The Court of Justice of the European Union has ruled in a case that turns out to be a deceptively small question: does a platform that shares advertising revenue with a creator still host what that creator uploads?
Dispute on 19 July 2022 of AGCOM, the Italian communications authority Google fined Ireland 750,000 euros and ordered the removal of YouTube videos promoting online gambling.
The videos violate Italy’s Dignity Decree, a 2018 law that bans direct or indirect advertising of games with prize money in any medium and is among Europe’s strictest regimes.
It comes in a bad month for Google in Luxembourg. Same court Upheld the €4.1 billion Android fine rejected the latest appeal two weeks ago.
Google challenged the decision before an Italian administrative court, citing EU e-commerce law’s exemption from liability for hosting providers for material uploaded by third parties.
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AGCOM’s response was that the exemption does not extend to gambling in general, as gambling is outside the scope of the e-commerce regulations.
The Italian Council of State considered the appeal and sent the questions to Luxembourg for a preliminary decision. This is a point worth being clear on, as it is regularly stated publicly.
The Court of Justice does not consider the Italian fine. It answers questions of EU law and the national court then applies those answers to the facts before it.
The two questions are narrow and consequential. Does the hosting exemption of Article 14 of the e-commerce directive generally apply to online advertising of games and betting for money? And if so, can Google make a claim given the agreement with the creator?
This second question is where the case is interesting and the facts are useless to Google. Videos are uploaded by a content creator affiliated with Google through a commercial partnership agreement that shares ad revenue from ads served before each video.
The deal was not blind. Before signing it, Google reviewed the creator’s videos, the channel’s theme, most viewed and most recent uploads, and associated metadata.
A company that checks out a channel, decides it likes what it sees, signs a revenue share deal, and then sells advertising against the output is doing something less reminiscent of hosting with each additional step.
The distinction between a passive host and an active one, on which the case is based, has been in EU law for two decades and has never held up well with the platform economy.
It was designed for a world of file storage, not a world where an intermediary manages, monetizes and shares revenue.
The stakes are wider than a fine. If the hosting shield does not apply to a platform that has a revenue-sharing relationship with the uploader, then the exemption is entirely monetized by the content platforms.
This will fall first to the online gambling industry and then to the digital advertising market.
The case drew a crowd, which usually explains it. In addition to Google, AGCOM and the European Commission, the governments of Italy, Belgium, the Czech Republic and Portugal also participated in the hearing. Four member states do not apply to dispute the €750,000.
The Android decision is not the only one. German court found Google are responsible for their own AI Viewsand it happened offers discounts in news search rankings canceling yet another DMA penalty.
What unites them is the direction of travel more than any judgment. The question Europe keeps coming back to is whether a company that organizes, ranks and monetizes other people’s content can continue to portray itself as a neutral channel for it.
The answers now go back to the State Council, which decides what they want to say for the fine.
