The European Court of Justice has ruled in a case that revolves around a deceptively small question: whether a platform that shares advertising revenue with a creator is still simply a host for what that creator uploads.
The dispute began on July 19, 2022, when AGCOM, Italy’s communications authority, Google Ireland fined 750,000 euros and ordered him to remove YouTube videos promoting online gambling.
The videos violated Italy’s Dignity Decree, the 2018 law that prohibits direct and indirect advertising of games with cash prizes in all media, and which is among the strictest regimes in Europe.
It comes in a bad month for Google in Luxembourg. the same court confirmed its fine of 4.1 billion euros to Android two weeks ago, dismissing the final appeal.
Google challenged the decision before an Italian administrative court, invoking the exemption from liability that EU e-commerce law grants hosting providers for material uploaded by third parties.
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AGCOM’s response was that the exemption does not affect gambling at all, because gambling falls outside the scope of the e-commerce rules.
The Italian Council of State, which heard the appeal, referred the questions for a preliminary ruling to Luxembourg. This is a point worth being precise about, because it is usually reported in a vague way.
The Court of Justice does not review the Italian fine. It answers questions of EU law and the national court then applies those answers to the facts before it.
The two questions are narrow and transcendent. Does the exemption from Article 14 of the E-Commerce Directive apply to online advertising of games and betting for money? And if it does, can Google claim it given the agreement it had with the creator?
That second question is where the case gets interesting and the facts don’t help Google. The videos were uploaded by a content creator linked to Google through a business partnership agreement that shared advertising revenue generated by ads that ran before each video.
The agreement was not blind. Before signing it, Google reviewed the creator’s videos, channel theme, most viewed and most recent uploads, and associated metadata.
A company that inspects a channel, decides it likes what it sees, signs a revenue-sharing agreement, and then sells ads based on the result is doing something akin to hosting less with each additional step.
The distinction on which the case is based, between a passive and an active host, has been in EU law for two decades and has never survived particularly well from contact with the platform economy.
It was written for a world of file storage, not one where the middleman selects, monetizes, and shares the profits.
What is at stake is broader than a fine. If the hosting shield does not extend to a platform in a revenue-sharing relationship with whoever uploads the content, then the exemption is reduced on exactly the content from which the platforms make money.
This would first affect the online gaming industry and immediately afterwards the digital advertising market.
The case attracted a crowd, which usually does the talking. At the hearing, the governments of Italy, Belgium, the Czech Republic and Portugal appeared alongside Google, AGCOM and the European Commission. Four Member States do not appear to discuss 750,000 euros.
Android’s ruling is not the only one. A German court has found Google responsible for your own AI overviewsand it has been offer concessions in news search ranking to avoid a new DMA penalty.
What connects them is a direction of travel rather than a single standard. The question Europe keeps coming back to is whether a company that organizes, categorizes and monetizes other people’s content can continue to describe itself as a neutral conduit for it.
The answers now go back to the Council of State, which decides what they mean for the fine.
