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Will EU Copyright Directive Proposal Hurt US Tech Giants?

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On Sep 12, European parliamentarians voted in favor of a new and revamped copyright directive in Strasbourg, France. A significant number of lawmakers supported the directive which is intended to support the interest of artists and publishers. Following the European parliament’s approval of the copyright directive, top associations related to Europe’s TV and film industries showed their support.

On the other hand, critics slammed the European Union’s (EU) decision and highlighted that such a law may hamper Internet freedom and normalize censorship. Further, concerns were raised that users will not be able to share articles from news outlets. Also, the directive prevents sharing of copyrighted content, hurting tech giants.

EU Copyright Directive: Boon for Artists

The EU Copyright Directive or the Directive on Copyright in the Digital Single Market is aimed at synchronizing copyright laws in all member countries of the economic bloc. After being rejected in July, the revamped copyright directive received the approval of EU lawmakers this month. Out of all EU parliamentarians, 438 votes voted in favor of the draft, while 226 voted against it and 39 abstained.

The two key points of the copyright directive are Article 11 and Article 13, each respectively termed by critics as "hyperlink tax" and the "upload filter." Article 11 ensures that companies like Alphabet Inc. (GOOGL - Free Report) or Google, Facebook, Inc. (FB - Free Report) and Microsoft Corporation (MSFT - Free Report) have to pay these news outlets if even snippets of their content are shared by these Internet companies.

Additionally, Article 13 which is also termed as "meme killer" is aimed at "effective content recognition." Article 13 is for online platforms like Facebook, YouTube, Instagram and Reddit and requires these platforms to use filters and prevent uploading of content that is copyrighted. Article 13, is clearly being welcomed by artists, authors and musicians since it is expected to protect their content.

EU Copyright Directive Spell Doom for Tech Giants

Alex Voss, German Member of the European Parliament (MEP) and a big supporter of copyright directive, believed that the criticisms are overstated. Additionally, the Society of Audiovisual Authors (SAA), the Federation of Screenwriters in Europe (FSE) and the Federation of European Film Directors (FERA) have welcomed the development in a joint statement.

Meanwhile, German Pirate Party lawmaker, Julia Reda called the result "catastrophic." While talking about Article 11, Reda said that platforms which are unwilling or unable to pay any licensing fees “would need to shut down or disallow users from sharing links with snippets." This raised fears that barring big players like Google, it will be difficult for other smaller players to link and share content.

Moreover, Article 13 also poses a threat to Internet companies as indicated by a letter from 70 Internet leaders including Web Pioneer, Vint Cerf and inventor of the World Wide Web, Tim Berners-Lee. In the letter, addressed to President of the European Parliament, Antonio Tajani, the Internet luminaries supported “fair distribution of revenues from the online use of copyright works.”

But they also cautioned that from an open platform, the Internet will be transformed “into a tool for the automated surveillance and control” by Article 13. In this context, tech giants like Alphabet, Facebook and Microsoft will suffer. Alphabet has a Zacks Rank #3 (Hold), while, Microsoft holds a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Conclusion

Undoubtedly, tech giants will bear the brunt of EU lawmakers’ vote in favor of the revamped copyright directive. Although, MEP Alex Voss showed his support for the draft law, the directive faced criticisms from other MEPs like Julia Reda. With all focus on Article 11 and the controversial Article 13, tech companies have a lot to endure in Europe in the days ahead.

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