Netflix, Amazon face ‘30% made in Europe’ directive


The Netflix logo is seen on a DVD envelope, 28 October 2010. Photo credit: Mark Bonica (CC BY 2.0) 

Netflix, Amazon and other online streaming services will have to dedicate 30% of their output to TV shows and films made in Europe, which they must subsidise, under the terms of a new EU law agreed in Brussels on Thursday.

As well as the “Netflix quota” the streaming services will have to fund European TV series and films, either by directly commissioning the content or contributing to national film funds, under the terms of an outline deal on EU broadcasting rules reached by legislators.

MEPs and the Council of Ministers, who are responsible for agreeing the law, struck a deal on a final version of the EU’s audio-visual services directive – a breakthrough in the legislative process.

The law falls into a longstanding tradition of EU lawmakers protecting European film and drama against the encroachments of Hollywood and American TV and web shows.

Industry groups have criticised cultural quotas as “outdated” and “counterproductive” but lost the argument to European politicians who see them as vital to protect local languages and culture.

The European commission’s original proposal was for a 20% “Netflix quota” but MEPs said that was not enough.

The European parliament says the law means companies such as such as Netflix will face the same rules as traditional TV channels, not only on European content but also limits to advertising and product placement.

Video-sharing websites, such as Google and Facebook, will also have to intensify work to clamp down on content “inciting violence, hatred and terrorism”. Under the law, platforms need to create a “transparent, easy-to-use and effective mechanism” to allow users to report hateful content.

The EU is also banning product placement from children’s programmes, although member states can decide whether they want to outlaw corporate sponsorship of under-18’s TV shows.

“We have now made European media regulation fit for the digital era by applying similar rules to similar services, whether online or offline,” Sabine Verheyen, a German centre-right MEP, who was one of the parliament’s lead negotiator, said.

In a statement, she said the new rules on product placement and sponsorship for video-sharing platforms were “a great achievement for the protection of consumers, especially children and minors”.

As part of the parliament’s bid to clamp down on “excessive advertising”, advertisers will only be allowed 20% of screen time during the prime-time hours of 6pm to midnight.

The changes were made in an update to the EU’s audio-visual services directive to reflect the rapid changes to the industry, since the 2013 version. The law has to jump over a number of procedural hurdles before it goes into the EU rule book, including approval by the European parliament, a process that is not expected to be complete until September.

In another legislative development on Thursday a draft EU regulation was published that would force Amazon, Google and other tech firms to be more transparent in their dealings with third-party businesses who sell goods on their sites.

Thousands of companies use platforms such as Amazon and eBay to sell goods online, allowing a sole trader working from a garage or kitchen table to reach millions of potential customers.

But many complain that the big firms are opaque about their rankings, why some get top billing, while others struggle to be seen by internet browsers. App designers, selling through Google’s Play Store or Apple’s App Store, report similar problems.

Under the draft regulation, large tech platforms would be obliged to rewrite their terms and conditions, to ensure third-party sellers know how they can influence their online ranking, for instance whether payment is required for a top spot.

Online platforms would also have to give an explanation for a decision to suspend any third-party business from their site and set up a system to handle complaints.

EU legislators want to fast-track the law and hope for agreement between European ministers and MEPs in early 2019. Under this timetable, the law would start to affect firms from autumn 2019.

The draft regulation follows a pan-European survey by the commission, which found that 46% of businesses using online platforms encounter problems, rising to 75% for those that generated more than half of their turnover via the platform. One-third of heavy users complained about lack of transparency, while 22% thought terms and conditions were unfair. The most frequently cited problems were technical ones and lack of support from the platform.

“You see things like user conditions being changed from day to day,” said Mariya Gabriel, the European commissioner for digital economy and society. “We are saying to the platforms you need to have transparency with regard to your conditions for use, data access and so on, to provide businesses with the opportunity to know what their criteria are and to create an environment based on rules that everyone is familiar with.”

Jennifer Rankin in Brussels