AGCOM imposed a fine of €750,000 on Google due to gambling videos on YouTube.

      The Court of Justice of the European Union has issued a ruling on a case that hinges on a seemingly minor issue: whether a platform that shares advertising revenue with a creator is simply hosting the content that creator uploads.

      The conflict started on July 19, 2022, when AGCOM, Italy’s communications authority, imposed a €750,000 fine on Google Ireland and instructed it to remove YouTube videos that promoted online gambling. The videos violated Italy’s Dignity Decree, a 2018 law that prohibits both direct and indirect advertising of cash prize games across all media, making it one of the most stringent regulations in Europe.

      This ruling comes at a difficult time for Google in Luxembourg, as the same court upheld its €4.1 billion Android fine two weeks prior, rejecting the final appeal. Google challenged the ruling before an Italian administrative court, citing the liability exemption that EU electronic commerce law provides to hosting providers for content uploaded by third parties.

      AGCOM responded by stating that the exemption does not apply to gambling, as it falls outside the e-commerce rules' scope. Italy’s Council of State, in considering the appeal, referred the matter to Luxembourg for a preliminary ruling. It’s important to clarify this point, as it is often inaccurately reported. The Court of Justice does not assess the fine imposed by Italy; rather, it addresses questions of EU law, which the national court then applies to the specific case.

      The two questions posed are both narrow and significant: Does the Article 14 hosting exemption in the e-commerce directive pertain to online advertising for games and betting for money? And, if it does, can Google leverage this exemption given its relationship with the creator?

      The second question is particularly intriguing, as the circumstances do not favor Google. The videos were uploaded by a creator associated with Google through a commercial partnership that involved sharing the advertising revenue from ads displayed before each video. This agreement was not accidental; Google assessed the creator’s videos, the channel's theme, its most popular and latest uploads, and the relevant metadata prior to signing the deal.

      When a company reviews a channel, expresses approval, enters a revenue-sharing agreement, and then sells ads against that content, it resembles hosting less and less with each additional step taken. The case's crux lies in distinguishing between a passive host and an active one, a distinction present in EU law for two decades, yet it has not fared well under the platform economy's realities. The legislation was crafted for a world centered on file storage, not one where intermediaries curate, monetize, and distribute the results.

      The implications extend beyond a single fine. If the hosting exemption does not apply to platforms in a revenue-share relationship with the uploader, then the exemption weakens in relation to the very content platforms profit from. This would primarily impact the online gambling sector first, followed closely by the digital advertising market.

      The case attracted considerable attention, which is often telling. During the hearing, representatives from the governments of Italy, Belgium, the Czech Republic, and Portugal appeared alongside Google, AGCOM, and the European Commission; four member states do not typically engage over a €750,000 issue.

      The Android decision is not the only recent ruling. A German court has held Google accountable for its AI Overviews, and the company has been making concessions regarding news search rankings to avoid further penalties under the DMA.

      What connects these matters is a broader trend rather than a singular decision. Europe continues to grapple with the question of whether a company that arranges, ranks, and monetizes user-generated content can still consider itself a neutral conduit for that content. The responses will return to the Council of State, which will determine their implications for the fine.