Digital platforms and liability: the Court of Justice of the European Union’s decision in the Google/YouTube case

The recent judgment of the Court of Justice of the European Union (“CJEU” or the “Court”) in the Google/YouTube case significantly shifts the focus of the debate on the liability of digital service providers.

The issue concerns whether the operator of a platform may be classified as a “passive” hosting provider, thereby benefiting from the liability exemption set out in Article 14 of Directive 2000/31/EC (the “e-Commerce Directive”), or as an “active” hosting provider, with the consequent loss of such exemption. Traditionally, the Court has classified providers as active or passive by reference to the technology employed by the platform, including indexing, filtering, cataloguing and algorithmic recommendation activities. (For a more detailed analysis of the distinction between these two categories of hosting provider, we refer readers to our previous contribution, available here).

Today, applying those very same principles, the Court clarifies that where a commercial agreement exists between the platform and the content creator, the classification may change. What now appears to be relevant is no longer solely the manner in which the platform processes content, but also the structure of the contractual relationship with the party uploading such content.

The case

The case originated from a measure adopted by the Italian Communications Authority (AGCOM) in July 2022, whereby Google was fined EUR 750,000. AGCOM found that a number of websites offering online gambling services had been promoted through certain YouTube channels, in breach of the advertising ban set out in Article 9 of Decree-Law No. 87/2018 (the so-called Dignity Decree). The sanctioned channels were attributable to a single content creator who had joined the YouTube Partner Program, namely the commercial partnership programme that enables creators to monetise their content through the sharing of advertising revenues.

At first instance, the Regional Administrative Court of Lazio (TAR Lazio) annulled the fine, holding that Google acted merely as a provider of hosting services and was therefore entitled to rely on the liability exemption provided for under the e-Commerce Directive. On appeal, the Council of State stayed the proceedings and referred two questions to the Court of Justice of the European Union for a preliminary ruling. The first concerned the applicability of the e-Commerce Directive to hosting activities relating to gambling advertising. The second concerned whether the liability exemption could be invoked in relation to content disseminated by YouTube channel creators who are bound to Google by a commercial partnership agreement.

The Court’s decision

With respect to the first question, the Court clarified that online hosting activities retain their autonomous nature regardless of the content being disseminated. Under Article 1(5) of the e-Commerce Directive, what falls outside the scope of EU law is online gambling as such (and the related advertising), not the activity of an intermediary that merely stores and makes available content which happens to concern that sector. Indeed, online hosting services are not intrinsically linked to gambling activities. Rather, they constitute, in principle, a neutral activity that bears no direct connection to gambling services and is not intended to promote them. Consequently, the hosting of videos containing gambling advertisements falls fully within the scope of the e-Commerce Directive.

As regards the second question, however, the Court reached the opposite conclusion. In the circumstances of the case, the liability exemption could not be relied upon. The Court placed particular emphasis on the specific features of the relationship between Google and the content creator, and in particular on the activities carried out by Google within the framework of the YouTube Partner Program.

In order to admit a channel to the programme, the platform conducts a prior assessment, which may also include human review, examining the channel’s subject matter, its most viewed videos, metadata and informational sections. Once admitted, the channel generates advertising revenue that Google shares with the creator, and users are allowed to subscribe to paid memberships, the corresponding fees being collected directly by Google.

According to the Court, these activities cannot be regarded as merely technical, automatic and passive interventions. Rather, they demonstrate the platform’s involvement in managing the commercial relationship with the creator and confer upon it a degree of knowledge of and control over the disseminated content that is incompatible with the requirement of neutrality.

Why the contractual relationship matters more than the technology

The most significant implication of the judgment lies in the way the Court applies the traditional “indicia of interference” developed in its case law, such as filtering, indexing, cataloguing and content promotion, to identify an active hosting provider.

In the present case, however, the CJEU does not merely assess the presence or absence of one of these technical elements. Instead, it looks to the contractual relationship. The Court observes that it is the partnership arrangement itself, together with the prior assessment of the channel, the sharing of advertising revenues, and the collection of subscription fees, that transforms the platform into something more than a mere provider of technical infrastructure.

In other words, by reviewing the YouTube channels before admitting them to the programme, Google could not reasonably have been unaware that their primary focus was online gambling and the promotion thereof, in breach of Article 9 of the Dignity Decree. Accordingly, the platform’s role extended beyond that of a neutral intermediary and reflected a degree of involvement in the commercial exploitation of the content that was incompatible with the liability exemption afforded to passive hosting providers.

The Judgment in Light of the DSA

Although the judgment was delivered under the framework of the e-Commerce Directive, its practical significance must be assessed in light of Regulation (EU) 2022/2065 (the Digital Services Act - DSA), which has inherited the Directive’s safe harbour regime.

Article 6 of the DSA substantially reproduces Article 14 of the e-Commerce Directive, while Recital 18 expressly codifies the “active/passive” test applied by the Court in this case. Under that recital, the liability exemption does not apply where the provider, rather than confining itself to the neutral provision of services through the merely technical and automatic processing of information, plays an active role of such a kind as to give it knowledge of, or control over, that information.

Particular attention should also be paid to Article 7 DSA, which codifies the so-called “Good Samaritan” clause. Under this provision, voluntary activities aimed at detecting, identifying and removing illegal content, when carried out in good faith and in a diligent manner, do not deprive a provider of the benefit of the liability exemption.

In the present case, the Court did not base the exclusion of the exemption on the exercise of content moderation activities, which, in themselves, would not be sufficient to produce that effect. Rather, the decisive factor was the contractual relationship between the parties. As a result, the judgment does not create any tension with Article 7 DSA and, indeed, indirectly confirms its rationale: platforms may, and should, invest in content moderation tools without such efforts, in themselves, leading to the loss of the safe harbour protection.

Finally, it should be recalled that Google and YouTube have been designated by the European Commission as Very Large Online Platforms (VLOPs) and are therefore subject to the enhanced obligations under the DSA relating to the management of systemic risks, independent audits and transparency requirements.

Final consideration

At its core, the CJEU’s judgment draws a conceptual distinction whose broader significance should not be overlooked. The loss of the liability exemption does not arise, in and of itself, from the platform’s technological or product-related choices, namely from the fact that it indexes, organises, recommends, filters or moderates the content it hosts. Rather, the exemption may cease to apply where the platform’s economic and contractual choices transform the hosting environment into an infrastructure for a shared business model with the creators of that content.

A creator bound to the platform through a commercial agreement is not merely another user, and a platform that remunerates such a creator is no longer merely another intermediary.

From a practical perspective, the judgment suggests the emergence of two categories of relationships coexisting within the same platform, each potentially subject to different liability regimes. On the one hand, there is the broader group of users who upload content under standard terms of service and without any specific commercial relationship with the platform. On the other hand, there is the smaller, yet economically crucial, group of creators with whom the platform enters into commercial partnership arrangements.

It would, however, be a mistake to read the judgment as a condemnation of revenue-sharing or monetisation models. The Court neither prohibited partnerships between platforms and content creators nor imposed a general monitoring obligation with respect to hosted content, an obligation that Article 8 DSA continues expressly to exclude.

Rather, the Court simply held that where a platform chooses to transform a user into a commercial partner, it may subsequently find it difficult to present itself as a neutral intermediary in relation to the content that forms part of that commercial relationship.