The main significance of the ruling came in the final 19 paragraphs in which the Court tackled a question of intermediary liability that arose in the dispute concerning Coyote System. An aspect of that dispute related to a rule in Article 15 of the E-Commerce Directive whereby Member States are prohibited from imposing general obligations on intermediary service providers to monitor for illegal content or activity online.

Because the applicability of this rule rests upon the prior characterization of the service in question as an ‘intermediary hosting service’, the dispute required the European Court to re-examine the conditions on which internet services can claim protection under the EU’s exemption from intermediary liability claims.

It was in reconsidering this characterization that the Court held that “where, by means of an algorithm, the operator…determines, in its own interest or that of its service, under what conditions, how and in which order of priority that information is or is not broadcast as part of that service, it exercises control over that information.”

The word “control” had featured in the Court’s prior case law, but it had been fused to the higher bar of the Court’s established ‘knowledge’ standard.

Coyote System emphasized their separation and distinctness for the first time: the “two conditions requiring knowledge and control,” the Court held, “should be understood as being alternative to and independent of each other.” Where previously ‘knowledge’ (or, the related notion of ‘awareness’) was required to rescind platform immunity, after Coyote System, an operator that exercises algorithmic ‘control’ over user content—regardless of what it knows—can no longer be deemed an intermediary for European law and cannot avail of protection from liability regarding the illegal user content it carries.

Though the EU regime does not provide Section 230’s absolute immunity—or use the vocabulary of publisher/speaker—but instead provides a conditional shield against whatever form of liability (excluding injunctions) that an EU Member State might otherwise wish to impose on an intermediary, a brief illustration by analogy to the U.S. context will underline how far the European Court has gone in this ruling.

The closest thing to an American Coyote System would have been if the Supreme Court had decided Gonzalez v. Google differently, and had addressed the question of whether Section 230 protects interactive computer services when they make targeted recommendations of third-party content, and answered no.

But Coyote System’s dismantling of the European equivalent to Section 230 is in a different galaxy even than this hypothetical Gonzalez. In remanding Gonzalez, the Court left the ordinary function of Section 230 undisturbed, and declined to answer the main issue which regarded the narrower question of whether a platform might be held liable for the targeted recommendation itself, as a form of own-content provision, as distinct from being exposed to liability as publisher/speaker in respect of the content of the individual posts to which the recommendations related. Coyote System, by contrast, attacked the exemption’s ordinary function, removing its protection from a broad class of service providers. It would be as if algorithmically-driven platforms were no longer interactive computer services per Section 230.