Netflix, Amazon Face Minimum Quota for European Films

  • EU proposals seek to bolster European creative content
  • Measures part of wide-ranging proposals on e-commerce in EU

Video-on-demand providers such as Netflix Inc., Amazon.com Inc. and Apple Inc.’s iTunes would be forced to dedicate at least a fifth of their catalogs to European content, under proposals published Wednesday.

The European Commission is seeking to bolster the EU’s film and TV industry with the 20 percent quota as part of a wider overhaul of the EU’s broadcasting rules presented in Brussels. Netflix and iTunes currently teeter just above the proposed level, the commission said.

Netflix said the EU measures “won’t actually” help “European production flourish. “Our members around the world love European programming, that’s why our investment in European programming, including Netflix original titles created in Europe, is growing,” said Joris Evers, a spokesman at Netflix.

The quotas plan is just one of a raft of measures published Wednesday as part of an overall EU legislative attack on barriers to e-commerce. The commission in December proposed a first set of rules to allow business travelers and tourists to continue watching their favorite shows on services such as Netflix wherever they travel in the 28-nation bloc.

Geo-Blocking

On Wednesday came the second attack on geo-blocking in the form of a draft law that would eliminate obstacles to online shopping across the EU. The proposal wouldn’t force traders to physically deliver products to specific regions. Additionally, the commission said it’s weighing initiatives for so-called online platforms such as Google and Amazon.

The measures drew a mixed bag of responses. The proposed quota for on-demand services was criticized on several fronts, some calling for more flexible rules, others for even higher quotas.

“For some service providers it’s 1 percent, for others it’s 50 percent, so we would like to equalize a little bit this situation,” Andrus Ansip, European Commission vice-president for the digital single market, told reporters in Brussels Wednesday.

‘Detrimental Effect’

Setting a fixed quota for European content isn’t an effective way to protect local content, said DigitalEurope, a trade group with members including Apple and Google. This could “have a detrimental impact” on business models that offer “European consumers with the ability to access a wide variety of European and international content,” John Higgins, director general of DigitalEurope said in a statement.

European screenwriters and authors called for an even higher limit to European works for on-demand video, saying this was “vital” to further help European “drama to breakthrough outside of national borders.”

The EU draft rules also would give more scope to nations to ask on-demand video providers to contribute financially to European works targeted at their national audiences. This would expand existing rules by allowing countries to ask such services in other EU nations, and not just those based locally, to contribute in this way.

It would “be a voluntary measure” and not an obligation at the EU level, the commission said.

Amazon also weighed in on the commission’s new geo-blocking proposals, saying that 98 percent of its own retail selection is already available to shoppers anywhere in the EU and that “the main reasons why the remaining small selection can’t be shipped around Europe is because certain items are very heavy or they contain hazardous materials.”

The rules, while welcomed by many, also drew criticism for not tackling geo-blocking of online content.

Error Message

“When most Europeans hear the term ‘geo-blocking’, they think of the all-too-common error message that ‘this video is not available in your country’ -- and yet the measures presented today will not do anything to address this,” said Julia Reda, a member of the European Parliament’s Green group.

“An anti-geo-blocking regulation that does not cover online video content misses the point,” she said.

Further proposals are in the works too, the commission said. Alphabet Inc.’s Google and other Internet services may see new rules on their liability for content under an overhaul of copyright rules planned for later this year.

The EU also is assessing whether Internet companies need guidance for handling illegal content and for take-down procedures. Regulators and the industry are currently discussing a code of conduct for tackling hate speech online. Facebook Inc.’s WhatsApp and other online telecommunications services may face the same data-protection requirements for traditional operators in rules to be announced later this year.

The broadcasting and geo-blocking rules still need the backing of EU lawmakers and national governments.

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