EU copyright showdown could reshape the internet

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It's a battle that could shape the future of the internet.

The European Parliament is expected to vote Wednesday on a copyright proposal that has pitted artists including Paul McCartney against tech heavyweights like Google (GOOGL) and Facebook (FB).

European lawmakers have been considering how to overhaul copyright rules to ensure that publishers and artists are fairly compensated when their work appears in Google searches and on YouTube.

The draft law is the latest example of the European Union taking a tough line with the tech industry. Sweeping EU rules on personal data came into effect in May, and EU regulators hit Google with a record $5 billion antitrust fine in July.

Lawmakers will consider scores of amendments to the copyright legislation on Wednesday.

"[It] takes an unprecedented step towards the transformation of the internet from an open platform for sharing and innovation, into a tool for the automated surveillance and control of its users," web inventor Tim Berners-Lee and Wikipedia founder Jimmy Wales warned in a June letter to a top EU official.

Dire warnings

Supporters say the law is needed to restore the balance of power between musicians, filmmakers and news publishers on one side and Big Tech on the other.

But critics warn of dire consequences: They say the law could signal the end of internet memes, or even lead to the closure of Google News.

Eleonora Rosati, a lawyer and copyright expert at the University of Southampton, said the ultimate impact depends on how specific the final version of the legislation is and how it's interpreted.

"If a law is not clear, that's great news for lawyers, but it is problematic because it creates uncertainty," she said. "[The warnings] are correct, but exaggerated."

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Death of memes?

The most heated argument has been over Article 13 of the new legislation, which would make content sharing platforms like YouTube liable for copyright infringements committed by their users.

Tech companies would have to build filters that prevent users from uploading copyrighted material.

Critics argue that automatic filters amount to surveillance and could hurt freedom of expression. They say provisions designed to prevent streaming and sharing of pirated music and video are far too broad.

"They establish the principle that the upload filter can be used to overturn democratically agreed copyright flexibilities such as parody and quotation," said the internet advocacy group European Digital Rights.

The cost of developing the filters would be substantial. YouTube said it spent over $100 million on an existing content ID system that identifies copyrighted material after it's published.

Critics say the cost of building a system that prevents copyright material from being uploaded would be prohibitive for smaller platforms.

"These rules would ensure that the next Facebook or Google cannot come from Europe," said Julia Reda, a German lawmaker who has opposed the draft law.

YouTube, which is owned by Google, has campaigned against the new law, saying "it's vital to preserve the principles of linking, sharing and creativity on which so much of the web's success is built." Facebook declined to comment.

The Computer and Communications Industry Association, an industry group whose members include Amazon (AMZN), eBay (EBAY) and Pandora (P), has also campaigned against the law.

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'Link tax' threat

A second controversial part of the proposal, Article 11, could require sites like Google News to pay publishers for displaying snippets of content.

Supporters say the rule will safeguard media pluralism in Europe.

Major tech companies have lobbied heavily against the proposal. Google has warned that the rule would prevent it from sending traffic to news publishers via search and Google News, because "paying to display snippets is not a viable option for anyone."

Critics have said the proposal amounts to a tax on links. But the lawmakers behind the initiative argue that links are exempt.

Previous efforts to make sure publishers are paid have backfired in Europe. When Spain tried something similar, Google shuttered its Google News product.

Rosati said the impact of the rules will depend on how literally they're applied.

"There is a difference between you sharing something on your personal Facebook page, and a for-profit news aggregator doing the same," she said.

The final version of the proposal must be approved by EU member states and the European Commission before it becomes law.

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