Source: https://blog.lselawreview.com/2020/07/ecjs-judgements-on-gmail-and-skype-out/
Timestamp: 2020-08-06 15:33:28
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The ECJ’s Judgements on ‘Gmail’ and ‘Skype Out’: A Critical Review | LSE Law Review Blog
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The ECJ's Judgements on 'Gmail' and 'Skype Out': A Critical Review
By Andreas Daum Jul 16, 2020
The Over-the-Top (OTT) services have successfully competed with “traditional” telecommunications services and disrupted the market for short messages, phone and video calls. While WhatsApp alone processed an average of over 65 billion messages per day in May 2018, this is true for “only” 22.7 billion messages sent via SMS. The stunning success of OTT services like Gmail, Viber, Skype etc. is also due to the different regulation frameworks that apply to telecommunications services and OTT services. With its judgments on Gmail and Skype Out in June 2019 the ECJ finally clarified the legal situation, subjecting Skype Out under telecommunications law, but not Gmail. This essay shall give a short overview on the key findings of the ECJ’s judgments, critically evaluating the argumentation of the court.
The rise of the Web 2.0, the widespread distribution of smart phones, and the development of new digital platforms have shaken many economic branches and turned a great number of business models upside down. This is especially true for the telecommunication sector where so-called “Over the Top” (OTT) services have successfully competed with “traditional” telecommunications services and disrupted the market for short messages, phone and video calls. 1 The stunning success of OTT-services like Gmail, WhatsApp, Skype etc. is due to many factors. Yet, it cannot be overlooked that the market is no “level playing field”, especially regarding European regulation.
When regulating these services, internet access providers (IAP) are treated differently than internet service providers (ISP). The regulatory framework of the transmission of signals is different to that of the transmission of content. This relates to the distinct roles assumed by ISPs and IAPs in the digital market. The service of an ISP is brought to the user over the open internet. ISPs usually don’t operate their own network infrastructures, but run software and, if necessary, some central servers. They provide almost all imaginable services rendered via the internet and range from chat applications and social networks (WhatsApp, WeChat, Facebook) to streaming services (Netflix, Amazon Prime, YouTube) and e-commerce platforms (ebay, Amazon, alibaba). The service of the IAPs, on the other hand, is limited to connecting the user (and often the ISPs too) to the internet. They only provide internet access and have no influence on the nature or content of the ISPs’ services. However, IAPs are essential for ISPs as their services couldn’t be brought to the users without internet connectivity. An IAP provides individuals access to the internet, employing a range of technologies to connect users via their own network with the open internet. Larger IAP companies in the UK are, for example, Vodafone, British Telecom or Three.
ISPs or “information society services”2 are subject to an array of different European directives depending on the kind of services they are offering, whereas IAPs are mainly regulated by the “Framework Directive for Electronic Communications Networks and Services” (Directive 2002/21/EC) and its related directives. These two frameworks differ significantly in their respective approaches and their levels of regulation. While the telecommunication sector has traditionally been heavily regulated, OTT services are almost not regulated at all.3 It is, therefore, hardly surprising that one of the top priorities of the “Digital Single Markets Strategy” of the European Commission is to create “[…] the right conditions for digital networks and services to flourish”. According to the European Commission, this requires “[…] the right regulatory conditions for innovation, investment, fair competition and a level playing field.”4
In addition, regulatory authorities have repeatedly attempted to subject OTT service providers to the same regulation as “traditional” telecommunications providers by classifying them as providers of “electronic communications services” in the meaning of Art. 2 lit. c Directive 2002/21/EC.5 As this would mean a much stricter regulation on OTT services and a significant increase in power for regulatory authorities, this matter was highly controversial until the ECJ issued two fundamental judgements on the email service Gmail of Google6 and the VoIP service Skype Out of Skype Communications.7 This essay shall give a short overview on the key findings of the ECJ and critically evaluate the argumentation of the court.
II. Essential technical features of “Gmail” and “Skype Out”
In the aforementioned cases, the ECJ adopts a functional-technical interpretation of the law. A technical understanding of the characteristics of the respective OTT service is essential. The BEREC8 describes OTT services as “a content, a service or an application that is provided to the end user over the public internet”.9 However, as this definition refers more to the method of the provision, rather than a particular type of service, it does not yet provide any understanding of the concept. Almost any available service on the internet could then be qualified as an OTT service.10 As this essay focuses on competitive effects of OTT services on the telecommunications industry, only those OTT services which enable individual communication over the internet and offer an alternative to “traditional” telecommunications services shall be deemed to be OTT services.
The services Gmail and Skype Out differ mostly in their technical structure. Gmail provides its users with a service that enables them to send and receive emails and data over the internet. The service is based on a ‘client server architecture’. This means that all relevant user data is processed, stored, and forwarded to other internet users over central servers. It associates the email addresses with the Internet Protocol (IP) addresses of the corresponding terminal device, splits the messages into data packets, and uploads them or receives them from the internet for the purposes of transmitting them to their recipients. The conveyance of signals occurs essentially over the open internet.11 Internet access providers transmit those signals on behalf of the user as a service rendered under a service contract with the user.
Skype Communications offers the Skype Out service as an additional feature of the communication software Skype. This allows users to make calls from a terminal, where the software is installed, to a fixed or mobile telephone line using the Internet Protocol. The signal is first conveyed by an internet access provider, over the open internet, to a gateway where the further transmission is carried out by a telecommunications service provider via the PSTN.12 For this purpose, Skype Communications has concluded an agreement with the telecommunications service provider which is also remunerated for its services.13
III. The legal classification by the ECJ
The key issue in both judgements of the ECJ is whether the service delivered by the OTT service providers “[…] consists wholly or mainly in the conveyance of signals on electronic communications networks”.14
The court begins in the Gmail case by emphasizing the regulatory distinction between the production of content and the transmission of content, since “[…] content and transmission [are] being covered by different measures which pursue their own specific objectives”.15 However, what at first sight seems to be a simple and clear distinction is blurred by the court itself as it admits in the Skype Out and Gmail cases that the OTT services convey signals on electronic communications networks. Therefore, the court goes on, the service must consist wholly or mainly in the conveyance of signals in order to be classified as an electronic communications service and this is only the case with Skype Out. In the case of Gmail, it is mainly the IAPs of the senders and recipients which convey the signals necessary for the functioning of the service. By applying a quantitative criterion in its assessment, the court follows the technology-neutral approach of the Framework Directive.16 Yet, the distinction between the production and the transmission of content is less plausible due to the arbitrary evaluation of open terms (“wholly or mainly”) by the court. In order to substantiate its reasoning with a more objective criterion the court introduces therefore the concept of responsibility. The decisive factor is according to the court whether the provider is ultimately responsible to the user for the proper functioning of the service. The court states in both cases that “[…] all that matters […] is that that the provider is responsible vis-à-vis the end-users for transmission of the signal”.17 Whilst the participation of Gmail in the sending and receiving of messages “[…] does not appear to be sufficient to [regard the service of Gmail] as consisting ‘wholly or mainly in the conveyance of signals’, the court holds that Skype Communications has assumed responsibility vis-à-vis the end-users for the transmission of voice signals on the PSTN18 only by the (contractual) involvement of telecommunications service providers authorised to send and terminate calls to fixed or mobile telephone numbers via the PSTN. As a consequence, the ECJ considers only Skype Out to be an ‘electronic communications service’, while Gmail remains unregulated by the Framework Directive.
IV. Critical evaluation
The findings of the court are noteworthy considering the fact that Google itself owns an internet connected network infrastructure, which is also used for the purposes of the conveyance of signals for Gmail. However, this is “of no relevance to the classification of the nature of the service” for the court.19 Yet, following the logic of the ECJ leads to very strange results. Would the court have ruled differently if Skype Communications had its own PSTN infrastructure? What if Google only rented its infrastructure? The court does not deliver any explanation on why an internet connected network infrastructure and a PSTN should be treated differently in the regulatory classification of OTT services. The strong focus on the technical architecture gives the outcome of the legal assessment a arbitrary appearance. The different classification of the two OTT service providers is even more puzzling when the fact that Skype Communications excluded, in its general terms and conditions, any liability for the transmission of signals to the end-users is taken into account. Viewed from the end-users’ perspective, only the ISP and the telecommunications service provider remain responsible for transmitting the signals.
The further arguments of the court are unconvincing too. The court states, “[t]he fact that Google must be regarded as supplying electronic communications services as the operator of its own electronic communications networks […] does not mean that all the web-based services which it supplies must also be treated as electronic communications services, even though they do not consist wholly or mainly in the conveyance of signals.”20 This argument is void, only reaffirming in numerous words the statement of the court that it does not consider the electronic communications networks of Google in the classification of Gmail. Legal or technical arguments in this regard are nowhere to be found.
Furthermore, the judgements lack a definition to the term of “service” within the meaning of Art. 2 lit. c) Framework Directive. Many services consist of several different sub-services such as Voice over IP, messaging or communication with chatbots. If the key criterion is whether “the service” consists wholly or mainly in the conveyance of signals, a sharp definition of what features amount to a “service” is essential. Nonetheless, the court leaves many questions unanswered in this regard. The court fails to establish clear criteria as to when a particular feature of a provider is to be regarded as a service in the meaning of the Framework Directive. Especially in the case of Skype Out, a clear outline of the term would have been desirable, as the installation of the Skype Out feature on a terminal requires the prior installation of the Skype software, which already offers an array of (sub-)services that cannot be classified as ‘electronic communications services’.21 In the end, the judgement of the ECJ represents a missed opportunity to put things right. A teleological approach, which also takes into account the competitive substitution effect of OTT services, would have been more appropriate. Above all, the different classification is flawed as both services provide their users with classical individual communication tools. Content-related components are fading into the background or do not even exist. Both services should be treated equally.
The Administrative Court of Cologne, in the lower instance, had focused on whether Gmail had “factually adopted” the signal transmission of the IAP and stated that it is the user that “gives the decisive impulse for signal transmission”.22 The court therefore concluded that Gmail makes an essential contribution to the functioning of the telecommunication process and qualifies as an ‘electronic communications service’.23 This approach leaves the technical particularities out of the picture and focuses on the functionalities of the Gmail service. As this legal view would subject both services - Gmail and Skype Out – equally to telecommunications regulation, it is only to be welcomed. However, the application of regulatory means and measures requires the utmost tact and sensitivity in order to maintain the inventive strength of OTT services. The challenge for authorities will be to establish a regulatory balance between data protection, consumer protection and a functioning market without stifling innovation and industry growth.
[1] “Over-the-top phone services. Joyn them or join them. Mobile operators are trying both to repel and to imitate invaders”, The Economist, Aug 11th 2012.
[2] As Art. 2 lit. a Directive 2000/31/EC (E-Commerce Directive) names content services.
[3] Peng, S. (2019). The Rule of Law in Times of Technological Uncertainty: Is International Economic Law Ready For Emerging Supervisory Trends? Journal of International Economic Law, 22(1), p. 6.
4 European Commission, A Digital Single Market Strategy for Europe, COM(2015) 192 final, p. 3-4.
[5] For example: Institut belge des services postaux et des télécommunications, Final Decision on Skype Communications Sàrl for non-compliance with Article 9, §1, of the Act of 13 June 2005, May 30th 2016; Bundesnetzagentur, Decision on Google LLC, July 2nd 2012.
[6] Google LLC v. Bundesrepublik Deutschland [2019] C-193/18 ECLI:EU:C:2019:498 (ECJ).
[7] Skype Communications Sàrl v. Institut belge des services postaux et des télécommunications (IBPT) [2019] C-142/18 ECLI:EU:C:2019:460 (ECJ).
[8] Body of European Regulators for Electronic Communications. The BEREC is a regulatory body of the European Union with the aim „[…] to ensure the consistent implementation of the regulatory framework for electronic communications”, Art. 3 (2) Regulation (EU) 2018/1971.
[9] Report on OTT services, Body of European Regulators for Electronic Communications, Report on OTT services, BoR (16) 35, 2016, p. 14.
[10] A list of further common definitions and examples provides Bilbil, E. (2018). Methodology for the Regulation of Over-the-top (OTT) Services: The Need of A Multi-dimensional Perspective. International Journal of Economics and Financial Issues, 8 (1), p. 102.
[11] Google LLC v. Bundesrepublik Deutschland [2019] C-193/18 ECLI:EU:C:2019:498 (ECJ), paragraph 18.
[12] PSTN stands for “Public Switched Telephone Network” or the traditional circuit-switched telephone network.
[13] Skype Communications Sàrl v. Institut belge des services postaux et des télécommunications (IBPT) [2019] C-142/18 ECLI:EU:C:2019:460 (ECJ), paragraph 8.
[14] Art. 2 lit. c Dir. 2002/21/EC (Framework Directive for Electronic Communications Networks and Services).
[15] Google LLC v. Bundesrepublik Deutschland [2019] C-193/18 ECLI:EU:C:2019:498 (ECJ), paragraph 31.
[16] See also recital 18, Art. 8 (1) Framework Directive.
[17] With reference to UPC DTH Sàrl v. Nemzeti Média- és Hírközlési Hatóság Elnökhelyettese [2014]C-475/12 ECLI:EU:C:2014:285 (ECJ), paragraph 43.
[18] See Fn. 12.
[19] Google LLC v. Bundesrepublik Deutschland [2019] C-193/18 ECLI:EU:C:2019:498 (ECJ), paragraph 32.
[20] Google LLC v. Bundesrepublik Deutschland [2019] C-193/18 ECLI:EU:C:2019:498 (ECJ), paragraph 40.
[21] Skype Communications Sàrl v. Institut belge des services postaux et des télécommunications (IBPT) [2019] C-142/18 ECLI:EU:C:2019:460 (ECJ), paragraph 42.
[22] Google LLC v. Bundesrepublik Deutschland [2015] 21 K 450/15 openJur 2015, 20274 (Administrative Court of Cologne), paragraph 61.
[23] Spies, A. (2019). Gmail ist kein TK-Dienst. Multimedia und Recht, 22 (8), p. 517.
Article by Andreas Daum
LLM (London School of Economics and Political Science) '20
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