The German head regulator for youth protection in online matters (Commission for the Protection of Minors in the Media – KJM) issued a press release (German) according to which it has engaged in enforcement action against three Cypriot providers of adult content (pornography). The action by the KJM is the outcome of a long debate and process and might indicate a shift in the regulatory practice vis-à-vis foreign and EU providers, which also has general relevance for all providers of online and entertainment media and content (e.g. video-on-demand providers, social networks, video sharing platforms and video games).

Background

The German youth protection law regulating online content (the JMStV) does not explicitly state whether it applies to foreign providers as well. However, it is broadly agreed that the law must be interpreted this way. A new version of the law – which will likely come into effect in September 2020 – will add language clarifying that the territorial scope also applies to foreign providers. Other German youth protection laws are currently amended accordingly.

Providers established in other EU Member States so far could rely on the so called country of origin exemption which – depending on the nature of the service – is included either in the Audio Visual Media Services Directive or the E-Commerce Directive. The country of origin principle – in a nutshell – stipulates that an EU based service only needs to comply with the regulatory regime of the EU Member State in which it is established. However, the country of origin principle is also subject to certain exemptions which apply in particular to violations of youth protection and hate speech laws. The extent and practical applicability of these exemptions have been intensively debated in Germany and other EU Member States for years and – due to the legally, procedurally and therefore overall practically complicated nature – have never been actively tested by a German regulator. There have only been a few single (largely unpublished) German court decisions based on unfair competition law vis-à-vis EU based entertainment providers stating that they must comply with German youth protection rules and that the country of origin principle does not apply due to the exemption for youth protection law.

For years, German regulators and the German legislator criticize that foreign services which are directed vis-à-vis German consumers do not comply with German youth protection laws. Several recent legislative initiatives also include a vast number of very onerous new obligations for platform providers, video games, video-sharing platforms and video-on-demand providers which are supposed to be applied to foreign providers as well. However, the country of origin principle remains an obstacle for both, German regulators and the legislator. Discussions intensified in particular over the last 1-2 years and more and more signs indicated that the regulator might put the exemptions of the country of origin principle to a test to establish a precedent for future regulation. The ongoing procedures now disclosed by the KJM might be the beginning of a more active regulation of foreign providers targeting the German market.

The decision

According to the KJM, it went “a long way” of information and consultation with different stakeholders within and outside of Germany, including a hearing of the providers in coordination with the Cypriot media regulator. The statement of the KJM likely refers to the procedural/formal requirements of the exemptions from the country of origin principle. Art. 3 (4) (b) E-Commerce Directive states that the relevant Member States trying to regulate a provider established in another Member State must have (i) asked the Member State first to take measures and the latter did not take such measures or they were inadequate and (ii) notified the Commission and the Member State of its intention to take such measures. These requirements are largely known as so called information and consultation requirements. The old AVMSD included the same requirements while the revised version from December 2018 includes new formal requirements, which nevertheless also result in certain consultation and information requirements.

The KJM also states that it has engaged in discussions with the EU (which might refer to the EU Commission as required by the consultation requirement) and that it will use the obtained practical knowledge in ongoing legislative discussions on an EU level. The press release implies that the regulator will increase its regulation efforts vis-à-vis foreign providers in future and also explicitly states that this might include blocking orders vis-à-vis access providers. The latter has not been attempted since the early years of the internet in Germany, despite the JMStV giving the KJM the explicit power to impose blocking orders.

Takeaway

Foreign video-sharing, social networks, video-on-demand and video game companies should closely monitor the developments in Germany. In particular with regard to several new and quite onerous obligations that have been suggested in various draft laws that are currently discussed and which are at different stages of the legislative process. All signs indicate that it might in future become more difficult to avoid compliance with German youth protection laws and related rules on the basis of the country of origin principle. The fact that the three procedures only concern providers of adult content does not make the development less practically relevant for providers of other media and content. In fact, it is likely the KJM chose providers of adult content to avoid any risk on the material law side of the procedure, as it is quite obvious that providers of pornography violate German youth protection rules. This way the procedure can focus mainly on the formal requirements of the exemptions and then serve as precedent for future regulation attempts which might be directed towards providers of other content.

For any questions related to this update, please contact Sebastian Schwiddessen.

Author

Sebastian Schwiddessen is a senior associate and a member of Baker McKenzie's TMT Practice in Munich. Sebastian has been working in the entertainment and video games industry for over 18 years, from both an operational and legal perspective. Sebastian’s clients range from platform providers over market leading video gaming, film and entertainment companies to indie publishers. Sebastian is well-known as an advisor in the video games and entertainment sector. He also regularly advises a wide range of leading social media companies and video-sharing-platforms on regulatory and copyright related matters.

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