European Court of Justice (ECJ) issued a verdict on Tuesday that will surely reverberate across the boards of the largest tech corporations.
Ruling that set a precedent for Big Tech?
Company Meta Platforms lost the battle against the Italian telecommunications regulator AGCOM.
The dispute concerned the fundamental question of whether social media platforms can profit from displaying snippets of articles without paying fair compensation to their creators.
The judges in Luxembourg were very clear and ruled that the publishers’ right to fair remuneration is fully aligned with EU legislation.
There is one condition – remuneration must constitute a real mutual benefit for agreeing to use the publication online.
For Meta, this is a clear signal that the era of arbitrary rate setting by “digital overseers” is slowly coming to an end.
Italian oversight gained a powerful tool to discipline the giant, which will surely be noticed by regulators in other EU member states.
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Meta vs AGCOM – the genesis of the conflict
The case went to the EU forum after Meta challenged AGCOM’s authority to independently set compensation amounts.
Corporate lawyers argued with typical confidence that national regulations in Italy are incompatible with EU copyright law. Moreover, they tried to convince the court that EU legal frameworks already sufficiently protect publishers, and additional interference from local authorities is mere overzealousness limiting economic freedom.
The Italian court, unwilling to take on the burden of final interpretation, sought guidance from the ECJ. The response from Luxembourg proved a cold shower for Meta’s lawyers and Mark Zuckerberg himself.
The Court held that member states have the right to intervene when negotiations between Big Tech and smaller entities are extremely asymmetric.
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The shadow of artificial intelligence over the ECJ ruling
Although the case directly concerns news on Facebook or Instagram, its context is much broader and touches the hottest current topic: artificial intelligence.
The biggest startups in this sector are now facing a wave of lawsuits for copyright infringement in training LLMs. Meta, OpenAI or Anthropic are accused of having their algorithms consume millions of pages of journalistic text and books without paying a cent to authors.
The ECJ ruling clearly lays the groundwork for future decisions on artificial intelligence. If publishers have the right to be compensated for short excerpts on social media, they should even be rewarded for using their entire body of work to build commercial AI systems.
This approach poses a fundamental threat to business models based on “free” data scraping from the web. Stock market investors, who have been going wild over tech companies in recent months, must start factoring in rising licensing costs that could drastically reduce the giants’ margins.
News from Italy and Luxembourg struck not only Zuckerberg’s conscience but also Meta’s stock price, which fell by 1.77% to 598.86 USD.
Chart. Meta Platforms stock price
Source: TradingView.
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Source: Reuters.
