Cyberlaw Reading Group Session 29 of the Renmin Law and Technology Institute was held in Room 725, Mingfa Building, Renmin University of China on September 24, 2019. At this reading group, faculty members and students delivered thematic presentations and held discussions centering on two papers: Reforming Intermediary Liability in the Platform Economy: A European Digital Single Market Strategy and From Horizontal to Vertical: An Intermediary Liability Earthquake in Europe.

Presenter: Yang Xi, Master Student of Jurisprudence, Class of 2019, Renmin University of China

Free Discussion:

Liu Xiaochun, Executive Director, Center for Internet Law Studies, University of Chinese Academy of Social Sciences:

      Overall, the scope of platforms’ copyright-related liability in China is not necessarily weaker than that under EU law. Beyond the so-called safe harbor rules, Chinese law imposes a general duty of care, the concrete content of which varies across different sectors. There is no requirement for platforms to deploy overly sophisticated filtering technologies. Generally speaking, as long as right holders submit comparable sample materials, matching identification shall be conducted within the limits of technically feasible and reasonable solutions at present. Platforms cannot be expected to identify and filter every snippet of background music embedded in live streaming content. The mere adoption of filtering mechanisms does not automatically raise platforms’ duty of care or constitute full compliance. In China, if a platform implements predictable filtering measures that meet industry standards or ordinary industry practice, its duty of care may in fact be reduced in certain fields. Once the platform fulfills such filtering obligations, it is relieved from additional case-specific duties of care.

Zhang Jiyu, Associate Professor, Renmin University of China Law School:

      Copyright law represents a classic area regarding platforms’ joint tort liability. In another review paper, the author of this article collated a wealth of judicial cases across the globe and found that courts worldwide are trending toward raising platforms’ duty of care. Many copyright cases in China demonstrate that platforms cannot avoid tort liability simply by deleting content after receiving infringement notices, as exemplified by the case of Han Han v. Baidu.

      In practice, after years of implementation of the notice-and-takedown rule, well-resourced copyright owners widely adopt automated tools to detect infringements and send out massive numbers of takedown notices. Platforms are thus compelled to deploy algorithms to process such notices. Both platforms and copyright holders have poured substantial resources into this area. Professor Cui Guobin once argued that imposing a statutory automatic filtering obligation on platforms represents a socially more cost-effective model for the deployment of automated algorithms. On another front, the revenue generated by popular works follows a clear time-based pattern. For instance, newly released blockbuster films earn their maximum profits in the initial release window, after which revenues decline to sporadic earnings. If the only available remedy at this early stage is the passive notice-and-takedown mechanism, the economic returns of such hit movies will suffer a sharp drop. Meanwhile, ordinary individual users who upload infringing content generally lack the financial capacity to pay full compensation for damages.As online platforms and intelligent automated algorithms gain wider adoption in copyright governance, the traditional notice-and-takedown framework is facing mounting challenges. It suffers from two prominent flaws: limited regulatory effectiveness and rising overall operational costs.

Shen Weiwei, Director, Center for Big Data and AI Law, Law School, China University of Political Science and Law:

      The first reading group session of the new semester picks up seamlessly where the final two sessions of last semester left off. Last semester we read works on platform liability by American scholars, while today we examine a European scholar’s perspective. Rather than dwelling on obscure, granular regulatory design details, the paper delivers broad, comparative-law-oriented discussions that offer abundant inspiration for Chinese legal academics. I will skip the compliments and briefly address the potential shortcomings of the two articles.

      First, the author displays strong subjective bias: they take an explicitly critical stance against the current European regulatory regime. This stance is so pronounced that certain arguments come across as overly assertive and inadequately justified. For instance, I struggle to grasp the concept of “added value” emphasized in the author’s conclusion. The author regards the value gap as counterintuitive, yet the notion of added value they put forward strikes me as far more counterintuitive. The enactment of the U.S. DMCA was essentially a battle over benefit distribution between two sides: the content industry and the internet industry. The two camps clashed for a long time over an unsatisfactory split of market gains. The DMCA was adopted in 1998, and in 2000, American scholar Jessica Litman retraced this protracted conflict through an institutional historical lens in her book Digital Copyright. The debates unfolding in Europe bear striking similarities to those in the United States, featuring persistent friction between traditional industries and internet platforms. If the sufficient added value the author describes truly existed, traditional sectors—especially the content industry—would have readily embraced online content dissemination. On the contrary, it is precisely the lack of sufficient added value, and the resulting value gap, that has triggered industry conflicts mirroring those seen in the U.S., and ultimately led to the introduction of new regulatory legislation.

      Second, the articles scarcely discuss freedom of speech, a topic that does not feature prominently in European legal discourse, since the First Amendment is a uniquely American legal institution. Many free-speech arguments that hold water in the U.S. are untenable under European law, with the Yahoo case serving as a prime illustration. Yahoo was sued for allowing Nazi memorabilia to be sold on its French marketplace. Its reliance on freedom of speech as a defense was entirely rejected by European courts. Merchandising Nazi paraphernalia constitutes hate speech inciting racial discrimination, which is stringently prohibited across Europe. In contrast, such content qualifies as political speech in the United States and receives robust constitutional safeguards, rendering free-speech defenses viable there. This marks a fundamental divergence between the two jurisdictions. That said, the sophisticated doctrinal frameworks developed in American scholarly debates greatly aid our assessment of platform liability regimes. Such nuanced analytical reasoning, however, is largely missing from the two articles under review.

Xiong Bingwan, Research Fellow, Renmin Law and Technology Institute, Renmin University of China:

      My first thought was that the concept of value-added tax levied by states is closely linked to the term "added value", and VAT-related issues lie at the core of this debate. The VAT collected by the EU amounts to the total tax revenue of a small sovereign nation. Under the current framework, all profits generated from value appreciation accrue solely to platforms, a result the EU regards as inequitable. The parallel reasoning works as follows: governments impose VAT at every stage of commodity circulation, yet they cannot simply collect tax revenue without providing corresponding public services. Tax proceeds fund police forces, a full set of security guarantee mechanisms and law enforcement systems. I wonder why the author fails to draw a clear distinction between value judgments and factual descriptions in the paper, as this bears on highly practical issues. A critical factual question remains unresolved: are platforms’ earnings a short-term gain or a sustainable long-term return? Are such revenues measured against individual users or entire user groups? Conclusions can diverge drastically depending on the analytical perspective adopted. For instance, governments collect massive tax revenues each year on a per capita basis, yet they shoulder enormous public expenditures of all kinds. When it comes to platforms, take a giant platform like WeChat with an enormous user base operating under a one-to-many model. If we frame its revenue not as a form of tax but simply service fees, such online platforms resolve inherent bottlenecks that limited the scope of traditional markets. They expand market boundaries to an unprecedented scale, which explains why platforms naturally generate profits. Their financial performance, however, cannot be assessed through simplistic economic calculations. A platform may reap substantial profits today yet roll out heavy user subsidies tomorrow; alternatively, its current earnings may merely offset massive subsidies poured out in earlier stages. Profit volumes vary drastically across different time periods. In this context, “value gap” may sound like a fancy word. Nevertheless, the essential nature of the profits implied by this so-called value gap is a question that merits in-depth discussion.

      Second, the article discusses whether platforms ought to be burdened with extensive legal liabilities. Another relevant parallel can be drawn from transportation service platforms. Platforms currently harbor a concern: the more proactive measures they take, the heavier their corresponding legal responsibilities may become.

Ding Xiaodong, Associate Professor, Renmin University of China Law School:

      The author of these two papers is a European scholar who earned LLM degrees from the University of Milan in Italy and the University of Glasgow in Scotland, followed by an LLM and a JSD from Duke University. As such, the papers are authored by a researcher with integrated European and American academic training and research experience, making his perspective on platform liability particularly insightful.

      Regarding the papers themselves, my core comment is that any analysis of European platform liability ought to be contextualized within the EU’s Digital Single Market Strategy. The EU has explicitly defined this strategy as a policy initiative to grow its digital economy. In this regard, it constitutes an openly declared strategic agenda. To deliver on this objective, the EU intends to build an alternative digital marketplace by rolling out standards divergent from those of the United States covering platform liability, data privacy, wealth distribution, hate speech and other related fields. These unified standards serve two major functions. On the one hand, they help dismantle internal barriers within the EU, enable efficient cross-border allocation of production factors, human resources and other resources across the bloc, and allow network effects to take root and expand throughout the European Union. On the other hand, the implementation of this strategy serves as a check on the United States’ dominance in drafting digital economic rules. By building a “civilized” regulatory ecosystem for its digital single market, the EU seeks to establish itself as a global leader in both the formulation of digital governance rules and the construction of relevant normative discourse.

      The paper fails to analyze the latter dimension, namely the international political and economic backdrop behind platform liability, while it expresses skepticism toward the former objective. To begin with, the ideal of uniform laws and standards (analogous to the ancient Chinese policy of unifying writing systems and carriage track widths) is unlikely to be fully realized so long as sovereign nation-states remain in existence. Furthermore, given the vastly divergent domestic conditions across member states, forced legal harmonization may well result in ill-fitting, unreasonable regulatory provisions. In this sense, the EU’s rulemaking on platform liability and the digital economy confronts the classic dilemma of central-subnational relations. In addition, the author points out that arbitrarily tightening platforms’ legal liabilities will harm free expression. The inevitable consequence will be a sharp rise in private online self-censorship, which is chiefly undertaken by Silicon Valley corporations. From this perspective, the EU’s rules on platform liability and other digital governance norms bear characteristics of domestic internal law, yet they also largely function as extraterritorial regulations targeting foreign companies. This point must be kept firmly in mind when studying the digital laws of Europe and the United States and drawing on the EU’s regulatory experience.

Editor:Xu Liuya

Reviewer: Zhu Peiwen