The German Minister of Culture recently escalated calls to expand regulations on streaming platforms, targeting American companies like Netflix with reinvestment quotas requiring platforms to redirect revenue back into the German economy.
The proposed quotas would reduce competitiveness, diminish consumer choice, and stifle innovation in the entertainment space.
The Minister’s targeting of American businesses follows in the footsteps of the previous administration’s failed Investment Obligation Act (IOA). The act, which was scrapped after opposition from business and political leaders, would have imposed a 20% reinvestment quota on streaming platforms. It aimed to forcibly stimulate local filmmaking using profits from American streaming services.
Combined with existing EU law requiring 30% of streaming catalogs to consist of European content, forced reinvestment would cut into the streaming industry’s already thin profit margins and limit consumer choice. Similar policies in foreign jurisdictions have already demonstrated such negative effects.
Australia’s 2021 News Media Bargaining Code (NMBC), similar to the IOA, led American companies to pay exorbitant sums to Australian firms. The act requires platforms like Meta and Google to compensate Australian media outlets every time their content appears in a search result or is shared on social media. Now, Apple and Meta are actively subsidizing the digital marketing of Australian media on their platforms, forced to pay to provide a previously free service.
In practice, the NMBC crippled innovation. Service providers made key deals with a handful of the largest outlets while neglecting startups and independent journalists. In 2024, Meta announced that it would not renew its contracts, opting instead to scale back its news services and solidifying the act’s legacy as harming competition and reducing service offerings
Germany’s IOA risks a similar effect. Mandated reinvestment and content quotas across Europe have already led providers to cull libraries and invest in low-quality projects. For instance, France’s expansion of the EU’s 30% content quota to require 85% of content be in French, along with its own reinvestment scheme, has limited access to popular, profitable shows, instead forcing platforms to fill catalogs with less appealing works to satisfy regulations.
The Minister’s proposal comes at a time when Germany and the U.S. are seeking to address unfair trade practices and rebalance their relationship. Such proposals run counter to these efforts, fueling calls for further trade restrictions and undermining efforts to signal good faith.
Europe’s growing patchwork of content quotas and mandated reinvestment is sparking a race to the bottom, with countries competing to raise quotas and redirect investment, often at the expense of quality and innovation.
Germany must not fall into this trap. Digital quotas and forced reinvestment undermine innovation by restricting free-market investment. Ultimately, consumers are deprived of the diverse and quality entertainment they’ve come to expect.
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Author: Caden Hubbs
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