Netflix, Amazon and other online streaming services will have to dedicate 30% of their output to TV shows and films made in Europe, which they must subsidise, under the terms of a new EU law agreed in Brussels on Thursday.
As well as the “Netflix quota”, the streaming services will have to fund European TV series and films, either by directly commissioning the content or contributing to national film funds, under the terms of an outline deal on EU broadcasting rules reached by legislators.
MEPs and the council of ministers, who are responsible for agreeing the law, struck a deal on a final version of the EU’s audio-visual services directive – a breakthrough in the legislative process.
The law falls into a longstanding tradition of EU lawmakers protecting European film and drama against the encroachments of Hollywood and US TV and online shows.
Industry groups have criticised cultural quotas as “outdated” and “counterproductive”, but lost the argument to European politicians who see them as vital to protect local languages and culture.
The European commission’s original proposal was for a 20% “Netflix quota” but MEPs said that was not enough.
The European parliament says the law means companies such as Netflix will face the same rules as traditional TV channels, not only on European content but also limits on advertising and product placement.
Video-sharing websites, such as Google and Facebook, will also have to intensify work to clamp down on content “inciting violence, hatred and terrorism”. Under the law, platforms need to create a “transparent, easy-to-use and effective mechanism” to allow users to report hateful content.
The EU is also banning product placement from children’s programmes, although member states can decide whether they want to outlaw corporate sponsorship of under-18’s TV shows.
Advertisers will only be allowed 20% of screen time during the prime-time hours of 6pm to midnight.
“We have now made European media regulation fit for the digital era by applying similar rules to similar services, whether online or offline,” said Sabine Verheyen, a German centre-right MEP who was one of the parliament’s lead negotiators.
The rules on product placement and sponsorship were “a great achievement for the protection of consumers, especially children and minors”, she added.
The law has to jump over several procedural hurdles before it is passed, a process not expected to be completed until September.
Also on Thursday a draft EU regulation was published that would force Amazon, Google, eBay and other tech firms to be more transparent in their dealings with third-party businesses that sell goods on their sites.
Thousands of companies use the platforms to sell goods online, allowing a sole trader working from home to reach millions of potential customers. But many complain that the big firms are opaque about their rankings, which mean some get top billing, while others struggle to be seen. App designers report similar problems when listing on Google’s and Apple’s stores.
Under the draft regulation, large platforms would have to rewrite their terms and conditions to ensure third-party sellers knew how to influence their online ranking, for example, if payment is required for a top spot.
Platforms would also have to explain any decision to suspend a third-party business from their site, and set up a system to handle complaints.
Legislators hope for agreement between European ministers and MEPs on the law by early next year, which would see the law come into effect from autumn 2019.
The draft regulation follows a pan-European survey by the commission, which found that 46% of businesses using online platforms encounter problems, rising to 75% for those that generated more than half of their turnover via the platform. One-third of heavy users complained about lack of transparency, while 22% thought terms and conditions were unfair. The most frequently cited problems were technical ones and lack of support from the platform.
“You see things like user conditions being changed from day to day,” said Mariya Gabriel, the European commissioner for digital economy and society. “We are saying to the platforms you need to have transparency with regard to your conditions for use, data access and so on, to provide businesses with the opportunity to know what their criteria are and to create an environment based on rules that everyone is familiar with.”