Free content yes – but only without advertising, please. This is where the business model of ad blockers comes in to meet this request: it allows Internet users to have online advertising suppressed. At the same time, advertisers are able to buy their way out of the blockage. Several press publishers, whose free online services are financed by advertising, consider this a violation of fair competition and filed complaints against ad blockers in court. The Federal Court of Justice has recently dismissed these complaints. Following the legal action brought by Axel Springer publishing house against Eyeo GmbH, which distributes the “AdBlock Plus” program, the Federal Court of Justice (Case I ZR 154/16) ruled that the ad blocker is not anti-competitive.
“AdBlock Plus” is a tool that allows users to suppress online advertising. The provider gives publishers’ advertising customers a choice: either their online advertising ends up on a blacklist and is entirely blocked or they have the advertising filtered by the provider for a fee to place at least part of the advertising next to the publisher’s editorial content on the web. The provider distinguishes between “acceptable” and “unacceptable” advertising (which includes above all intrusive banner advertising and animated affiliate advertising). While acceptable advertising is displayed (“whitelisted”), unacceptable advertising remains blocked. The fee for filtering out is about 30% of advertising revenue.
Cologne Higher Regional Court had still classified paid whitelisting as anti-competitive in the appeal proceedings. By combining blacklisting and paid whitelisting, Eyeo would place itself virtually between publishers and their advertising customers and thus unfairly influence advertisers’ freedom of decision. The Federal Court of Justice saw this differently. There was no general market obstruction by “AdBlock Plus” because there was no sufficient evidence that the business model of free content on the internet would be destroyed. Ad blocker providers are not interested in specifically preventing competition or suppressing offers. Rather, they primarily pursue the objective of promoting own competition and generating income through whitelisting advertising. This business model requires the functionality of publishers’ online offerings. The Federal Court of Justice also considers it reasonable for publishers to take defensive measures against ad blockers, for example by excluding users who are not prepared to refrain from using the ad blocker from their offerings.
It seems doubtful whether this is appropriate in practice. The Federal Court of Justice points out that the use of an ad blocker was at the discretion of internet users. The displeasure of “excluded” AdBlock users, however, who were previously able to use editorial content free of charge, will probably not be directed at the providers of ad blockers, but at publishers. If advertising revenues fail to be generated because companies no longer advertise online, publishers’ online offerings will further come under pressure. They will then rely even more on paid content and walled gardens. In return for the exemption of users from online advertising, the offering of freely available editorial content is expected to further decrease, particularly as the European ePrivacy Regulation is already taking shape on the horizon and the options of generating income with online advertising are becoming ever more difficult.
Axel Springer publishing house has announced that it will file a constitutional complaint for violation of press freedom in reaction to the Federal Court of Justice ruling. The dispute over ad blockers is thus entering the next round.