Category e-commerce directive

Unintended consequences

The government is concerned. Bad things are happening. The internet is a corrupting and subversive influence, tipping bad people over the edge into depravity and evil deeds. Something must be done.

So, ministers have summoned internet companies. A Code of Conduct is under consideration for ISPs. We need their help to stop the bad things.

Child porn, radicalising websites, other distasteful or criminal material need to be controlled. They are damaging our society and creating deviants and criminals.

The call for “internet companies” to step in to try to prevent this is understandable. After all, they stand between the bad people publishing this bad stuff and the innocent users who risk being corrupted, radicalised and deranged by what they see.

Responsible action by “internet companies” is needed to tame the wilder, antisocial extremes of behaviour online.

If you pause to think, you might wonder why these internet companies aren’t already doing something about it without being dragged in to see the headmaster. Everything on the internet has some sort of interaction with an “internet company”, whether it is hosting, uploading, streaming, aggregating or whatever. If their users are doing bad things, you would have thought they might want to do something about it. Why do they need to be summoned by the government to point out the obvious?

Well, one reason might be that there was a law passed more than a decade ago which specifically exempted them from any responsibility for what their users do and publish using their facilities.

In fact, because of the way the law is worded, it almost obliges internet companies not to check or have any awareness of what their users are doing. Once they are aware of illegal or infringing activity, they are obliged to act to stop it, but as long as they’re unaware they have no liability.

The law actually enshrines ignorance as a legal defence. Awareness is an expensive and risky business so actively policing and monitoring what people are publishing is an unappealing option. Ignorance is bliss. Profitable bliss.

The law in question is the european E-commerce directive which creates broad exemptions for “intermediaries” on the internet.

The rationale for that law is obvious but the effect it has had is perhaps less positive than was intended. I have written before about the catastrophic effects for copyright and the creative industries. The problems of criminal and deviant activities which are so exercising the government at the moment would seem, at the very least, not to be helped either.

Of course it’s not true to say that internet companies should be blamed for the bad things that other people do. It’s not their fault and it’s not entirely within their power to prevent it either.

However, when you have written a law which specifically disincentises them from doing anything at all to exercise any control, and then find yourself calling them in for a meeting to ask them nicely if they wouldn’t mind making a little more effort, you should perhaps ask yourself whether you have got the balance quite right.

Pub landlords don’t make anybody get drunk but they can still lose their licence for allowing excessive drunkenness. Football clubs don’t organise riots but they can still be penalised for the bad behaviour of their fans. Where responsibility is at least partly shared, more responsible behaviour tends to emerge. Where someone is made immune from consequences, responsible behaviour is less likely to emerge.

The e-commerce directive is the unintended consequences law. Whatever protection it gave to the mewling, vulnerable, infant internet is no longer needed. The internet has grown up into a strapping teenager, able to stand on its own two feet and behave like a grown-up. It’s time it was given the responsibilities to go with the freedoms and profits.

Smart legislation would be great, lets get rid of the dumb laws too

We might, as Neelie Kroes suggests, be losing the battle to enforce copyright. The hearts and minds of many users might already be lost to the more tempting promise of limitless supply in a copyright-free world. But what role has the law played in creating this situation and what could politicians do to fix it? The e-commerce directive and DMCA need to be back in the spotlight, and the dreadful, if unintended, consequences of those hasty laws need to be recognised and reversed.


Neelie Kroes has made an interesting speech, much of which it’s hard to disagree with. Her theme is “who feeds the artist” and it refocuses the discussion about copyright on its core objective: to ensure that creators get paid.

She states the following objectives for copyright:

Legally, we want a well-understood and enforceable framework. Morally, we want dignity, recognition and a stimulating environment for creators. Economically, we want financial reward so that artists can benefit from their hard work and be incentivised to create more.

And she says she’s an “unconditional supporter” of these objectives. Which is good news. I agree.

She comes out as a strong supporter of a better licensing infrastructure, making it easier to legally acquire the rights needed to use content legally. I agree with this too. It’s more or less the same line of thinking I have been promoting since the idea of ACAP was a twinkle in my eye, and it’s strongly supportive of the approach which the Linked Content Coalition is now developing actively.

Smart legislation

She says that “smart legislation” can play a role in bringing about her vision of a better future for creators. Three cheers for that, I say, because the bleak choice to litigate endlessly and expensively is not appealing to anybody least of all the beleagured creators.

I also hope that along with introducing “smart legislation” she also gives consideration to abolishing, or at least modifying, some dumb legislation of the past.

Kroes says:

legal enforceability is becoming increasingly difficult; the millions of dollars invested trying to enforce copyright have not stemmed piracy

This is true, and this is a problem which has been in no small measure caused and exacerbated by the law. Specifically one law.

Dumb legislation

The European e-commerce directive (along with its counterpart the Digital Millennium Copyright Act in the USA) has created the giant loophole through which the coach-and-horses of businesses contemptuous of copyright can be driven.

This directive created the “safe harbour” (to use the american term) which makes internet companies effectively immune from liability (or damages) for the infringements of their users.

In so doing, it went beyond protecting vulnerable new players from the possible  consequences of old law applied to the new world. It also created a huge opportunity for anyone to build a business which can make vast sums of money exploiting content – as long as they don’t do anything to monitor or proactively act on infringements.

Ignorance is not just a defence, it’s a necessity

As far as copyright is concerned, their obligation is to do no more than wait for complaints and then act on them. In fact if they do do more than this they actually increase their liability – ignorance of the infringement is their defence. So the law actually rewards a lack of governance and punishes responsible behaviour. Ignorance, in this case, is not just a defence but an obligation.

Their users aren’t similarly immune, of course. They are expected by the law to take full responsibility for their actions. On the face of it this seems fair; there’s still someone who has liability, it’s just not the internet company who merely provided a facility which a naughty user abused.

ISPs are immune, users are unreachable

However, while the liability may pass to their users, the internet companies don’t actually have to know who their users are to benefit from the immunity the law gives them. Nor are they obliged to hand over whatever details they do have about their users, and most of them will refuse to do so without a court order (after which it may turn out they have little or nothing to give – the one time I pursued this all I got at the end of it was an IP address belonging to a university).

So the copyright owners have to police the entire internet, all the time, in respect of every piece of their content, in order to get infringing copies removed. In reality taking further action against users is expensive, unlikely to result in any meaningful recompence and often impossible even if they are prepared to go to court twice (once to obtain the user details and then again to actually take action against them). And internet companies, freed from the irksome responsibility of even basic governance, are able to build huge businesses with very little cost or risk.

So, unsurprisingly, some of the biggest businesses on the internet depend on this for their viability and enormous profits.

Legislate in haste, unintended consequences guaranteed

One way of thinking about this law, and the DMCA, is that they codified the status quo on the internet at quite an early stage. The internet had largely grown up from a utopian vision of a world free from many of the constraints of the regulated world outside.

This utopian vision used to extend well beyond copyright. I remember when people thought that they were truly anonymous on the internet, that they couldn’t be traced or monitored as long as they used a pseudonym. When people thought that national laws would be unenforceable and that traditional law would never reach the internet. It was truly a utopian vision, from the perspective of those who built it starting with a blank sheet. The hope of many of them was that commercialism and old legal frameworks would never rule the day because in the intangible, borderless new world of cyberspace individuals held the power.

But gradually the real world has chipped away at that vision. Some of it is still there, but just like the real world we have seen the full mix of human nature move online. And as it has the internet has changed. Criminal activity has had to be curbed. Regulation and law enforcement have become an ever growing reality. Surveillance and intrusion has become a fact of life too, with complex steps needed for those who want to try to evade it. Security has improved, peoples willingness to trade online has improved too, and the ingenuity of criminals has raced ahead. An endless cat-and-mouse game. It was ever thus.

Almost no aspect of the internet is recognisable from those utopian early days from the way in which web pages work to the protocols which underpin the most basic functionality

Copyright has been excluded from the evolution of the internet

However, strangely, the internet is no better at dealing with copyright than it ever was. Despite the ability of the internet to simplify immensely complex things – from finding a website to dealing with your banking – copyright remains as old-fashioned and clunky as ever and the internet’s ability to deal with it remains entirely undeveloped. Buying a licence – or even knowing who to buy one from – is, as Kroes points out, is absurdly complex and expensive.

As far as copyright is concerned, the internet remains much as it was when Tim Berners-Lee had the first twinkle of a web page in his eye. Which is unfortunate because at that stage the internet without any effective mechanisms for managing copyright at all.

But why was copyright left behind as the internet raced ahead? What held it in that simplistic, stunted state of evolution?

Well, in part it suits those who have the greatest influence over the way the internet works, so they have (at best) avoided putting any resource into the issue and (at worst) done everything they can to prevent other initiatives from gaining ground. Whether for ideological or commercial reasons (and one very often masquerades as the other) they have no desire for change and can kill any attempts by pronouncing that they would “break the internet”.

But they have been aided and abetted, and latterly incentivised, by laws made in haste for simplistic reasons and which have held the internet suspended in an embryonic form, destined like Peter Pan never to grow up, for the last decade or more.

Poor copyright functionality is complimentary to the new mega-businesses

What it has given rise to is a small cadre of mega-businesses, who monopolise the content-related revenues of the internet and prevent development of new business models. It has impoverished content businesses and destroyed, in many instances, the rationale for investment in creativity.

These mega-businesses, made bullet-proof by the law, have also created a world in which copyright has become demonised and where the less you invest in content the more you make.

Kroes is right to point out in her speech the shame that creators make so little from their creations but she is ducking a big issue if she fails to address the real cause of the problem.

It’s true that enforcement is a losing game but hardly surprising given the protection that the law has given to infringement. Imagine if the law made dealing in guns and ammunition legal and unrestricted, and only criminalised use of guns. Would we have more or less gun crime? Imagine if we abolished speed limits and allowed drivers to decide for themselves how fast to go. Would we have more or fewer road deaths? Imagine if the job of setting duties on fuel were put in the hands of car manufacturers. Would we see cheaper or more expensive petrol prices?

Letting people write the law to favour their own interests is likely to result in laws which minimise their obligations and and maximise their opportunities regardless of the impact on anyone else. That’s why, in democracies, they’re not allowed to do it. The role of politicians is to prevent this happening and ensure that the law strikes a fair balance. With what were doubtless impeccable intentions at the time to protect vulnerable underdogs in the new digital world, the safe harbour provisions of the E-commerce directive and the DMCA have failed the test of time and has proved themselves to be a disaster. ‘

Failed laws should be changed, even if it upsets the status quo

It’s no surprise that these invulnerable internet businesses lobby strongly for the laws which protect them from normal vagaries and costs of business governance, and even for further relaxation to make life even easier for them. Their absurdly self-interested and disingenuous arguments have been given so much exposure, courtesy of their enormous consumer reach and the lobbyists they fund, that they have begun to feel to some as if they are givens, natural truths. We are in danger of getting the world they have wished for.

Nor is it any surprise that their users, who are also the beneficiaries of the impunity to infringe that has been created, dislike copyright and resist attempts to enforce it. Someone threatening to take away the cheap and seemingly limitless fuel that they have grown so used to putting in their cheap and gas-guzzling cars, and they want to keep it.

While it’s great to hear politicians talk about using “smart legislation” to improve things for creators in the future, they shouldn’t consider the recent past as anything other than a salutary lesson. As well as creating better new legislation they need to get rid of the disastrous old legislation which has destroyed much of the opportunities the internet should offer creators.

While I share Neelie Kroes’s frustration about enforcement, I find it equally frustrating to see politicians talking about this as if it’s nothing to do with them. Of course we need to move on, and the first thing we need to do is remove the legal incentives to build massive businesses on copyright infringement.

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