State Aid for Digital Games and Cultural Diversity: A Critical Reflection in Light of EU and WTO Law

Abstract

Governments in Europe and elsewhere are increasingly subsidising the production of digital games, whether directly or indirectly, often arguing that this is necessary to promote the diversity of cultural expressions on the Internet. Whether digital games belong to the sphere of culture has important implications for European and international economic law, due to the cultural purposes safeguard, which justifies exemptions from the principle of trade liberalisation. The paper first looks generally at the question whether digital games are in fact cultural expressions. Second, the paper analyses how this question has been dealt with in the realm of EU competition law. Here, cultural purposes justify both privileges for public service broadcasters and exemptions from the general ban on subsidies. The last part of the paper is dedicated to the law of the World Trade Organization, wherein framing digital games as cultural expressions, or not, may determine their classification within the General Agreement on Tariffs and Trade and/or the General Agreement on Trade in Services and impact the applicable level of commitments for trade liberalisation. It concludes that though digital games do belong to the cultural sphere, their promotion should not be automatic. Rather legitimacy is contingent on whether a market failure is being corrected. Therefore, the validity of support measures should be governed by requiring that they be to protect/promote a goal of the UNESCO Convention on Cultural Diversity and that they are necessary to that end.

Keywords: Digital games, state aid, trade, culture, cultural diversity, EU and WTO law

JEL Classification: K21, K33, K39