The European Union’s Directive on Copyright in the Digital Single Market takes effect June 7. It is intended to update European policies regarding online intellectual property and shelter fledgling European technology companies against competition from Apple, Google and other foreign tech giants. The irony is that the new directive may end up hampering web-based initiatives everywhere—particularly the very companies it is meant to protect.

Of particular concern is Article 17, which limits the “use of protected content by online...