Internet service provider PSINet is planning to move some of its Web site hosting servers out of the Bavarian region in Germany in reaction to the controversial conviction of a former CompuServe manager in May.
The decision was announced after PSINet's general manager in Germany told the Wall Street Journal that the firm needed to move some of its servers to places where "the laws are international, and not Bavarian-like."
Because of the more conservative and restrictive atmosphere in Bavaria, PSINet said some servers that store corporate and home users' Web sites will be relocated to Amsterdam, London, and Paris--cities with more open-minded Internet policies.
"We would rather house [our servers] in a location where legislation has recognized that ISPs can't control content, rather than in a location that poses criminal liability for information that flows over PSINet's network," said John LoGalbo, associate general counsel for PSINet.
Despite the relocation of its servers from the region, PSINet has emphasized that it plans to continue its operations in Germany. The company will keep its servers in other German regions running, and will maintain offices and staff in the country.
As further indication of its intent to stay in Germany, PSINet announced today that it will acquire German ISP Interactive Networx GmbH, part of a $46 million deal that gives PSINet control of four Internet service providers in Germany, Hong Kong, France, and the United States.
"We intend to stay in Germany, but in terms of housing our data centers and servers, we need to be aware of laws that are favorable" to ISP operations, LoGalbo added.
PSINet's move comes after a Bavarian judge convicted the former general manager of CompuServe Germany for trafficking child pornography on the Internet. The judge held Felix Somm responsible for the content and handed the former manager a two-year suspended sentence for 13 counts of distributing online pornography and other illegal material.
Free speech advocates and online industry members expressed outrage over the decision--especially since during the trial the prosecution reversed its stance because of the German multimedia law that was passed after Somm was indicted. The law states that access providers are not responsible for content transmitted by third parties.
PSINet's move to trim down its operations in Germany underscores the growing sensitivity among Internet companies toward policies that hold ISPs responsible for illegal Internet content. Observers say legislation that blames providers instead of or along with perpetrators could scare businesses away from setting up shop in those regions.
"It is not a surprise that companies would choose to move their operations out of Germany, and it's probably a sound business practice, because German regional authorities have proven to be very draconian about their views about free speech on the Internet," said Barry Steinhardt, president of the Electronic Frontier Foundation.
On the flip side, countries that don't hold firms responsible for Internet content stand to attract Net companies that are prohibited from operating in their home countries. Countries that the Electronic Privacy Information Center considers to be relaxed about free speech on the Internet include a few Scandinavian nations and the Netherlands.
"It seems to be creating a competitive market place for companies to be based in countries with more favorable speech laws," said David Banisar, staff counsel at EPIC.
However, Banisar added that the European Union as a whole has the potential to foster a more favorable environment for Internet companies.
"[The European Union] definitely sees the Internet as something that can help their economies a great deal," Banisar added.