EU copyright reform: charging tech giants or putting breaks on digital SMEs?

With a very tight majority, the Legal Affairs Committee (JURI) of the European Parliament has given a go for the so-called European copyright reform, a law that may have a big impact on all the players in the digital world, including the SMEs. The European DIGITAL SME Alliance calls on the Members of the European Parliament to block the flawed reform in the upcoming plenary vote on the 5th of July. The new law compels platforms to continuously monitor users’ activity as to eliminate copyrighted content. Such obligation would apply to all platforms, independently from their size. Therefore, smaller platforms or startups that do not have the means to comply may be forced down and, thus, reinforce the dominance of Facebook and the likes.

The old copyright law dates back to 2001, and definitely needs to be revised. Therefore, we support the idea of reforming the copyrights legislation and making it suitable for the digital era that we live in. However, we warn that the proposal adopted by JURI is not a right way to go. It will have a negative effect on the AI ecosystem, limiting the participation of digital SMEs. It will add new burdens, such as mandatory upload filters, and will further complicate the competition against the tech giants. And, finally, it will limit the freedom of expression’. – commented Oliver Grün, the President of European DIGITAL SME Alliance.

Besides many flaws that the proposed legislation contains, three main aspects are particularly worrisome:

  1. Platforms need to create “upload filters” that monitor all the content users upload to the platform. The copyright reform impacts platforms that rely on user-generated content, for example, an online platform where young artists sell their paintings will be obliged to continuously monitor all the uploaded paintings is an illegal reproduction. As a consequence, it creates a burden on the smaller platforms which do not have enough resources to develop complicated algorithms that would automatically analyse the uploaded content. It also discourages the creation of new platforms, which rely on content uploaded by users, further limiting the alternative to US-based platforms. In addition, automatic filtering technologies are still not sufficiently reliable, thus, there is a high risk of legal content to be taken down as well: e.g., due to incapacity of algorithms to detect caricatures, parody, or memes based on copyrighted art-works and containing similar features. This can lead to automated censorship and significantly restrict freedom of expression on the Internet.
  2. European development of artificial intelligence is at stake. The proposed legislation limits the use of text and data mining (TDM), a method for analysis of Big Data from online text sources. For instance, TDM is used to train intelligent customer care software by analysing data collected through surveys, customer-care tickets, social media activity and even recordings from the customers’ calls. According to the proposal, text and data mining can be carried out for non-commercial research purposes only. Thus, profit-seeking SMEs will not be allowed to mine data, or will have to pay licenses.

Text and data mining (TDM) is one of the main techniques used to train the artificial intelligence systems, thus, limitations to the use of TDM will result in barriers to SMEs from developing artificial intelligence (AI). Therefore, the copyright reform as it stands will slow down AI innovation and will disadvantage European companies competing with non-EU developers of artificial intelligence.

Another source of concern is that member states (MSs) will be entitled to create exceptions under their national law. Therefore, competing and unharmonized legislations are likely to pop-up among countries, creating an uneven playing field for SMEs and potentially favouring multinational companies that can select the country with the most favourable legislation.

  1. Link tax’. The proposed law will create a copyright over snippets to the news stories and ban links to the news unless licenses are paid – the so-called link tax. The positive intention of such provision is to generate income for European publishers by charging internet platforms, say Google, for displaying snippets. however, similar laws have already failed in Germany and Spain where Google and others have been offered free licenses from most of the major publishers. Whether tech giants will actually have to pay or will again find their ways around, small news apps or Facebook competitors will surely not be able to do so. Neither will they manage to hire enough people to control each link that their users share against the terms of their licenses. In addition, there are fears that fake news publishers may offer free licenses, thus encouraging even faster spread of their content.

The copyrights proposal, which has passed in the JURI committee, shall be negotiated with the European Council. On the 5th of July, the decision to start negotiations with the Council will be announced in the Parliament’s plenary session. Members of the European Parliament (MEPs) will have the right to object JURI’s decision and call for a new vote with the aim of reopening discussions on the file. Several MEPs have already announced in social media about their commitment to do so. Based on the expressed criticism, European DIGITAL SME Alliance encourages the European Parliament to block the proposal in the plenary session, carefully review the proposed text, and find new means to achieve the intended goals and protect the copyrights.