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Digital Business Lawyer

German Federal Court of Justice rules in favour of AdBlock Plus

The German Federal Court of Justice issued its ruling on 19 April 2018 in case I ZR 154/16, which involved a claim brought by publishing house Axel Springer against Eyeo GmbH’s AdBlock Plus, a piece of software which enables users to block online ads. The highest civil court in Germany has ruled that the AdBlock Plus software does not amount to unfair competition in a ruling that will have global significance and will likely shape the everyday experience of internet users. In confirming the previous assessment made by both the Hamburg and Munich Higher Regional Courts, the Federal Court of Justice also overturned the ruling issued in the previous instance by the Cologne Higher Regional Court, which had questioned the admissibility of the part of the AdBlock Plus business model that requires large publishers to pay for being whitelisted with the consequence that certain acceptable ads are shown to AdBlock Plus users on those whitelisted publishers’ websites.

CMS Hasche Sigle, the law firm that represented Eyeo GmbH, states that it is a positive step forward that the highest civil court in Germany has now confirmed the freedom of internet users to use adblockers and that publishers have no right to specify what the user must see online. “Within the scope of the user’s ‘negative freedom of information,’ which is one of their fundamental rights, the user can thus determine what content they will be shown on their devices,” explain Dr Heike Blank and Dr Pietro Fringuelli of CMS Hasche Sigle.

The Federal Court holds that the business model behind AdBlock Plus is not unfair because it does not circumvent any protective mechanisms used by website owners to counteract the adverse effects of the adblocking software, such as denying access to content to users who are unwilling to forgo the use of an adblocker. “Being forced to see advertising you don’t want to see doesn’t lead to sales, which is the point of advertising. Publishers who don’t want to join the pointless ‘block the blocker’ race must make sure that customers who wish to advertise on their site have the right wording in place to obtain the user’s permission for targeted advertising as failure to do so will result in considerable fines from supervisory authorities,” said Dr Andreas Leupold, Lawyer at Leupold Legal. “Those who master this challenge will have a head start because they will no longer have to pay the hefty fees for being on AdBlock’s whitelist of ads that are still shown to consumers who are using the AdBlock tool.”

In reaction to the increasing prevalence of adblockers, publishers and advertisers are already using a variety of measures to counter adblocking, which include blocking access to users who have an adblocker installed and implementing a paywall to finance content instead of being dependent on advertising revenues. However, points out Anthonia Ghalamkarizadeh, Counsel at Hogan Lovells, another more problematic counter to adblocking is the technical rigging race. “Tools such as ‘AdDefend’ have been developed, which circumvent adblockers by encrypting ad requests and rerouting them so that ads are not recognised by activated adblockers as advertising content, and hence are not blocked,” explains Ghalamkarizadeh. “This development will just lead to more sophisticated adblockers. So, in my view, publishers and advertisers are better advised to focus on what is really at stake: The preferences of their users. Sustainable online business necessitates that users truly endorse the format and content they are presented with.”

Increasingly, publishers and advertisers are listening more to what users want in terms of advertising as a trade-off for accessing free content online. Significant stakeholders have joined forces to improve user experience and develop alternatives to AdBlock Plus. In late 2017, Facebook, Google, Microsoft, Thomson Reuters, Unilever, the World Federation of Advertisers and others formed the ‘Coalition for Better Ads’ to create their own standard for acceptable ads, which they aim to roll out throughout 2018. “So, while the Federal Court may have underestimated the intricacies of Eyeo’s monetisation scheme, the various lawsuits that have been brought in Germany against AdBlock Plus are contributing to a welcome development of a healthier internet and better user experience,” concludes Ghalamkarizadeh.

The Federal Court’s ruling is not the end to the adblocking debate however, and there are several cases still pending on the matter. “AdBlock Plus has won one battle, but not the war on adblocking,” believes Prof Dr Stefan Engels, Partner at DLA Piper. “The Federal Court has only reviewed whether adblocking itself or adblocking with whitelisting is unfair competition against publishers. Questions still remain about the infringement of antitrust or copyright law depending on the market position/behaviour or the adblock mechanism. The next cases on the matter, especially the case involving ProSiebenSat.1 Digital, will bring answers.”

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