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Big Tech threatens to geo-block NZ

Big Tech companies like Microsoft have raised the spectre of geo-blocking New Zealand if the Government proceeds with a bill for classifying streamed content, Marc Daalder reports

A law attempting to standardise parental guidance warnings across streaming services like Netflix and Lightbox has raised hackles from some Silicon Valley firms, which have threatened to block Kiwis from accessing their content.

The bill mandates that certain commercial video-on-demand (CVoD) providers follow the process that broadcasting and film companies follow in classifying content or submit themselves to a self-classification system to be developed by the Chief Censor and the Office of Film and Literature Classification (OFLC).

Even this latter proposal would require reclassifying vast back catalogs of content, some CVoD providers say, and it might be easier for them to pull some content out of New Zealand altogether. There are also worries that streaming services might choose to leave the country rather than deal with a potentially onerous regulatory regime.

Microsoft threatens geo-blocking

In order to pull out of New Zealand, these companies would need to prevent Kiwis from signing up for their services even with overseas addresses and credit cards. This would entail geo-blocking, in which IP addresses associated with a certain country are prevented from accessing webpages.

Geo-blocking is already used by streaming services that aren't present in New Zealand and to lock away content when a company has the rights to air footage in other countries but not here. Now, international streaming companies already present in New Zealand say they are considering stopping or delaying the release of some content if the new legislation places obligations on them that are too onerous.

Submissions to the Governance and Administration select committee raised concerns about enforceability or whether companies might just pull out. NZME's submission said news sites with paid subscriptions that aired video footage could fall under the classification system.

"The difficulty with such wide application is that, coupled with the extra-territorial effect of the proposed Bill, the definition could capture news sites worldwide where VOD is offered in a supplementary form to the main news reporting function. Rather than complying with the law, we then risk such content being geo-blocked to prevent New Zealand users from subscribing to international news sources," the submission stated.

"Restricting the availability of news sources internationally is not desirable."

In its submission to the select committee, Microsoft warned that content it has yet to classify could be geo-blocked. "Microsoft observes, however, that while the majority of content it makes available through the Microsoft Movies & TV platform is or may be rated by the studio producing the content, where a small independent studio or filmmaker makes content available on the platform, that content may not have a rating assigned," the company's government affairs manager Maciej Surowiec writes.

"In that situation, a provider like Microsoft is unlikely to apply to rate the content itself (or itself develop a rating system) as it isn’t in the business of reviewing the film’s content in order to apply for the correct label. In the result, unobjectionable yet unrated / unlabelled content may, in some cases, not be made available to New Zealand audiences, due to the regulatory threshold associated with rating and labelling."

At the same time, Sky asked in its submission "whether (and how) DIA expects to be able to impose the new CVoD regulation on global operators like Amazon Prime, Disney Plus and Apple TV+".

There were also fears that content, if not blocked, could be delayed. The Australia New Zealand Screen Association said it "supports measures that allow CVoD providers to self-classify without onerous regulatory obligations or fees that could delay release of content and increase piracy", evoking the frustration that rippled through New Zealand when the first episode of the final season of Game of Thrones aired an hour later here than the rest of the world.

Government reassures those concerned

The Government says there is no reason for worry. Minister of Internal Affairs Tracey Martin wrote in a March 2019 cabinet paper that she had "been advised that the Deputy Chief Censor’s opinion is that [self-classification options] are unlikely to result in any delay in new content coming to the New Zealand market".

"The Deputy Chief Censor also did not think that providers would skip the New Zealand market because of the proposed changes."

The OFLC, in its select committee submission, said that "given that this framework is low cost and simple for providers to implement, this would be unlikely to impact services provided to NZ public. We have not seen providers withdraw from other jurisdictions due to regulation. This light-handed regulatory approach will not require providers to make significant investment to supply our relatively small market."

This avenue of concern was anticipated, as it had been raised in earlier rounds of debate.

In a submission on an earlier proposal, which included the possibility of mandatory classification without a self-classification option, the Screen Association wrote, "Complying with a formal classification process demands time and resources that may prevent operators from meeting the demands of the CVoD marketplace".

A 2018 Department of Internal Affairs briefing raised the same concerns. "Some [streaming] providers have signed up to the voluntary scheme, but several major [CVoD] providers (like Apple iTunes and Amazon Prime) have chosen not to be members. This highlights an issue with the scheme as subsequent new entrants to the [CVoD] market may opt not to participate or current participants may decide to leave in order to reduce their compliance obligations."

When the legislation was introduced to Parliament, National MPs also aired concerns about geo-blocking. Melissa Lee told the House that "the other concern is that if the regulation is too much, sometimes, I think, we run the risk of having content providers geo-block New Zealand".

ACT Party leader David Seymour told Parliament that geo-blocking would occur. "One of the unintended consequences is that some outfits that currently stream to New Zealand will either stop servicing the New Zealand market or be blocked," he said.

However, the Government says that the need for classification justifies the concern. The OFLC's submission contains the below table illustrating the wide range of classifications for controversial content.

The submission says it is a problem when "a movie appears on different platforms with completely different classifications and warnings. This creates confusion for NZ consumers seeking reliable information when making viewing choices for themselves – or for young people in their care."

Under the new system, streaming services would either have to subject their catalogs to the classification process that mainstream films go through or self-classify based on a new scale the OFLC will develop for streamed content. This would particularly address concerns that suicide, sexual assault and other forms of sexual violence are not adequately prefaced with warnings, the OFLC says.

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