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Ad-Blocking under Austrian competition law


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Gastbeitrag: Dr. Arthur Stadler, Of-Counsel (Österreich) und Tamino Chochola, beide von Brandl & Talos Rechtsanwälte, Wien

Targeted advertising is achieving remarkable economic success, thanks to modern technology of collecting and analysing user behaviour. Although advertising typically finances content on the Internet, which otherwise would have to be offered to users for a fee, customers often perceive advertising as intrusive and find relief in so-called “Ad-Blockers”, which – depending on their functionality – filter, block and/or remove undesired ads.

Ad-Blocking at user’s request and user-controlled

According to a study by WebWizard (relating to 2013), every fourth user of websites in Austria has already installed an Ad-Blocker. Today, the most popular product is AdBlock Plus (“ABP”), developed by Eyeo GmbH (“Eyeo”) and available on the market since 2006. Its version 2.0 allows users to compile lists of desired/undesired ads and describe which (type of) advertisement shall be removed. Users may also indicate domains that shall be blocked.

Eyeo developed criteria to determine which ads are considered as “not annoying”, namely if they are (i) clearly marked as advertising, (ii) only static, (iii) predominantly consisting of text and (iv) clearly distinguishable from page content. Eyeo also offers the possibility for advertising companies to be “whitelisted” if they commit to continuously comply with these criteria. The company supervises compliance and offers users a public forum to complain if whitelisted companies do not meet the criteria (anymore). Even if previous ads by the same company have been classified as “not annoying”, each newly published advertisement will be reviewed. Smaller companies can be whitelisted without any costs, while “big players”, such as Google, Amazon or Microsoft, are required to pay and receive support services in return.

Case law on ad-blocking

The phenomenon of ad-blocking is not brand new, but the technology is now being applied to internet and mobile solutions. In the past, several courts in Europe have dealt with TV ad-blockers. The German Federal Supreme Court (Bundesgerichtshof, “BGH”) released its landmark ruling on this issue (BGH 24 June 2004, Az. I ZR 26/02), in a case by TV broadcasting company RTL requesting inter alia to cease and desist the distribution and provision of TV ad-blockers. In essence, the BGH ruled that offering TV ad-blockers may not be considered an unfair commercial practice provided that the ad-blocker is an instrument controlled by the user in deciding which (type of) TV advertisement the user is willing to watch.

Austrian competition law

Similar to the above mentioned doctrine (under German law), Austrian legal literature and case law consider the consumer’s “free choice” as one of the decisive factors: Provided that the instrument to remove ads merely functions at the consumer’s request and is predominantly user-controlled, the offering and distribution of ad-blockers may not be considered an unfair competition practice under Austrian law. In our opinion, besides default settings, the user’s “free choice” shall be safeguarded by providing a broad range of filtering levels adapted to the user’s needs and following his/her requests.

Abuse of dominant position in Austria?

In Austria, another case with regard to ad-blocking is currently pending: Austria’s largest media company, the Austrian Broadcasting Corporation ORF, filed a complaint with the Austrian Federal Competition Authority (Bundeswettbewerbsbehörde, “BWB”) stating that it considers Eyeo’s ad-blocking cooperation with Google an abuse of Google’s market position being capable of significantly distorting competition. The BWB is currently investigating the market effects as well as market figures of ABP and its competitors offering ad-blockers.

Whitelisting system under scrutiny

The majority of currently pending competition law cases in Austria and Germany is therefore not (solely) directed against the distribution and provision of ad-blockers per se, but against the system of selective whitelisting being financed by larger companies. Several proceedings are currently pending, inter alia launched by media houses such as RTL, Seven-One Media (ProSiebenSat1), Axel Springer, Zeit Online or Handelsblatt. The current investigation by the Austrian BWB just adds to this picture.

Conclusion

Ad-blocking via the internet and mobile devices follows the aim of increasing the users’ “comfort when surfing the net”, allowing users to block undesired advertising. However, ad-blocking instruments jeopardize the idea of a “free internet”, intrinsically linked to offers in the net providing free content or free software, which otherwise can be offered only for fee subscriptions.

According to Austrian competition law such user controlled instruments may not be considered as unfair commercial practices as far as users implement their own user settings, and the ad-blockers function on user request and via user-selected filtering. Still, a system of selective and potentially non-transparent whitelisting of companies for whose advertising user settings may not make a difference is currently under the scrutiny of competition authorities together with an assessment of abuse of market position. Labelled as blocking undesired ads and being the consumer’s free choice, the abuse of market positions by “big players” might create another undesired market effect.

Further information:

Contact: Dr. Arthur Stadler Lukas Bühlmann


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