On the one hand, definitely worrisome when taking into account the alternative sites. On the other, it's in a paragraph about legal exceptions, so I'm wondering if the article's saying that Facebook and such get more people looking the other way, and that any smaller competitors would get jumped on disproportionally; just looking at music, YouTube doesn't seem to be suffering too greatly from everyone uploading recordings, while I can easily see a small upstart getting sued into oblivion for a fraction of the infringement. Maybe some of that is that they can point to their algorithms as mitigation, but, A, that gets into proprietary secrets that would be key to even existing clashing with anti-trust laws, and B, there's still plenty of eight-year-old music videos that they somehow haven't gotten around to checking.
Yeah, that really worries me. OTOH, it's probably easier for a small company to police its users than a very very large one, so maybe it'd actually be an advantage for smaller competitors?
I think that the real answer is to mandate open protocols. The government has a real role in determining weights & measures used in trade (which it's rather shamefully ignored: I should be able to order a small, medium or large coffee or pizza anywhere in the country and get the exact same size); that same role could be legitimately used to describe exactly the right (though not the sole) formats which must be supported by a service.
E.g., the State could mandate that Facebook provide users a well-supported way to publish to or read from RSS, or for Spotify, Pandora, Google Play Music, Amazon Prime & iTunes to share music.
There is a danger there, in that it's not exactly well-defined 'share music' means (are those services even comparable? what about some future service with a revolutionary new model?), but I think that it should be doable.
> Immunity to content liability must go, too.
This would be quite a hurdle to quite a few sites if it applied across the board. To begin with, this site. Reddit. Etc.