Brazil’s “Remuneration Right” Strengthens Big Tech and Big Media, At the Cost of Free Expression and a Free Press

Brazil’s “Fake News Bill” (PL 2630/2020) is the latest salvo in the global battle between Big Tech companies and the media industry—which is itself highly concentrated, controlled by a handful of dominant firms. The remuneration rule in the “Fake News Bill” is a made-in-Brazil installment that is poised to become law, despite the complaints of civil society and independent media associations.

EFF has been analyzing and reporting on the bill since its earliest stages in the Brazilian Congress. The latest text, which has been approved by a working group in the Chamber of Deputies, still contains dangerous language for free expression and digital rights. The Brazilian digital rights groups coalition Coalizão Direitos na Rede has published a relevant analysis  of improvements in the latest draft. It also identifies the serious challenges that remain, including the expansion of data retention obligations. Beyond what’s in the text of the current bill, there is also persistent political pressure to revive the unsettling traceability mandate for private messages.

Just as dangerous, however, is the “remuneration obligation” for publishers, an unrelated legislative initiative that has been shoehorned into one article of this bill without the thoughtfulness, consultation, or nuance that such a proposal warrants. We fear that, for the big media companies who have advocated for this measure, that lack of consideration and nuance is a feature, and not a bug.

In a nutshell, this  provision compels platforms to compensate media companies for use of “journalistic content.” While it exempts from its scope some of the exceptions and limitations established in Brazil’s copyright law, it’s not clear whether that exemption would extend to user links on social media that automatically import just a few sentences from the beginning of an article as a preview. Would courts consider such a link a non-infringing quotation? Although Brazilian case law has settled that Brazilian copyright law’s exceptions and limitations should be broadly interpreted, this is still an open question.

The proposed rule does allow “the simple sharing of the IP address of the original content.” This is confusing and technically inaccurate, as IP addresses generally don’t refer to specific articles, and often many websites will share a single IP address. Moreover, social media users do not typically share IP addresses of journalistic organizations. It’s possible that the drafters used “IP address” as a synonym for “URL;” if that is the case, proponents should amend the provision accordingly.

As is, the provision, if enacted, will change the way core digital human rights values like free expression and access to knowledge are interpreted by businesses, courts and regulators. Quotation and linking is a key mode of online expression and journalism; if it comes at a financial price, few will engage in it.

In theory, the remuneration obligation proposal could address some of these concerns by articulating narrow, well-crafted definitions of “journalistic content” and “use;”  as well as clear rules on how the system will be designed and overseen. Proponents should also explain whether any of the money paid by platforms will be earmarked for journalists. Instead, proponents of the obligation have left the provision alarmingly vague: compensation arrangements will be left to further regulation to be approved by the executive branch. In other words, the President has the final call, and can use that power to favor the most influential players.

The obligation would apply to commercial search engines, social media networks, and instant messaging applications with over 10 million users registered in Brazil. While the proposal would hit only major commercial internet platforms, its scope still raises serious concerns. For instant messaging applications, compliance implies mass surveillance of private communications and a major and dangerous blow at end-to-end encryption. The pernicious impacts of the remuneration rule will not spare small and medium-sized players, be they media companies or tech companies, as we saw in France after the passage of the EU Copyright Directive (see below for more).

It is unlikely to benefit the publishers who are most in need of financial support. Attempts to create similar obligations in France and Australia demonstrated that when big media companies negotiate with big tech companies, smaller and independent publishers get left behind. The French implementation of publishers’ neighboring rights approved in the EU Copyright Directive has led to grievances from media outlets frozen out of the bounty. This, in turn, has triggered a battle between Google and the French competition authority, that is still in progress.

In Australia, the News Media and Digital Platforms Bargaining Code – which aimed to create  balanced agreements between publishers and internet platforms – ultimately became a bargaining tool for major media outlets who opted for private deals with tech platforms, sidelining other smaller publishers. The Australian Treasurer must designate the digital platforms that fall within the scope of the Code, and that are subject to its rules. Even though the law was enacted in early 2021, the government hasn’t yet ordered any platform to pay. In the meantime, a range of commercial content agreements between Facebook and Google and news businesses have been concluded outside of the legislation. Those, too, have been unequal: For example, Rupert Murdoch’s News Corp. secured its deal with Facebook just a few weeks after the new Australian Code passed. But other, less connected publishers had their negotiations requests shot down without justification.

Brazil is likely to see the same. There’s the risk that the country’s media giant Globo and other big media outlets will capture the regulators who design and enforce the payment system. Even if the obligation to pay is never enforced, the looming threat of its enforcement could be used by big media companies to secure paydays from big tech companies, leaving small media companies behind. As with the Australian case, the Brazilian proposal is primarily being pushed by big media companies with political power and few competitors. That’s why associations of independent publishers released, last year and once again last week, public statements urging Congress to drop this vague rule from the Fake News Bill. 

On the platforms’ side, Google’s deals in France offer a lesson in how this provision can impose indirect adverse effects to non-dominant platforms and start-ups. Google’s strategy for complying with the remuneration rule was to tie publishers’ compensation to their use of  Google’s news aggregator product News Showcase. For example, Google and the French press association Alliance de la presse d’information generale (APIG) worked out a deal for Google to pay French news outlets. APIG represents most major French publishers. For news outlets to participate in the deal, they had to join Google’s New Showcase product. This requirement was one of the reasons the French competition watchdog fined Google for failing to negotiate neighboring rights in good faith. With this move, Google leveraged its obligation to come to a remuneration agreement to give a marketplace advantage to its own news aggregator product. That, in turn, serves to entrench the company’s central role as the intermediary people go through in order to reach news sites.

Calls for media remuneration by tech companies are grounded in the premise that tech giants are misappropriating journalistic organizations’ content. This represents a dangerous understanding of copyright, because it assumes that copyright holders are empowered to license (and thus control and block) quotation and discussion of the news of the day. That would undermine both the free discussion of important reporting and reporting itself. The press, after all, is a prolific user of quotations from rival media outlets. This reporting is key to understanding the role of the media in shaping public opinion – including its role in magnifying or debunking so-called “fake news.” Brazil’s 1998 copyright law is explicit that there is no copyright violation when the press reproduces news articles, provided they mention the source of the content, specifically so the wider public can access, discuss  and criticize journalistic reporting.

Link taxes are a bad idea – but that doesn’t mean Congress and regulators shouldn’t do anything to help publishers, especially small ones. A better approach starts with recognizing that Big Tech primarily harms publishers by misappropriating their money (not exactly their copyrights).

Online advertising is dominated by a duopoly – Meta (née Facebook) and Google – who have been repeatedly accused of defrauding publishers. These frauds include allegedly undercounting viewers and, more disturbingly, allegations of direct collusion by senior executives at both companies to rig the entire ad market to both maximize the share of revenue raked off by the ad-tech duopoly (including through blatant fraud), and to exclude other ad-tech companies who might have paid publishers more. Google allegedly charges higher fees than rival ad exchanges and, according to regulators, cheats when it collects those fees.

Even worse: the remuneration provision in the bill may actually entrench the dominance of the ad-tech duopoly by enshrining them as permanent structural elements of the media industry, such that efforts to reduce their dominance would undermine media outlets that depend on them.

Regulating quotation isn’t the way to give all the nation’s publishers a fair deal. Cleaning up the ad-tech market is a far better approach. For example, regulators could consider the following:

• Restrict firms from offering both “demand-side” and “supply-side” ad services. Today, the ad-tech giants routinely represent both sellers of advertising space (publishers) and buyers (advertisers) in the same transaction, creating many opportunities for cheating in ways that benefit the platforms at the expense of publishers. The law should require companies to represent either the buyers of ads or the sellers, but not both;
• Require ad-tech platforms to disclose the underlying criteria (including figures) used to calculate ad revenues and viewership, backstopped by independent auditors;
• Find ways  to allow smaller players to participate in real-time bidding for ad space; and
• Build on Brazil’s data protection law to make surveillance advertising less attractive and encourage non-invasive, content-based advertising that uses the text of articles, not the behavior of readers, to target ads. This would erode the data advantage enjoyed by companies that have practiced decades of nonconsensual mass surveillance.

These measures may take longer and might require more administration than a “remuneration obligation,” but they have one signal advantage: they will work. A hastily constructed, underspecified remuneration obligation is the epitome of the Silicon Valley ethic of “move fast and break things” – it’s the kind of thinking that created this mess in the first place. By contrast, restructuring the ad market to make it fair to publishers, to eliminate mass surveillance, and to purge it of widespread fraud is a project that involves “moving slowly and fixing things.” It is the antidote to Silicon Valley’s toxicity.  

When we allow debates about compensation for publishers and the sustainability of journalism  to be posed as a battle between Big Tech and Big Media, we miss the real stakes: fostering freedom of expression, and access to information and knowledge. Good digital policy should strive for an online environment with a rich plurality of voices and a diverse range of solid news sources. These priorities will not emerge from private deals cut between media and tech giants in back rooms, and giving either side more power and less competition from upstarts will only make things worse.

Brazilian civil society has rejected the proposition that we must choose one or the other. They are demanding more diversity and fairness, not entrenchment for dominant and highly concentrated players. Brazilian legislators should listen and drop the flawed remuneration obligation from the Fake News bill.