ECJ clarification: When smaller platforms risk losing the Hosting Exemption

What is the “Hosting Exemption”?

Small online platforms and app providers often rely on a mechanism called the “hosting exemption”. This is an exemption that was originally set out in the E-Commerce Directive, and is now reflected and supplemented by the Digital Services Act (EU) 2022/2065 (“DSA”). Essentially it can help protect them from liability for illegal content uploaded by their users, as long as their role is neutral and passive.

Provided the platform provider does not have actual knowledge of illegal content (and acts quickly to remove it if they are notified of it), platforms are generally not liable for damages or criminal repercussions that may arise in relation to such content. This protection also lives on in UK law via the Electronic Commerce (EC Directive) Regulations 2002.

However, there has been uncertainty about when automated moderation and ranking systems (that may be implemented by platform providers) cross the line from being considered as “passive” hosting to more “active” control… And thereby causing the platform to lose the benefit of this exemption.

The ECJ’s recent judgment

On the 16^th of June 2026 the ECJ delivered an interesting judgment in joined cases C-188/24 and C-190/24 EU:C:2026:492 (“WebGroup Czech Republic, a.s and Coyote System v Premier ministre”).

One of the joined cases involved a navigation app that allowed drivers to share information about roadside police checks (this is an activity that is prohibited under French law), while the other concerned age-verification obligations imposed on operators of adult-content websites. Among other issues, the Court was required to consider whether the way a provider processes and presents user-generated information may mean that it no longer acts as a neutral hosting provider.

Neutral and passive vs “control”

The ECJ provided some much-needed detail on what it means for a platform to remain “neutral and passive.” In simple terms, if your involvement is limited to the technical or automatic processes (for example just providing storage and making content searchable) you’re still covered by the hosting exemption. The key is that you don’t have actual knowledge of illegal content and you don’t exercise control over what users upload.

But the ECJ helpfully drew a boundary: Where algorithmic systems play a more active role in selecting, shaping or controlling the dissemination of information, a provider may be found to have moved beyond the neutral role required for the hosting exemption.

So, what does this mean in practice? If your app simply makes it easier for users to find or search content, you’re likely playing it a bit safer. However, if you start using algorithms to push certain posts to the top, filter content, or reorder information in a way that gives the platform an active role over the dissemination of content, you may no longer be able to rely on the hosting exemption.

Many smaller platforms lean on automation to manage content, thinking it naturally shields them from liability. The ECJ clarified that this isn’t always the case. If automated systems are used in a way that gives the platform an active role in selecting, shaping or controlling the dissemination of content, the platform may be deemed to exercise control, even if those decisions are made by computers, not humans. Automation isn’t a “get out of jail free” card if it’s used to shape content.

Practical implications and best practice

So, what does this look like day-to-day for smaller platforms? The ECJ judgment suggests that even ordinary app providers need to pay close attention. If your systems are designed just to categorise or index information for accessibility, you’re likely fine. But if they start dictating how content is displayed or prioritised (especially where they play an active role in determining how content is presented), you might cross the line.

Good practice for platforms includes regularly reviewing both technical and contractual processes for handling user content. If you want the comfort of the liability exemption, you need to ensure your algorithms do not take an active role in determining how content is disseminated. If your business model involves optimising or promoting content commercially, be aware you may be consciously accepting greater risk.

To make things clear and easy to digest: platforms retain liability protection if algorithms are only used for indexing and categorising content or to make things more searchable and accessible. But, ranking, prioritisation, or moderation may be relevant evidence that a provider is exercising control, depending on how those functions operate and the provider’s role. In practical terms, your exemption is safe as long as your systems are neutral, but once they make choices about content, the law may treat you as being in control.

Why this matters even post-brexit

Although ECJ decisions are not binding on UK courts since Brexit, their reasoning is persuasive, and UK courts may well adopt similar approaches. The hosting exemption is still a central legal protection for small platforms under UK law, so it’s wise to stay up-to-date with these developments and consider the ECJ’s guidance in compliance reviews.

If you are a small platform provider, or regularly use one, and have any questions on how the hosting exemption may affect you, please get in touch with Matt Schrader at matt.schrader@fsp-law.com or please contact our Commercial, IP & Technology Team.