for Google to have listed it in its 10K filing as something that could harm its business.

And even if Google does go the licensing route, what does that mean for small-time creators without record label deals? Bad things, according to Steffen Holly, head of media management and delivery at Germany’s Fraunhofer Institute, who recently wrote: “There will be a plethora of wrongly rejected media as measured by the daily amount of new audiovisual media in platforms with user-generated content… All these user-generated, not-recognized works will be blocked automatically, because commercial services and media enterprises are afraid of expensive fines from potential rights owners.”

Ancillary copyright

The ancillary copyright part of the Copyright Directive was also listed as a risk in Google’s 10K, where the company warned it “will limit the ability of online services to interact with or present [news] content.”

Google already has a rich history dealing with the concept in Europe, specifically in Germany and Spain. In Germany, when some press publishers tried to force the firm to pay them for reproducing snippets of their article text in Google News’s headlines and blurbs, Google simply stopped listing the articles of those publishers. Traffic to their sites collapsed, and they gave Google a temporary exemption—which has lasted for several years now.

Chief Executive Officer of Google Inc. Sundar Pichai at SciencesPo university in Paris on February 24, 2016. ERIC PIERMONT AFP/Getty Images
Eric Piermont—AFP/Getty Images

Spain saw the flaw in Germany’s plan and passed a law that forces publishers to charge ancillary copyright fees, even if they don’t want to. Google responded by shutting down Google News in Spain, in a move that particularly harmed small publishers who relied on the service to reach the public.

So the question here is whether Google will maintain Google News in Europe, now that the EU-wide law has passed. Google did not answer Fortune‘s questions about the future of Google News in Europe, but there are a few things to consider: the directive is closer to the German model than the Spanish, in that it allows publishers to grant free licenses to news aggregators, and in recent years Google has stopped reproducing lengthier text snippets in its News results anyway.

But Google News may look very different soon, at least in Europe. As part of its lobbying against Article 11, the company ran a test showing what the service would look like with only very short fragments of headlines and no preview images. Answer: it would look pretty spare and useless. “Even a moderate version of the experiment (where we showed the publication title, URL, and video thumbnails) led to a 45% reduction in traffic to news publishers,” wrote Google global affairs chief Kent Walker in a blog post last month.

National choices

Reacting to Tuesday’s vote, Google did say this: “The details matter, and we look forward to working with policy makers, publishers, creators and rights holders as EU member states move to implement these new rules.”

In the EU, there’s a big difference between directives such as this one, and regulations such as the General Data Protection Regulation (GDPR) privacy law: regulations automatically apply in the same way across all EU member states, while directives have to be transposed into national law in each country. This makes directives more flexible, and in the case of the Copyright Directive it means there are more battles to be fought on issues such as the length of a text snippet that must command a licensing fee.

Google’s statement makes it clear that the company is preparing for more lobbying on a national level. Other opponents of the new legislation are also ready to fight on. “Now it is up to the governments of the European Union Member States to take into consideration the millions of people who stood up against this law and vote against the agreement in Council,” said Ska Keller, president of the Green bloc in the European Parliament, in a statement that referred to the massive protests and petitions against Article 13 and the upcoming formal endorsement of the law by EU countries.

“The key focus now will be on how the directive is implemented across the EU over the next two years, and care will need to be taken to ensure that smaller services are not disproportionately disadvantaged by measures which are in reality designed to curtail the formerly unchecked power of the tech giants,” said Rafaella De Santis, a lawyer with Harbottle & Lewis in London.

Incidentally, that motivation behind the law—the EU reining in Big U.S. Tech—could not be clearer. The European Commission wasted no time after the vote in characterizing the new law as part of a wider imposition of European rules on the Internet.

“With today’s historic copyright vote, clear EU rules now in place for online platforms: users/creators balance, GDPR/data protection, ending tax loopholes, fighting electoral interference & disinformation,” tweeted the European Commission spokesman Margaritis Schinas. “With [Jean-Claude Juncker’s Commission] Europe takes back control.”

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