German justice sets a historic precedent: that Big Tech has to pay operators for traffic

On May 14, the Cologne Regional Court handed down a historic ruling in Europe: it sentenced Meta to pay Deutsche Telekom for traffic that their social networks Facebook, Instagram or WhatsApp sent through the German operator’s infrastructure.

Expansion has been echoed of the ruling that, although they leave room for appeal, creates a legal precedent that supports the theses of the main operators around the world.

Telephone and communications operators have been demanding for more than a decade from large technology companies such as Google, Meta, Netflix or Amazon: that they pay a fee for the use that their users make of the data networks deployed by the operators.

The Deutsche Telekom case in which all operators win

In this specific case, the Cologne Regional Court upheld the claim of the German company Deutsche Telekom for the misuse of your data network by Meta. The court ordered Mark Zuckerberg’s company to pay around 20 million euros in compensation.

However, the key to the ruling is not the amount of the fine imposed on Meta, but the legal recognition of the right of operators to charge technology companies that offer online services for the traffic generated by their services. A historical demand from operators that technology companies refused to recognize.

The litigation between Meta and Deutsche Telekom began as a result of a traffic agreement between both companies. Meta paid the German operator 5.8 million a year as compensation for sending data traffic through its networks. However, the technology company thought it was paying too much and requested a 40% reduction as a condition for renewing the agreement.

Deutsche Telekom counter-offered with a 16% reduction compared to the current contract. Both companies did not reach a satisfactory agreement, so Meta decided to terminate the contract and save that payment.

Although it did not receive any compensation for this, the operator maintained access to Meta traffic, because, otherwise, it would be harming the satisfaction of its users. If Deutsche Telekom blocked Meta, Your clients would not be able to access social networks nor send messages on WhatsApp. Something that was not in the plans of the German operator.

Therefore, Meta was using Deutsche Telekom’s network infrastructure for free, and the operator had its hands tied because it was not inadmissible to block access to those online services for its users. The only way out for the operator was judicial.

The important thing is not the fine, it is what the sentence implies

In Meta’s allegations before the court that Meta has absolute bargaining power by having the ability to block traffic to its services, the German justice has recognized that Meta and Deutsche Telekom are on equal negotiating termssince there is a situation of dependency between both models.

In reality, no online content service could be viable without the service of the operators, in the same way that the operators would not encourage the use of their networks by their users if there is no content to consume.

This recognition sets a legal precedent that recognizes the demand of operators to establish a fair contribution (fair share) so that large technology companies and streaming platforms assume part of the cost of deploying and expanding data networks, which is currently assumed by communications operators.

One of the historical claims of the companies is a specific legal framework that forces large technology companies to sit down and negotiate interconnection agreements (peering) with operators. Despite having been on the verge of achieving it several times, this framework has never been approved. This has allowed technology companies to get up from the negotiating table and use network infrastructure for free that bring traffic to their services, as Meta has done in this litigation.

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Image | Wikimedia Commons (Wdwdbot, Nokia621)