GDPR is just the beginning of the EU’s plans for internet regulation

(Via Foreign Policy)

Instead of breaking news, op-eds, and sports results, Europeans visiting the website of the venerable Chicago Tribune are seeing what has become an all-too-familiar notification: “Unfortunately, our website is currently unavailable in most European countries.”

At last count, over 1,000 U.S. newspapers have voluntarily blocked access from Europe since the General Data Protection Regulation (GDPR)—the law intended to protect the privacy and data of individuals within the European Union—came into force in 2018. These U.S. publishers have simply deemed compliance too cumbersome and costly, opting instead to abandon their European readership and forgo online revenues from the EU market altogether.

GDPR is not the only online legal initiative taken by the European commissioners. This April, the EU approved a new directive on copyright. Article 13 of that directive makes operators like Facebook and YouTube legally liable for any content uploaded to their platforms that is in breach of copyright. Article 11 (dubbed the “Link Tax” by critics) allows publishers to charge platforms like Apple News and Google for displaying even snippets of their content. These measures have sent shockwaves throughout the online ecosystem and placed the EU at the forefront of internet regulation.

Yet for all the disruption and discord, these initiatives represent the boldest and potentially most consequential attempt to shape the future of the internet in two decades. EU commissioners are officially overwriting the law of the jungle that has determined how data is used and how content is shared online. If all goes according to Brussels’s plan, the biggest beneficiaries stand to be publishers, media outlets, and European consumers.

To appreciate the significance of the EU’s regulatory agenda, it is necessary to understand how the current online ecosystem evolved. In fact, European protesters are defending a legal framework that emerged from the United States and, inadvertently, became the global norm for the consumer internet. The two landmarks of critical legislation are the 1998 Digital Millennium Copyright Act (DMCA) and the Telecommunications Act of 1996.

These acts of Congress came into law at a time of widespread libertarian enthusiasm for a free internet driven by private investment, unhampered by government interference, and governed—if at all—by its own users. The Telecommunications Act was the first piece of federal legislation to reference the internet and the first overhaul of U.S. telecoms law since 1934. It intended to provide “a pro-competitive, de-regulatory national policy framework designed to accelerate rapidly private sector deployment of advanced telecommunications and information technologies.” It also sought to safeguard the primacy of free speech.

In what one commentator called the 26 words that created the internet, Title V of the act states that “No provider or user of an interactive computer service shall be treated as the publisher or speaker of any information provided by another information content provider.” This distinction between platform and publisher—the former merely a conduit for content that is posted by others and therefore not liable for that content—became the bedrock on which the business model of Facebook and Google (the so-called Digital Duopoly) would be built.

Two years later, in 1998, the DMCA took the freewheeling spirit of the Telecommunications Act further still, explicitly creating a safe harbor for online service providers and shifting the burden of policing copyright infringement squarely onto the copyright holders themselves. Under the DMCA, it became incumbent on copyright holders to notify platforms of infringement and to substantiate their claim; only then would the platform be required to remove the offending content. The DMCA’s light-touch guidance for platforms was embraced by the EU a year later in its own Electronic Commerce Directive of 2000, which likewise adopted the liability exemption for online service providers.

The framework created by these laws has been unequivocally successful in fostering investment in broadband internet and the proliferation of digital services. It gave rise to a virtuous circle of technology development and value creation. But it did so at the literal expense of copyright holders and their content. DMCA advocates and critics alike acknowledge that the resulting regime has been a gift to tech platforms.

The Telecommunications Act and the DMCA discarded the business model that had previously dominated the media world, which was founded on the requirement that exhibitors of copyrighted content first secure permission from its owners: No broadcaster or print publisher would air a TV program or republish a short story without first licensing the rights from the copyright holder. By exempting online platforms from that requirement, these laws served to turn copyright holders’ revenue streams of “analog dollars” into “digital pennies”—to use one media executive’s famous formulation. The recorded music industry, for example, saw its revenues shrink from $25.2 billion to $16.9 billion in the decade following the DMCA.

At the same time, platforms were able to fund their businesses by selling ads around content they neither owned nor paid for. The fundamental business model of the Facebook and Google duopoly is built on two products: content and audiences. The platforms use content created by others to aggregate an audience; they then track that audience’s behavior online, segment the audience demographically by parsing the data, and sell those neatly targeted audience subsets to advertisers. The only guardrails guiding the use of this information are whatever protections are set forth in the private contract between the platform and its users—i.e., the terms of use—written unilaterally by each platform.

Notably, the United States has never developed a single federal data protection law, relying instead on an ad hoc patchwork of private sector self-regulation and state laws to govern information privacy, many of them predating the internet. The safe harbor provision of the DMCA provided the platforms with free content to build their audience, and the lack of oversight on consumers’ data has granted them an almost unfettered ability to monetize it through targeted advertising. The platforms have done this through their own use of that data and, often, by providing it to third parties through various commercial arrangements. The regulators’ hands-off approach to technology, combined with the network effects inherent to the internet, created a near laboratory-perfect setting for abuse—and for the rapid growth of and business dominance by the leading online platforms.

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