Analysis The EU's copyright reform is being watched globally as an experiment in taming Big Tech – but fears grow that it may make Silicon Valley even stronger. The Register has seen a draft law dated 4 February that gives some credence to this.

For those who've not been following, Article 13 of the EU Directive on Copyright in the Digital Single Market – currently being lobbed back and forth between France and Germany – is aimed at making platforms such as Google's YouTube pay creators fairly by either coughing up licensing fees for material, or filtering out unlicensed work. However, the latest draft legislation seen by The Register continues to alarm some of the beneficiaries.

The details appear to give platforms two significant concessions. The first excludes startups and small-to-medium biz from the new liability framework, that is, the requirement to pay or filter. The second appears to acknowledge that user-generated content containing copyrighted works is OK.

"Startups" that have been operating for less than three years; companies with an annual turnover under €10m; and platforms with fewer than 5 million unique visitors a month would all benefit from a "softer liability regime". That means they can use the old-school issue-a-notice-to-takedown route to have copyrighted stuff removed (in the EU, that lives in the E-Commerce Directive). The new obligations would kick in when those earnings, audience, or longevity thresholds were reached.

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The second concession appears to enshrine a mandatory exception for uses of material.

Serena Tierney, of UK law firm Veale Wasbrough Vizards, told us the wording would cause concern among rights-holders.

"It looks broader than the current position for the various exemptions which have 'fair dealing' requirement not obviously in this text," she told us. "It potentially creates a new class of 'users' – who are really publishers – who upload 'other users'' material but may be exempt from a normal publisher's liability."

Article 13, Article 11... and 3 years of tussling... Rights-holders in Europe have long feared that revising the EU's 2001 compromise between rights-holders and tech firms would result in a massacre for copyright holders, such is the lobbying muscle of Big Tech. When this correspondent asked a room of rights-holders and their lawyers last year why they didn't seek to reopen the E-Commerce Directive (rather than complaining about it), one senior representative [Chatham House rules prevent us from naming names] told us: "The absolute horror of rights-owners is the thought that in doing so we would lose what we already have." Those fears appear to be borne out, in part, by the exhausting three-year process that is now reaching its final stages. In return for a number of concessions – including making content more widely available – the European Commission threw two sops to rights-holders. These are Article 11, which strengthens copyright around news snippets, and Article 13, aimed at plugging the user-generated content (UGC) "loophole" that allows Google's YouTube to maintain an unlicensed supply chain (explained using wellie boots here). In turn, that allows Google to pay far lower per-stream rates for music than Apple, Spotify or rivals. Google already deploys an effective upload filter system on YouTube – ContentID – but Article 13 would oblige it to use it without discrimination. Street protests organised by anti-Article 13 groups last year drew derisory numbers. In one city police outnumbered the four activists, while in Stockholm fewer than 20 filled a vast square set aside for the protest – and even fewer last month. Berlin mustered 15 protesters, London and Paris none. But behind-the-scenes lobbying appears to have been effective, given the commission's noble goal of keeping everyone happy. The fight has been dirty. After YouTube CEO Susan Wojcicki said the vid platform may be forced to close, parents reported kids were lobbying them to help "save the internet".

One expert close to the process described the latest draft as "an absolute disaster from the rights-holder perspective, but many of them are willing to accept it because of various crumbs that are being left on the table".

The European Commission explained in a recent (must-read) Mythbuster: "The draft directive will impact large online platforms and news aggregators like Google's YouTube, Google News or Facebook, making it essential for them to correctly remunerate artists and journalists whose work they monetise.

"The draft directive intends to ensure that more money goes to artists and journalists rather than a news aggregator and its shareholders, a transfer of resources that is always beneficial to jobs," it continued.

However, the latest compromise by the Presidency of the Council of the European Union (which rotates on a six-monthly basis: it is currently Romania's turn) appears to strengthen the rights of unlicensed uploads, and establishes two parallel liability regimes – one for smaller companies and one for larger operators like Google and Facebook.

How we got here

Fears that Silicon Valley would use the process to strengthen its legal position were first highlighted here last May – and the Financial Times reported that platforms could yet pull off an improbable victory, noting: "The tide seems to have turned in back favour of Big Tech." [sic]

As the debate raged on last year, even Vivendi, owner of one of the world's largest record labels, Universal Music Group, complained about being weakened, arguing that the big platforms could mark their own homework.

European Parliament voted to take action in September, after which the draft went into "trilogues" – a three-way negotiation between member states, the commission and parliament. Five such meetings have been held since, and a draft compromise from the Romanian presidency was produced early this year. This left some rights-holders aghast – so much so, the sixth scheduled trilogue, which had been set for 21 January, was cancelled. In response, the latest presidency's draft – dated 4 February – represents attempts by France and Germany to thrash out a compromise.

Article 13 pits Big Tech and bots against European creatives READ MORE

So what happens next?

The latest draft compromise will be discussed by EU ambassadors' forum COREPER ahead of a final trilogue "tentatively scheduled for 11 or 12 February".

Providing that trilogue meeting proceeds smoothly, the agreed text then has to be ratified by the legal affairs committee before a final vote on the directive can take place, probably in March or the final plenary session in April. ®