Geo-blocking ban: what’s behind the new EU regulation

The first part of the major geo-unblocking campaign came into force on April 1, 2018 with the EU Portability Regulation. Providers of fee-based online content services such as Netflix, Spotify, or Amazon Prime are now required to deliver their services to the same extent and in the same quality even if a paying customer is temporarily in an EU member state that does not match up with the place of residence specified in the contract. Restricting the number of devices that can be used to access the content is also no longer permitted. So if you’re on vacation, doing business, or studying in another EU country, you can enjoy your entertainment services as you usually do.

Definition

Geo-blocking is a method used by providers to block content in certain regions or countries. Redirecting visitors to country-specific sites is also referred to as geo-blocking. The user is blocked or redirected depending on their IP address. Geo-blocking is used in particular for streaming services and online stores.

At the end of 2018, the geo-unblocking regulation will officially become reality in e-commerce. To date, operators of online stores have had to make every effort to adjust cross-border sales structures accordingly.

What is behind the geo-blocking ban?

By implementing the geo-unblocking efforts, the EU is strengthening one of its most important core objectives: the creation and maintenance of free domestic trade. Geo-blocking has been a hurdle in this respect for years, which should finally be overcome by the Regulation (EU) 2018/302 adopted on 28 February, 2018. With few exceptions, online service and goods providers no longer have the possibility of offering their services only to users from certain EU countries or to set conditions for purchase, delivery, or payment for their services according to residence, shipment, or nationality, which has often been the case up to now.

Note

Region-specific conditions for delivery are still possible even after the geo-unblocking regulation has come into force, in so far as the delivery area for goods may continue to be defined as a specific area (e.g. delivery only within the UK). However, customers living outside the UK or the EU must be given the possibility to order the goods and have them delivered to an address within the UK.

The EU geo-blocking regulation takes effect on December 3, 2018.

Which online services are (not) affected by the geo-unblocking regulations?

The geo-blocking ban mostly applies to providers of fee-based online services. Since web stores in particular have been using geo-blocking measures, these are now particularly affected. Cloud service providers such as web hosting or online storage services must also get rid of existing regional or country-specific variants from their offers (costs, functionality, etc.) or lift the restrictions in order to comply with the new EU regulations.

However, there are also a number of services and content that are exempt from geo-unblocking regulations, such as:

  • Health services
  • Financial services
  • Social services that meet certain conditions
  • Transmission of sport events
  • E-books
  • Video games

What the geo-blocking ban doesn’t mean – the most common misconceptions

Similar to many current changes in the online world – such as the new General Data Protection Regulation taking effect – the geo-unblocking law also causes a lot of confusion and concern among website operators. It is not only a question of whether the ban applies to their own web services, but also to various other issues.

For example, many providers mistakenly assume that the regulation means that they have to actively offer their own goods or services in all EU member states. However, this isn’t what the law states. You can continue to address customers in the EU countries of your choice, as long as you don’t redirect them to other sites with different conditions to your site on the basis of their place of residence, their place of business, or their nationality.

There is also no obligation to deliver to other member states. But if you do not offer to deliver your goods to a certain country, customers from this certain country have the right to order the goods and have them delivered to a place that is within your shipping range.

Note

The geo-blocking ban doesn’t denote which payment methods you can accept – you can decide this yourself.

When it comes to pricing, you also have more freedom than it initially seems: for example, price differences caused by different value-added taxes are allowed. In principle, you are also not obliged to standardize prices across the EU and can therefore even offer different net prices in different country stores, as long as this is done in a non-discriminatory manner. How exactly you should justify these price differences, though, is still unclear. However, there will be EU Commission guidelines regarding this in the future.

What are the penalties if you don’t comply with the geo-unblocking regulations?

Enforcing the geo-blocking ban is each member state’s responsibility, meaning that at least one competent authority has to be designated for this purpose. It is also necessary to lay down rules on the measures that need to be taken in case there’s an infringement of the law. These must be “effective, proportionate, and dissuasive.” In Germany, for example, the Federal Network Agency is the authority that will ensure that the rules are adhered to. Fines of up to €300,000 ($340,000) can be imposed for infringements.

How to prepare for the geo-blocking ban

If you operate a fee-based web service and have been using geo-blocking techniques, you should start redesigning your project now. One of the most important tasks is to deactivate all geo-blocking techniques that deny or restrict users from other EU countries access to your service. You should also turn off automatic redirects to other sites based on the user’s IP. Although you can continue to use country versions of your website, customers may only be redirected after they have given their consent (e.g. by clicking on a language selection menu). It is also important that a user can switch back to the original version of the website at any time.

Note

Design any forms on your website so that foreign contact data can be entered without problems.

As soon as you have adapted the technical area of your website to adhere to the geo-blocking regulations, you should take a look at your general terms and conditions and any legal texts. Check whether these include any clauses that discriminate against users from other EU countries and – if this is the case – delete the relevant passages. If you offer goods or services at different prices for understandable reasons (taxes, shipping charges, other national regulations, etc.), you should also explain this in the terms and conditions.

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