An internet intermediary liability regime that defines clear and cost-efficient requirements for intermediaries could increase start-up success rates by between 4% (Chile) and 24% (Thailand)
In this February 2015 report, Oxera investigates how internet intermediary start-ups are impacted by liability for user content, specifically in Chile, Germany, India and Thailand. The report indicates that by creating ‘safe harbours’ for content liability, policymakers can aid start-up intermediaries who are disproportionately at risk from content liability. It is estimated that the success rate of internet intermediary start-ups could increase by between 4% (Chile) and 24% (Thailand) with more balanced legislation covering content liability. Furthermore, the report states that expected profitability of internet intermediary start-ups could rise by between 1% (Chile) and 5% (India) with a clearer content liability framework.
Oxera defines intermediaries as platforms which facilitate the consumption, use and dissemination of content and interactions between users. The report notes that these businesses rely on content supplied by their users and the internet as a whole. Occasionally this material may be copyrighted and therefore illegally contained on an internet intermediary. Oxera claims that socially-efficient internet intermediary liability legislation must balance the benefits of enforcing copyright laws against the freedom for intermediaries to access an innovative and free internet. In order to do this legislation must ensure the effective removal of illegal content without impeding the free flow of information across the internet.
The report stresses that intermediary start-ups are particularly vulnerable to legal uncertainty surrounding copyright. Start-ups are primarily concerned with improving performance in the main business activity and have a disadvantage when it comes to specialising in internet intermediary liability legislation. This poses a significant risk that legislation with vague requirements for compliance might impinge on start-up success and growth. Oxera estimates the impact of regime changes from opaque compliance requirements to clearly defined frameworks with low compliance costs and finds this could lead to start-up success rates increasing significantly in the countries study. The report therefore recommends that policymakers wishing to encourage start-up activity should embark on internet intermediary liability reforms as a low-cost and simple method to achieve this goal.