On April 25, the EU’s Internal Market Committee voted to ban a practice called geoblocking, which sees online retailers offer different services to people in different regions. In a departure from prior proposals, the new ban extends to copyright-protected services, including music streaming and e-book sites such as Spotify and iTunes. The Committee’s vote allows the European Parliament to commence final negotiations with member states before the practice can be outlawed.
Geoblocking currently sees many online companies either charge customers different prices depending on where they live, or block services to customers who live in certain geographical areas. It tends to be undertaken by providers of copyright-protected content such as music, software, games and e-books. This is because different countries’ copyright laws cause the business costs of providing such services to vary geographically.
“What we want is simple: to end discrimination in the single market based on people’s nationality, residence or temporary location”, said Roza Thun, the MEP leading the charge on the new legislation. Thun subsequently described the Committee’s vote as “a small step forward but a step in the right direction”.
Firms with worries about profitability were opposed to the vote because it makes it easier for customers to get around the present pricing system
The new measures have caused controversy, partly because they overturn prior EU proposals on geoblocking. In May 2016, the European Commission blocked a proposal by Andrus Ansip, Vice-President of EU Digital Policy, who wanted to extend geoblocking bans to music services. The new vote seems like a U-turn in this regard, and makes the old ruling seem like a false promise.
Firms with worries about profitability were also opposed to the vote because it makes it easier for customers to get around the present pricing system. For example, under the new law, an iTunes customer living in a country with higher subscription fees would be allowed to buy a cheap subscription from another country with lower subscription fees. Last year’s decision to overrule Ansip was taken largely because industry lobbyists managed to persuade EU lawmakers that geoblocking is necessary to keep digital music providers profitable.
“To make it compulsory for all booksellers to sell e-books cross-border is a complete disaster”, said Fran Dubruille, Director of the European and International Booksellers Federation. “They will just withdraw from the market because they don’t want to go bankrupt.”
For such retailers, one alternative to withdrawing from the EU marketplace is the introduction of sprawling price hikes in countries where services are currently cheap. Although this would prevent customers in countries with higher prices from buying subscriptions in cheaper member states, it would also cause firms to lose customers in the cheaper countries.
The proposed law might still falter in negotiations between the EU Parliament and member states. Generally, member states are opposed to banning geoblocking among providers of copyright-protected services. Moreover, industry lobbyists are likely to increase their pressure on EU Parliament members and member states alike, in the hope of repeating last year’s turnaround.
That said, there also remains strong resistance in Brussels to the idea of a staggered, multi-tiered EU that would see different rules for different countries. The latest vote is a step away from this and towards a single online marketplace. In the present context, many EU legislators may be unwilling to give this up easily.