CJEU rules on hosting defence for EU platforms

The CJEU's full decision is available here.

The Court held that, when faced with infringement allegations, an internet service provider may only rely on the hosting defence where it plays a purely passive role over stored content.

In summary, the CJEU has ruled that:

• to rely on the hosting defence, the service provider must have neither knowledge nor control over the user’s information that is transmitted or stored - if the provider exercises control, the hosting defence will not be available to it; and
• beyond “the mere categorisation and indexing of information to improve its accessibility” (the scope of which activities will need to be interpreted), the use of an algorithm to determine in what manner and in what order of priority information is disseminated or not will amount to control, removing the availability of the hosting defence. In this sense, whether human intervention occurs is irrelevant.

Comments

This judgment could significantly impact liability on many platforms operating in Europe, especially given how many will likely implement algorithms to curate user-generated content.

Multiple platforms, including e-commerce/marketplaces and social media, rely on ranking and recommendation systems as a core functionality, and this functionality may now amount to an exercise of control in the dissemination of content. The absence of clarity in relation to the scope of what, in practice, constitutes “categorisation and indexing of information to improve its accessibility” introduces considerable uncertainty and will doubtless need to be clarified in future cases.

Post-Brexit, this decision is not binding in the UK (albeit it may be influential), so it is conceivable that the UK courts may take a different approach to the hosting exemption.

It remains to be seen how online platforms will react to this decision, and whether the number of claims for user-generated content in the EU will now increase.