The EU Commission’s proposal on Media Freedom Regulation

 

Lorna Woods, Professor of Internet Law, University of Essex

 

Photo credit: Bin im Garten, via Wikimedia Commons

 

In her 2021 State of the Union address, EU Commission President von der Leyen stated:

 

Media companies cannot be treated as just another business. Their independence is essential. Europe needs a law that safeguards this independence – and the Commission will deliver a Media Freedom Act in the next year.

 

The resulting Proposal sits against a network of existing rules – notably the long-standing Audiovisual Media Services Directive (AVMSD) and the e-Commerce Directive as well as the recently agreed Digital Services Act (DSA) and Digital Markets Act (DMA).  It will be accompanied by a Recommendation. The Proposal is a significant step; the Commission is entering new regulatory terrain here. This move indicates concerns not just about the state of the media but about public discourse more generally, but how has the Commission sought to transfer this high level concern into specific rules?

 

Outline of the Proposal

 

The Proposal can be said to be divided into roughly five elements (in addition to the definitions and scope), reflecting the fact that the concerns around media freedom have different aspects and need a response that itself is multifaceted. 

 

1 Media Freedoms

 

The first is about media freedom (and the recommendation is relevant for this issue too as it focuses on internal safeguards for editorial independence and ownership transparency). The Proposal introduces rights and obligations on media service providers in Chapter II. Specifically, it provides them the right to exercise their “economic activities in the internal market without restrictions other than those allowed under [EU] law” (Article 4(1)).  Article 4(2) then provides more detail. It specifies that Member States are prohibited from:

 

-          interfering with editorial policies and decisions by media service providers (Article 4(2)(a));

 

-          detaining, sanctioning, intercepting, subjecting to surveillance or search and seizure or inspecting media service providers, their employees, their families or their premises “on the ground that they refuse to disclose information on their sources, unless this is justified by an overriding requirement in the public interest” (Article 4(2)(b)); and

 

-          deploying spyware in any device or machine used by media service providers, their employees or their families other than in certain narrowly-defined circumstances (Article 4(2)(c)).

 

According to the Q&A document, this is to “protect them from unjustified, disproportionate and discriminatory national measures”.  There are provisions dealing specifically with “public service media providers”, reflecting their “societal role as a public good” (Recital 14) but also their “institutional proximity to the State, which puts them at peculiar risk of interference (Recital 18): they are obliged to provide “in an impartial manner a plurality of information and opinions to their audiences, in accordance with their public service mission” (Article 5(1)), although what “plurality” means for these purposes is not defined. It seems that public service media cannot be self-declared as such – the definition of “public service media provider” requires the media service either to be “entrusted with a public service mission under national law” or receives national funding for the fulfilment of such a mission (Art 2(3)). 

 

There are some ownership transparency obligations on media service providers who “provid[e] news and current affairs content”. They must provide the provider’s name and contact details, and details relating to certain shareholders and beneficial owners (Article 6(1)). They must also “take measures that they deem appropriate with a view to guaranteeing the independence of individual editorial decisions” (Article 6(2)).

 

The proposal also sets out the right of the audience (“recipients of media services”) the right to “receive a plurality of news and current affairs content, produced with respect for editorial freedom of media service providers, to the benefit of the public discourse” (Article 3(1)). Recital 11, however, clarifies that this right “does not entail any correspondent obligation on any given media service provider to adhere to standards not set out explicitly by law.”

 

2. VLOPS

 

Secondly, there are obligations on Very Large Online Platforms (VLOPs), which are in addition to those in the DSA. These provide additional rights to media service providers on VLOPs. Specifically, VLOPs must provide certain mechanisms to deal with the media (including applications of the requirements of the Platform to Business Regulation – see Article 17 MFA, and Articles 11 P2B Regulation).

 

3. Media Regulation and Institutions

 

A third element concerns the institutional set up of media regulation. There are provisions around cooperation of national regulators. The Proposal expands the scope of the existing European Regulators Group for Audiovisual Media Services (ERGA), replacing it with the European Board for Media Services (EBMS) which - with the European Commission - is to ensure the consistent application of the MFA and the wider EU media law framework (perhaps in a similar fashion to the EDPB in relation to the GDPR). Specifically, the EBMS will

 

-          advise the Commission on the implementation of the Regulation, for example, providing expertise on regulatory, technical, or practical aspects concerning the identification of audiovisual media services of general interest under Article 7a of the AVMSD;

-          mediate between the regulatory bodies of the Member States;

-          assess areas of interest such as the functioning of media markets and the potential impact of national measures; and

-          take a position if the functioning of the internal market appears to be affected.

 

4. Media markets

 

A fourth element deals with the market and includes requirements for Member States to put in place rules for assessing media market concentrations (Articles 20-22). In addition for setting rules for when concentrations must be notified, Member States should also set out criteria for assessing the impact of a concentration on media pluralism and editorial independence, an assessment which is distinct from that under competition law.

 

5. Resources and Audience measurement

 

Finally, there are rules relating to measurements of audience and to criteria for allocating resources to media outlets. The Commission notes that ‘opaque and unfair allocation of economic resources’ contribute not only to an uneven playing field but also to internal market barriers. The “opacity of and biases inherent to proprietary systems of audience measurement skew advertising revenue flows”, and the way state advertising revenue is allocated is also problematic. The Proposal therefore mandates transparent, non-discriminatory and objective measures and allocation of resources.

 

Comment

 

Competence

 

The Proposal builds on the Commission’s Rule of Law Report 2020 and the European Democracy Action Plan, and seems to aim at some worthy objectives. Despite this, the Proposal is not framed as directly protecting democracy.   The Proposal frames issues as media companies facing

 

“obstacles hindering their operation and impacting investment conditions in the internal market such as different national rules and procedures related to media freedom and pluralism”.

 

This would seem to be aimed at tackling concerns around competence and the fact that culture is typically for Member States, not the EU. To be sure, there are often special ownership and merger regimes for media undertakings, but these are often based on not on economic considerations but on non-market concerns. The emphasis on the impact that disparate rules have on media undertakings is used to justify the use of Article 114 TFEU as the legal basis for the proposal. This re-emphasises that this in not a specific piece of media policy, fields in which the EU has limited competence and has no competence to harmonise (Article 167 TFEU), but market regulation.  The Commission has pushed the extent of its harmonising powers before; while the AVMSD may have started off dealing with restrictions on cross-border advertising, it has also got a distinct cultural aspect (eg EU quotas). In this proposal, it is not clear how the measures listed actually map on to addressing the internal market problems identified in the Explanatory Memorandum. The extent to which a harmonising measure has to deal directly with the eradication of barriers to trade and the degree to which it may be directed at other policy issues has been the subject of a certain amount of jurisprudence, as the examples of Titanium Dioxide case (Case 300/89), Tobacco Advertising I (Case C-376/98), Swedish Match (Case C-210/03) and Vodafone (Case C-58/08) illustrate, and a cottage industry in legal commentary. On first glance, this proposal lies quite close to the boundary.  It is noteworthy that the justification given in recital 6 – that the audience should be able to receive cross boarder information flows – is linked to the satisfaction of the requirement in Article 11 of the Charter on Fundamental Rights. Yet, the Charter in itself is not a legal base for harmonising legislation. It is likely that this issue of competence may lead to legal challenge in the measure is enacted.

 

Place in the Digital Regulation Landscape

 

There will be a question of the interplay between this measure and others impacting on publicly available content. The measure is to a large part aware of this and cross refers to some of these relevant measures. It replicates some definitions from the AVMSD, albeit slightly tweaked. For instance the definition of ‘programme’ is in its base element the same that in the ADMSD (Art 1(b)) but excludes the reference in the AVMSD to “including feature-length films, video clips, sports events, situation comedies, documentaries, children's programmes and original drama”.  It is also notable that the definition of “media service” moves the focus of the service on to the provision  of programmes or press publications (Article 2(1), emphasis added); traditionally publications might have been thought to be goods! The definition of audiovisual media service remains the same as in the AVMSD. The terms “editorial decision” (Art 2(8)) and “editorial responsibility” (art 2(9)) seem to be aimed at drawing the boundary of these terms in the same place as the analogous terms in the AVMSD, though the language has been revised to reflect the broader scope of the Proposal.

 

The Proposal also notes the currently limited scope for the ERGA to take action; currently it is limited to audio-visual media services only.   The development of EBMS, however, follows the approaches taken in the DSA and also found in the EU’s approach to disinformation. Extending ERGA’s remit beyond audiovisual media services brings into question the historic difference in approach between broadcasting (and subsequently video on demand) and the print media, even in their online formats. It has long been accepted that regulation of broadcast entities is legitimate (even if different justifications might be given for that regulation) whereas the press has typically been subject to self-regulation. Giving ERGA (or the EBMS as it would become under the Proposal) a role starts to challenge that settlement.  It is worth reminding ourselves that the national regulatory bodies making up ERGA must meet certain independence requirements (and ERGA itself emphasises the importance of independence – as well as adequate resources!) – these independent bodies might start to have oversight over the press (in the areas covered by the proposal).  Again, this is a sensitive topic.

 

Media Independence

 

The Proposal does contain some important provisions that should benefit the maintenance of media independence – though of course the inclusion of these provisions recognises the distinctive nature of the media and the important role they play in an informed, democratic society. There are specific provisions on editorial independence and for public service media providers Member States will be under an obligation to ensure they have “have adequate and stable financial resources to fulfill their public service remit. These resources shall be such that editorial independence is preserved.” (Article 5).

 

This requirement for sufficient funding brings into law a principle long found in the Council of Europe recommendations on this area. Indeed, EU state aid law has also long recognised the need for State support (and the definition for public service media to a large extent reflects the position under Article 106(2) TFEU). How this is to be calculated or assessed however is not specified in the Proposal (the Recitals merely noting that a multi- year funding model is desirable – see Recital 18) and may cause tensions given the different levels of resources available and funding models used across the various Member States.  The Recitals are anxious to emphasise that this obligation does “not affect the competence of Member States to provide for the funding of public service media”, though it would seem that there is a shift from the permissive regime envisaged by Protocol 29 and the mandatory rule envisaged here. Currently Member States may provide such funding (subject to competition law and state aid rules in particular); this Proposal suggests that in future Member States must do so.

 

Moreover the Proposal introduces obligations so that the senior management is to be appointed according to transparent, non-discriminatory and objective procedures. They will also have term limits and can only be dismissed if it is determined that they are no longer fulfilling their legal duties. The rules around non-dismissal are commonly found to ensure institutional independence in regulators but are here extended to the media (though the Commission has noted that concerns remain regarding the independence of some regulators - Rule of Law Report (3.3) despite the provisions introduced by the 2018 amendments to the AVMSD). 

 

The specific obligations in Article 4(2) follow the lines set doewn in standard freedom of expression case law concerning journalists – notably the protection of journalists sources, and the importance of journalists’ communications remaining confidential, as noted in Recital 16. In this, the prohibition of spyware in Article 4(2)(c) seems to be a specific response to recent scandals showing the use of these technologies.

 

Transparency

 

The lack of transparency in media ownership has been seen as an issue specifically in relation to assessing plurality of the media as well as for users to make assessments as to likely bias in the information and opinions published by a media outlet, a point recognised in Recital 19. This was an issue on which there was little action in the individual Member States. The Commission’s Rule of Law report also noted “The transparency of media ownership continues to present on average a medium risk across Member States, due to a lack of effectiveness of legal provisions and to the fact that information is provided only to public bodies, but not to the public” (3.3). Against this background, the requirements to give information to the public is a step forward; it might be questioned how effective it will be, however, in the case of highly complex corporate structures. Moreover, the transparency obligations are limited in to those providing news and current affairs content.  This term, however, is not defined in the proposal – nor is it defined in the AVMSD.  There is a question as to whether the rules apply only to those whose purpose is to provide news and current affairs, or whether it includes providers whose offering includes news and current affairs. If so, how big a proportion of the offering should news and current affairs constitute to trigger the obligation? This of course assumes we know what news and current affairs comprises; but does this term encompass, for example, celebrity gossip? Broader aspects are contained in the recommendation and are therefore not binding.

 

Rules on VLOPs

 

It is unclear what the obligations on VLOPs add to the the obligations in the Platform to Business Regulation (“P2B Regulation”) – which could apply to VLOPs anyway – indeed, may apply much more broadly than to VLOPs or how the relationship between the two measures might be managed. 

 

VLOPs are likely to satisfy the definition of “online intermediation service providers” within the meaning of the P2B Regulation and therefore owe certain obligations to “business users”. It seems also likely that media service providers using VLOPs (or other platforms) to reach their audiences would constitute such “business users”, though perhaps some citizen journalists might fall outside this definition.  Having said that, would “citizen journalists” fall within the definition of media service for the purpose of the Proposal; ‘services’ within the TFEU are limited to economic activity – as Recital 7 to the Proposal recognises. It specifically notes that

 

[t]his definition should exclude user-generated content uploaded to an online platform unless it constitutes a professional activity normally provided for consideration (be it of financial or of other nature).

 

This might adversely affect charitable foundations and the like by contrast with influencers. Note, however, that the recital specifically excludes ‘[c]orporate communication and distribution of informational or promotional materials for public or private entities”.

 

Article 17(3) deals with complaints lodged by media organisations “with priority” and “without undue delay”, yet Article 11 of P2B requires online intermediation service providers to handle complaints “swiftly and effectively”. It is hard to see what added benefit is from the requirement in Article 17 regarding “undue delay” adds – indeed, it might be seen to be a lower standard than “swiftly”. The obligation to give media entities priority does seem to suggest that their complaints be dealt with in some sort of differentiated way.  This could be justified by the public interest in news and its perishable nature; however, it seems less good if such claims – no matter their merit - are automatically dealt with over other serious claims. While there might be specified time limits for dealing with certain sorts of content (notably terrorism), prioritising journalism leaves the victim of revenge porn, for example, relatively unprotected. This may of course be the nature of a legislative measure dealing with one type of content; specifying time scales that are not comparative in nature (implicitly ‘with priority’ is whereas ‘swiftly’, for example, is not) could avoid that problem.  Insofar as the Proposal envisages a separate mechanism for media entities, there is a risk of confusion as to which mechanisms for dispute resolution – whether those in the DSA or those envisaged here – should be used.

 

There is also a concern about the definition of media services which receive the benefit of this special treatment as it covers what have been termed ‘self-declared media’. This recalls the debates in the DSA’s legislative process to create a media exemption, but which was ultimately rejected.  The concern is that a wide range of actors could self declare as media entities for the purpose of this clause – perhaps benefitting those who spread disinformation. 

 

VLOPs are also required to allow their users to customise the audiovisual media offer (subject to Art 7a AVMSD) (Article 19). It is not clear the extent to which this overlaps with Article 27 DSA, which provides for recommender system transparency, and Article 38 to allow recommender systems not based on profiling.

 

Media Concentration

 

In the Commission’s Rule of Law Report, it notes that the media market is at risk from high levels of concentration. This seems to be a consequence of the dominance of online platforms in digital advertising and the adverse impact that has had on the financial stability of many media entities, a situation worsened during COVID. Against this background some controls on media concentration are required – though that then leaves the question of how the media entities are expected to survive in an environment dominated by clickbait content especially when the market dominance of the platforms and similar services are taken into account. This Proposal does not include those services into account. While the DMA provides some controls, it is not clear how the two sets of provisions will work together and whether there would be gaps (think for example of a cross media merger involving a platform and a content provider).  Finally, these questions seem to be dealt with at national level; rules may differ between Member States. The EBMS and the Commission are envisaged as having advisory roles. While this may respect divisions of competence, there are question about equality of enforcement – it remains to be seen (in the light of the experience of the GDPR) how well the co-operation provisions (Article 13, Article 14) work.

 

Resources

 

The final section relates to the measuring of audiences (indirectly affecting resources) and the allocation of State advertising – which is an important source of revenue in many places. Recital 29 notes that state advertising can be used as a form of covert public subsidy. Article 2(15) defines “State advertising” to mean the “placement, publication or dissemination … of a promotional or self-promotional message, normally in return for payment of for any other consideration, for or on behalf or any national or regional public authority” – this includes state-owned enterprises or other state-controlled entities.  This is a broad definition although there are limits on those subject to the obligation. For example, there is a de minimis threshold of local authorities with less than 1 million inhabitants. Recital 10 excludes “emergency messages by public authorities which are necessary, for example, in cases of natural or sanitary disasters, accidents or other sudden incidents that can cause harm to individuals”.  Although the Proposal envisages that the reporting on advertising spend should be monitored, it does not specify by which body.

 

Enforcement

 

One final point to note is that the Proposal does not include a specific mechanism for enforcement; the presumption seems to be that national mechanisms should be relied on (see eg Article 4(3)) (and the Q&A doc notes that any claimed breaches can be brought before national courts since the proposal – as a regulation – is directly applicable). This may, for example, give a route to relief for those subject to spyware – though the route to CJEU itself through the national courts – especially when those courts form part of the regime deploying the spyware and therefore may be unlikely to provide adequate relief themselves - may be long. It is also unclear what the precise role of the EBMS is in ensuring the consistent application of the Proposal.

 

Conclusion

 

In conclusion, the Proposal marks a significant shift in the current status quo and attempts the important job of safeguarding media independence – independence which has come under increasing threat in recent years. In so doing, however, pushes at the edges of EU competence. Moreover, some of the measures proposed may prove controversial as they seek to support the media against authoritarian regimes seeking to control them, not least with some Member States. The passage of this proposal is unlikely therefore to be smooth or easy; whether it achieves its stated aims is yet another question.