E-Commerce Directive for Internet Service Providers

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Table of Contents

Introduction
Cases
Benefits of the E-Commerce Directive 2000/31/EC
Criticisms of the E-Commerce Directive 2000/31/EC
Discussion
Conclusion
Annotated Bibliography
References

Introduction

The liability of internet intermediaries has been a contentious issue in many legal and academic fields. The e-commerce directive 2000/31/EC was introduced to address these concerns by providing a legal framework for regulating online transactions, including those in the international market. The directive’s main goal is to eliminate barriers relating to online transactions in the EU and to provide agents who operate outside of the jurisdiction a guarantee that their personal and business transactions are legally guaranteed. This legal provision sets out unique rules relating to information disclosure, commercial communications and electronic contracts. Other legal issues addressed by the law include limitations of liability for the intermediary service providers, administrative obligations for member states, and the need for self-regulation and information requirements for online service providers.

Although these developments have helped to reassure stakeholders in the e-commerce field that their transactions are guaranteed by the law, there are concerns that the law inadequately covers internet service providers (ISPs). This paper is a critical analysis of these opposing points of view. In detail, it analyses the merits of the e-commerce directive 2000/31/EC and examines some of its criticisms. Based on these discussions, a review is done to evaluate both sides of the argument and a conclusion is derived in the last part of the essay. However, before delving into the details of this review, it is important to understand relevant cases that led to the formulation of the e-commerce directive 2000/31/EC in the first place. They appear below.

Cases

There have been many legal cases that have been cited to explain the problem that exists in regulating the liability of internet intermediaries in e-commerce. The recent high court case involving L’Oreal v eBay is one such example because it was applicable throughout Europe. In the case, L’Oreal sued eBay for the unauthorised sale of its products. In the case, the plaintiff identified at least 17 cases where his products were being sold on the online auction site. Two of the 17 cases involved the sale of counterfeit goods, while the rest involved genuine goods. Part of the contention was that the 15 genuine products sold on eBay were marketed in the European Economic Area (EEA) without the consent of L’Oreal. Although the high court sided with the plaintiff on the basis that the sales were unauthorised, it refused to apportion blame to eBay for allowing such a sale on its online auction site. Although the case was decided by the High Court, it was referred to the European Court of Justice (ECJ) because there were still several pending issues relating to it.

Another case that shows the problems internet intermediaries encounter in the e-commerce field is Godfrey v Demon Internet Service. The plaintiff, Laurence Godfrey, had noticed that someone posted a message on an online platform (soc.culture.thai.) and passed it off as having originated from him. Godfrey contacted Demon Internet and demanded that the internet service provider deletes the message. Demon Internet refused to do so. Consequently, the message was hosted on the company’s servers for more than nine days. On the tenth day, it was automatically deleted with other old messages. Godfrey sued Demon Internet for libel because he argued that the service provider should have deleted the message when he first requested to do so. In the pre-trial motion, it was found that internet service providers could be sued for libel in such a case – a ruling, which prompted Demon Internet to settle with Godfrey out of court and pay him £15,000 and an additional £ 250,000 to cater for his legal expenses. The e-Commerce Directive 2000/31/EC was developed to protect ISPs from such lawsuits. Its benefits appear below.

Benefits of the E-Commerce Directive 2000/31/EC

The e-commerce directive 2000/31/EC has helped to grow e-commerce because it has reduced intermediaries’ liabilities in e-commerce. Furthermore, it has helped to standardise European e-commerce laws with the rest of the world because countries like Canada and the United States (US) have similar laws. Therefore, the directive was instrumental in facilitating trade and commerce between European nations and these jurisdictions because (often) the players and interests of the stakeholders involved are the same. Concurrently, the legislative framework has helped to provide an internet ecology, which allows intermediary services to work freely, thereby supporting many economic and social activities by the same players.

Another advantage that the e-commerce directive 2000/31/EC introduced in the e-commerce space is the clause of “actual knowledge” which sealed “loopholes” that people used to sue internet service providers for publishing illegal content on their platform without their knowledge. However, the clause on actual knowledge stipulates that ISPs can only be liable for illegal content if they are aware of their existence. It also stipulates that after notification, the content has to be removed. In the case of Bunt v Tilley (2006), it was further proved that the ISPs always play a passive role in the dissemination of information. Therefore, the court refused to impose any liabilities on it based on the passive role it played.

Lastly, the introduction of the e-commerce directive 2000/31/EC has helped to correct what some people say is a “slippery slope” into a culture of “shooting the messenger” that was slowly creeping into the e-commerce space. Indeed, many of the cases that were emerging in the field were designed to allocate responsibility to ISPs without paying attention to the authors of information. Therefore, it was as if the ISPs were liable for their users’ actions. This creeping culture was stifling their freedom to operate. Furthermore, it discouraged most of them to host content without imposing restrictions on their users. Issues of free speech arose in this context and they generally beat the purpose of engaging in e-commerce in the first place because the platform was supposed to eliminate some of the barriers of communication and trade that were associated with traditional forms of commerce. The e-commerce directive 2000/31/EC helped to change this situation by limiting ISP liabilities at least in the context that they played a passive role in the dissemination of information. While this view has largely been seen to be progressive, some people have held opposing views regarding the ability of this law to fully protect ISPs from liability. Their criticisms appear in the section below.

Criticisms of the E-Commerce Directive 2000/31/EC

Although the e-commerce Directive 2000/31/EC was developed in good faith to harmonise e-commerce laws in the virtual marketplace, it is important to point out that the law is close to two decades old and it was mostly meant to protect small start-ups from exploitation by internet users. However, this situation has changed because the intermediaries are no longer small companies, but giant multinationals with a lot of economic power. For example, Google controls up to 90% of all search engine operations in Europe. At the same time, Facebook is the dominant social media user on the continent and commands up to 90% of the market.

The dominance of these internet intermediaries is partly evident because of significant changes in their respective operating fields. For example, changes in the advertisement sector have led to the growing dominance of Google and Facebook, which now account for about 50% of the global advertisement revenue. The growth and development of these organisations demonstrate that they have enough influence and power to control policy decisions and the activities of users who use their platforms. Based on this assertion, they are not fully covered by the e-commerce directive because the law only protects internet intermediaries to the extent that they do not regulate the content displayed on their platforms. For example, Google has played an active role in “interfering” with the content displayed on its online platforms to counter terrorism. In a statement made by the company’s Vice President, Kent Walker, the company regulated the content displayed on its online platform by using technology to identify extremist materials, employing experts from non-governmental organisations to make decisions, putting warnings on offensive videos, and redirecting potentially radicalised people to materials that could change their minds.

The above actions show that internet intermediaries are increasingly playing an active role in regulating the content displayed on their platform. This is a potential area of vulnerability because they could be held liable for the materials that are contained on their servers, especially if they infringe on the rights of other people. Indeed, when internet intermediaries frame and control content, they eliminate their protection from liability. In other words, such actions provide the basis for imposing obligations and liabilities on the internet intermediaries.

Several European countries have recognised the need to regulate content and formulated local laws to govern the same. For example, in Germany, this kind of legislation has been enacted through the German Social Networks Enforcement law. Enforced in September 2017, the provision requires that all illegal social media posts should be deleted. Typically, internet intermediaries are required to take down the posts within 24 hours of being notified of their existence, but legally, they have a window of up to seven days to do so. Other laws are currently being formulated to further impose new responsibilities on internet intermediaries to remove misleading information from suppliers and protect information consumers when they have evidence that the information provided by the suppliers would be detrimental to their users.

At the same time, there is a precedence set by existing cases, which show that internet intermediaries may be forced to assume responsibility for the content displayed on their platforms. In the European context alone, more than four cases demonstrate this fact. For example, the 2014 Google v. Spain decision requires internet intermediaries to remove all defamatory content if the same material is found to have emanated from a search using the complainant’s name. The European Court of Justice through its 2017 Zigo decision also imposes the same responsibility on internet service providers who operate peer-to-peer online platforms because it ruled that the information presented on these platforms needs to be safeguarded within the same context. If they are exposed to the public and a complaint arises, sanctions may be imposed.

The 2015 Delphi decisions, which were made by the European Court of Human Rights, also showed instances where internet intermediaries are not immune from prosecution, subject to the content they publish on their platforms. The decision was based on an earlier Estonian ruling, which specified that publishers could be liable for some of their readers’ comments, especially if they are made in the absence of the complainant.

The above cases show that it is possible for internet intermediaries to be prosecuted for sharing defamatory contents on their platforms, even though they were not the original authors of the same. The European e-commerce directive seeks to minimise some of the liabilities that these intermediaries could incur, but it still cannot provide enough guarantee that the same parties (it seeks to protect) get the best legal protection for their activities. This paper has shown that two reasons are responsible for this outcome. The first one is the rising power and influence of internet intermediaries, which has made them influential players in global commerce. Their dominance in this space has given them immense power to regulate the content posted on their platforms. By doing so, they have demonstrated that they have the capability to regulate content and the power to delete the same if need be. Therefore, complainants could seek legal redress if they believe some of the content communicated on these platforms infringe on their rights. Lastly, another reason for the inability of the e-commerce directive to protect internet intermediaries from liability is the existence of other laws that apportion some level of responsibility on the same parties to regulate the content of materials posted on their websites.

Discussion

One important thing to consider in this discussion is the context that the e-commerce directive 2000/31/EC was made. The legal provision was developed almost 20 years ago and so much has changed since then. For example, the law was used to protect internet intermediaries who were seen as “innocent bystanders” in the information exchange chain. They were only seen to be playing a facilitating role in e-commerce. Therefore, they could not be held liable for some of the “transgressions” of their users. However, these internet intermediaries have changed their business model and are now playing an active role in the moderation of content displayed on their internet platforms. Today, some of these ISPs are seen as antagonists and the law has also evolved to perceive them this way, especially based on their perceived need to take responsibility for the information that is contained on their servers. Many people are also starting to see them as powerful stakeholders in the e-commerce field because they have the power and means to regulate the content they publish on their platforms.

Based on the above assertion, there is an evolving operating environment guiding the activities of these internet intermediaries, which is increasingly apportioning them more responsibility to regulate the content that is displayed on their platforms. Additionally, strictly from an implementation perspective, it is difficult to control what the public posts, but it is relatively easier to regulate what internet intermediaries do. Therefore, it is unlikely that regulation would seize to tighten around the activities of these companies, especially in today’s society where online activities are becoming more popular and almost unavoidable in different areas of social, political and economic development.

Conclusion

Based on the findings of this paper, the EU e-commerce directive does not protect internet intermediaries from liability because some existing laws require the same parties to assume responsibility for some of the content that is being displayed on their platforms. For example, Europe has a proposed directive to regulate audio-visual content, which requires internet intermediaries to formulate measures to protect minors from harmful content and citizens from incitement or violence. Copyright (COM (2016) 593), which is applied in Europe, also requires all internet intermediaries to implement agreements with right holders and prevent access to works identified by right holders. The 2014 Google v. Spain case is one example highlighted in this paper that shows how individual states have taken the responsibility of formulating laws that govern intermediary liability in their jurisdictions.

The context of law formation and implementation may vary from state to state, but they all show that local laws also operate out of regional ones, such as the e-commerce directive. Therefore, while the latter may seek to protect internet intermediaries from liabilities associated with their nature of jobs, there is no guarantee that they would be sued based on other laws outside of the regional framework. Relative to the insights highlighted in this paper, it is important to note that internet intermediaries need to be more aware of their activities and the nature of the content displayed on their internet platforms because there are reasonable grounds for which they may be prosecuted for displaying unwanted or illegal content. In other words, they are no longer seen as innocent parties in e-commerce.

Annotated Bibliography

Godfrey v. Demon Internet Ltd [1999] EWHC QB 240.

References

Andreas Rühmkorf, ‘eBay on the European Playing Field: A Comparative Case Analysis of L’Oréal v eBay’ (2009) 6(3) SCRIPTed. Web.

Council of Europe, ‘Rules for Blocking and Removal of Illegal Content Must be Transparent and Proportionate’ (Council of Europe, 2016). Web.

Eur-Lex, ‘Directive 2000/31/EC of the European Parliament and of the Council of 8 June 2000 on Certain Legal Aspects Of Information Society Services, In Particular Electronic Commerce, In The Internal Market (‘Directive On Electronic Commerce’)’ (Europa, 2013). Web.

European Commission, ‘e-Commerce Directive’ (European Commission, 2015). Web.

Kate Brady, ‘Germany to Abolish Provider Liability Law, Open Path to More Free Wifi’ (DW, 2016). Web.

Matt Lynley, ‘Pinterest: We’re Not Going to Be Sued into Oblivion, and Here is Why’ (Business Insider, 2013). Web.

Tom, Risen, ‘Turkey Censors News, Social Media after Terrorist Attack’ US News (New York, 2016) 3.

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