Varun Mathew

| @ | May 8,2020

OVER the last decade, online platforms operated by big technology companies (“Online Platforms”) have disrupted scores of traditional industries, changed public consumption patterns, and appropriated revenue from other market players. Amongst the most severely affected is the news media industry, with press publishers having lost a vast majority of readership and revenue to Online Platforms. To add insult to injury, Online Platforms have achieved this disruption by leveraging the very content created by press publishers[i]. In light of jurisdictions across the globe implementing increased protections for their news media industry, it is worthwhile to examine whether such measures should be introduced in India.

Existing remedies against the appropriation of content, which lie primarily under copyright laws, are ineffective in protecting the interests of press publishers. Online Platforms, by virtue of their widespread usage and varied offerings, are able to control every aspect of the content consumption online – from discovery and display to distribution and even monetisation. Given the deep entrenchment of Online Platforms (such as social media networks and search engines) into consumer behaviour, press publishers are dependent on Online Platforms to secure readers and therefore often willingly provide content. Unfortunately, this does not translate into a symbiotic union. On the contrary, Online Platforms leverage their superior technology and the content produced by press publishers to acquire and retain users for themselves, thereby capturing all associated revenue as well.

An interesting illustration of the power that Online Platforms have over press publishers may be found in the attempts of Germany and Spain to provide ancillary copyright protection for press content (“Neighbouring Right”):

  • In 2013, Germany introduced a Neighbouring Right in its Copyright Act, thereby granting press publishers exclusive control over the commercial exploitation of its content. A consortium of press publishers (“VG Media”) then sought to enforce this right against Google, requiring the payment of a fee for press content usage on its search engine. Google pushed back by the offering the publishers a choice – either consent to the royalty-free display of excerpts of the press content or have the search engine carry only headlines which would result in significant demotion in search rankings. This resulted in a Cornelian dilemma for the press publishers, forcing them to choose between giving up their rights or becoming virtually invisible on the internet. However, the strategy ensures that Google does not have to pay anything under the Neighbouring Rights regime. Eventually, many members of VG Media ‘opted in’ for the first option and waived their rights. VG Media continued to press its claims before the Bundeskartellamt (Germany’s national competition regulator)[ii] and the Landgericht Berlin (district court)[iii].
  • A similar Neighbouring Right was also introduced in the Spanish intellectual property legislation[iv], which granted press publishers a right to equitable remuneration for their usage of their content. However, unlike in Germany, the Spanish Neighbouring Right cannot be waived by press publishers, which led to Online Platforms such as Google News ceasing operations in Spain. Effectively, they chose to shut the shop rather than share revenue.

In the backdrop of these experiences, the European Union passed a directive in April 2019 mandating that member states introduce a Neighbouring Right for press publishers[v]. France passed an implementation act in July 2019; it went so far as to prescribe that the compensation due to press publishers must be determined by: (i) the financial and other investment, (ii) the contribution to political and general information, and (iii) the importance of the use of the press content by the commercial exploiter. Google responded with the same strategy as earlier, it would modify its platform to fall within the exceptions[vi] specified under the law so as to avoid paying any fee[vii].

Thus, the European experiences indicate that there is significant ground and effort to be covered by governments and press publishers if such a rescue was to be meaningfully implemented. The biggest challenge in this context, assuming the willing participation of Online Platforms, is the accurate calculation of equitable revenue shares, a complexity that is compounded by the different commercial variables in different contexts and between different parties.

Which brings us to the Indian context, where press publishers are facing similar erosions from Online Platforms. The rationale for putting in place a legislative framework in India that prevents Online Platforms from ‘bullying’ press publishers is clear:

  • a strong and independent news media industry, with adequate revenue flows, is a valuable asset for any democracy, and a reasonable intervention to secure this is justified.
  • the implementation of a clear set of rules regarding the commercial exploitation of press products will increase the bargaining power of publishers, particularly small and medium publishers who don’t receive the preferential treatment often accorded by Online Platforms to big media houses.
  • the Indian market is fragmented into multiple languages, with over a dozen languages counting over 30 million speakers each. Given the attraction of the largely untapped Indian market to Online Platforms, it is an opportune moment for the State to secure the rights of publishers in different languages and hasten multi-lingual digitisation.
  • such a measure would have the added advantage of subjecting a proportion of the vast Indian revenue of foreign Online Platforms to domestic taxation; currently, apart from the hastily conceived and problematic equalisation levy, most foreign Online Platforms pay little or no tax on the revenue garnered from India.

However, before such protections are provided, there is a strong case for the revamping of the regulatory framework governing the news media sector. One of the primary justifications for protecting the news media sector, as seen in the French implementation act, is that it makes an essential contribution in a democratic society. This value contributed by the fourth estate must be secured, and unfortunately, the existing regulatory framework governing journalistic standards and conduct is woefully inadequate. Different segments of the industry are governed by industry associations with little or no powers to enforce guidelines or penalise violations of the ethical codes of conduct. Fake news, politically biased mainstream reporting, and a lack of research plague mainstream news media in India, with there being numerous instances of press publications inciting communal violence. An appropriate framework, even if self-regulatory in nature, must be put in place to ensure that journalistic conduct is held to a basic minimum standard. Measures to compensate the investments made by press publishers in creating news products can only be justified if these news products discharge its essential function of being the fourth pillar of democracy.

 

 

[Varun Thomas Mathew is a lawyer practicing in New Delhi]

 


[i] In a case before the French Competition Authority, Google has responded to such assertions by stating that it, inter alia, provides over 8 billion monthly visits to European press publishers websites, thereby adequately remunerating any content usage; see decision 20-MC-01 of 9 April 2020, available here.

[ii] In Verwertungsgellschaft Media (VG Media) v. Google, on 08/09/2015, Ref: B6-126/14, available here, the Bundeskartellamteventually declined to take action against Google, citing the finding that ‘Google’s conduct most probably does not violate the prohibition of abusive practices under competition law but does not make any conclusive findings’; however, it did note that the question of abuse of dominant position and anti-competitive interventions by Google, which were beyond the scope of the instant examination, remained open.

[iii] The Landgericht Berlin (District Court) found that VG Media’s claims under S.87(f) of Germany Copyright Act had merit; however, questions were raised by Google over the enforceability of the provision on account of the failure of the German Government to notify the European Commission of this legislative amendment. The question was referred to the Court of Justice of the European Union, which found in favour of Google’s proposition on the un-enforceability.

[iv] Article 32 of the Ley de Propiedad Intelectual.

[v] Directive on Copyright in the Digital Single Market (“DSM Directive”), approved in April 2019.

[vi] The exceptions under the French implementation act, i.e. Act No. 2019-775, extend to: (i) hyperlinks, (ii) isolated words, and (iii) very short extracts.

[vii] In an April 2020 interim order, France’s competition regulatory authority found that Google is in a dominant position and its practices were prima facie likely to be anti-competitive, and accordingly ordered them to enter into good faith negotiations with press publishers on the entitlements under the Neighbouring Right. see decision 20-MC-01 of 9 April 2020, available here.

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