On March 1, 2022, the Administrative Court of Cologne (Verwaltungsgericht Köln, VG Köln) granted interim relief to Facebook/Meta (Docket No. 6 L 1354/21) and Google (Docket No. 6 L 1277/21). In the opinion of the court, the latest amendments to the German Network Enforcement Act (Netzwerkdurchsetzungsgesetz, NetzDG) partially violate European Union (EU) law and, consequently, the parts in violation may not be applied by the national authorities until a final judgment in the main proceedings. As a general principle, national provisions contrary to EU law may not be applied by the member states (effet utile). (Treaty on European Union (TEU) art. 4, para 3.) The goal of the NetzDG is to compel social media platforms to take a more forceful approach to combating hate speech and “fake news.”
Background to the Cases
In 2017, Germany passed the Network Enforcement Act (Netzwerkdurchsetzungsgesetz, NetzDG) (also called the “Facebook Act”). It obligates the social media networks subject to the act to remove content that is “clearly illegal” within 24 hours after receiving a user complaint and to publish biannual reports on how many complaints were received and how they were handled. A social media network may be fined up to 50 million euros (about US$59.2 million) for noncompliance.
In June 2021, the Act to Amend the 2017 Network Enforcement Act entered into force in Germany. The amendment obligated social media providers to establish a mechanism whereby the complainant and the affected user may initiate a review of the decision to remove or not remove flagged content (appeals procedure). (NetzDG § 3b.) The obligation codified in section 3a to report deleted content that could fall within a list of criminal offenses (mostly “hate crimes”) to the police was broadened. In addition to the content and IP address, social media platforms were obligated to submit the user name and the time when the content was shared or made available to the public, including the time zone. The amendment gave the Federal Office of Justice (Bundesamt für Justiz) the power to not only issue fines but supervise and enforce compliance with the act with “all necessary means.” (§ 4a.)
Google Ireland Ltd, Meta Platforms Ireland Limited, Twitter International Unlimited Company, and TikTok Technology Limited filed lawsuits and urgent appeals at the Administrative Court Cologne. The court ruled on Google’s and Meta’s urgent appeals only. The remaining lawsuits are still pending.
Decisions of the Court
The court granted interim relief with regard to the fines that the social media companies would otherwise have received for not complying with the NetzDG. It stated that until a final judgment in the main proceedings is made, the Federal Office of Justice was not allowed to take action against the plaintiffs to enforce the obligations codified in section 3a of the NetzDG and, as far as applicable, in sections 3b and 3e of the NetzDG.
The court based its decisions on two main considerations:
First, in the case concerning Google, it found that the Federal Office of Justice was not independent enough to comply with the standards set out in article 28b, paragraph 5 in conjunction with article 30 of Directive (EU) 2018/1808. (Google decision, para. 106.) For government agencies in charge of supervising “audio visual media services,” article 30, paragraph 1 of that directive provides that “[m]ember states shall ensure that they are legally distinct from the government and functionally independent of their respective governments and of any other public or private body” to ensure the impartiality of decisions. The court decided that the Federal Office of Justice was not “legally distinct from the government” because it is a federal office integrated into the Federal Ministry of Justice and not “functionally independent,” as it is bound by the orders of this ministry. (Google decision, para. 136.)
Second, in both decisions, it found that the obligations codified in section 3a of the NetzDG were not in line with Directive 2000/31/EC on electronic commerce (E-commerce Directive). (Google decision, para. 150; Meta decision, para. 97.) Article 3, paragraph 2 of this directive codifies the “country of origin” principle, meaning that online businesses are bound by the regulations in place only in the member state in which they are based and not by those of the state where their products are received by the consumer. This way a company can operate in all member states without having to adapt to different national regulations. However, as this could lead to lower consumer protection standards and discrimination against companies based in member states with stricter rules, the principle applies only in those areas in which the member states agreed on common general standards (“coordinated field”). In addition, there are certain exceptions to the country of origin principle that the member states may rely on. Article 2, letter h of the E-commerce Directive specifies what kind of rules fall within the coordinated field, listing, among other rules, the “taking up of the activity of an information society services, such as requirements concerning qualifications, authorisation or notification.”
The administrative court decided that section 3a of the NetzDG contains rules that fall within the scope of the coordinated field, which means that the country of origin principle applies. (Google decision, paras. 152–158; Meta decision, paras 99–105.) In the opinion of the court, Germany can therefore impose its national regulations only on companies based in another member state if it can rely on an exception made in the E-commerce Directive. Article 15, paragraph 2 of the E-commerce Directive, however, allows member states to obligate social media platforms to deliver information enabling the identification of users only on the request of a state agency and not, as section 3a of the German NetzDG demands, without a specific request. (Google decision, paras. 185–191; Meta decision, paras. 132–138.)
Furthermore, the court held that Germany could also not base its derogation on article 3, number 4a of the E-commerce Directive. Even though states may under this provision adopt additional rules for the “prevention, investigation, detection and prosecution of criminal offences,” they must undergo a specific procedure. First, the member state must request the member state in which the concerned entity is based to take action and second, it must notify the European Commission and the other member states of the considered actions. Because Germany did not follow this procedure, section 3a of the NetzDG is not in line with EU law requirements and may therefore not be applied, according to the court. (Google decision, paras. 222–224; Meta decision, paras. 169–185.)
The court, however, rejected the claim that section 3b of the NetzDG violated EU law, because Germany could rely on the exception codified in article 14, paragraph 3 of the E-commerce Directive. This provision allows member states to establish “procedures governing the removal or disabling of access to information.” (Google decision, para. 249; Meta decision, para. 195.) The requirement to set up an appeals procedure as provided for in section 3b of the NetzDG also does not violate article 16 of the European Charter on Fundamental Rights (freedom to conduct a business), in the opinion of the court. (Google decision, paras. 250 et seq.; Meta decision, paras. 196 et seq.)Prepared by Friederike Loebbert, Law Library intern, under the supervision of Jenny Gesley, Foreign Law Specialist