April 28, 2015
I hate “limited liability”. It sounds either technical & legalistic (who really knows what it means?), or mealy-mouthed and self-serving (“we don’t want to take responsibility”). There’s got to be a better name for it – a name that is catchy and simple and easy to understand. I am offering a holiday in Bali to anyone who can inspire me!
But as unsatisfactory as the term is, it is a fundamental principle of the way the Internet is regulated. It’s of central importance for two main reasons.
Firstly, it’s right. I mean “right” in the sense of good, just, fair, correct. It’s right because it’s fundamentally consistent with our societal values. It’s a concept much older than the saying, “don’t shoot the messenger”. It would be wrong for shopping malls or street markets to be made responsible for checking the inventory of every retailer they host. It would be wrong for the postal service or email providers to be made responsible for checking the paper or electronic communications between terrorist cells. Limited liability is right because it’s the fraudster, the counterfeiter, and the terrorist who should be going to jail, and not the unwitting intermediary.
It’s right because it keeps the burden of action on the right parties. It goes without saying that if you know that one of your nightclub’s employees is selling illegal drugs on your property, you have a responsibility to stop it, and you should be punished if you don’t. But equally, it wouldn’t be right for intellectual property rights owners to be able to pass on the responsibility for going after pirates and counterfeiters to platforms, just because it’s cheaper for them to defend their assets that way. Nor would it be right for law enforcement agencies like the police to cut costs by relying on Internet companies to take action against drug dealers by making nightclubs responsible for doing so.
In other words, it allows for a fair balance of rights and responsibilities that respects fundamental rights of Internet platforms’ users, whoever they are. Just as it would be unfair to a self-storage company to require them to inspect every item that its customers store in it’s facility, so it would be unfair to its customers if it didn’t take measures to deal with any risks or illegal activity that it is made aware of, and so it would be unfair on law-abiding and honest customers to have an employee of the self-storage company inspecting and recording every item that they want to store.
By Southbanksteve from London, UK
Secondly, without it, European Internet platforms would have precisely zero chance of competing globally with American, Japanese, or Chinese peers. This is because the success of Internet platforms is linked with their scale. Large-scale platforms are not just more efficient from a cost perspective; they are also typically more valuable to their users that smaller ones. Allegro and Amazon are useful to sellers because they have so many buyers, and useful to buyers because they have so many sellers. Facebook is useful to us because that’s where the largest number of the people we want to keep in contact with are. And scale is not possible if you have to take measures to inspect everything that your users do on your platform. In fact, imposing stricter liability measures on Internet platforms in Europe would guarantee that it would be foreign players who would dominate the world market, by making it impossible for European platforms to grow big enough to challenge them.
The balance struck by the EU’s current limited liability regime (in the E-Commerce Directive of 2001) has been a key factor in allowing the EU to stay in the game. Shifting that balance risks doing great damage, with no real benefit. But it’s not just Internet companies who like this balance. Civil society groups and rights activists agree that it’s important (they focus on the “it’s right” arguments). They say that a regime that tips towards greater liability will result in “privatised law enforcement” and censorship. This makes sense. While we have good commercial and brand protection reasons to want our platforms to be clean, making us legally responsible for everything that happens on them will simply incentivise us to impose stringent rules and checks, limiting access to the platforms and to impose arbitrary exclusions and sanctions on users we only suspect of behaving unlawfully. Yes, we might well end up reducing the amount of terrorist or pirated content that is on the Web. But at what cost? Fairness, transparency, objectivity, and the rule of law? In fact, we find ourselves under pressure from NGOs to do less, rather than more.
The issue of intermediary liability is coming up again in the European Commission’s Digital Single Market strategy. I say, “again”, because this debate has happened already (remember ACTA?), but memories in politics are short. European policy makers and legislators should think very carefully before altering a framework that is fair and balanced, and that is necessary if Europe is to remain competitive in the digital space.