Report from The Next Web
In Brief – A German court has ruled that Meta is responsible for fake investment ads posted by third parties on Facebook and Instagram, ordering the company to remove the ads and pay damages. The ruling by the Frankfurt Regional Court is not final and can be appealed. Finanzfluss, a German personal finance platform, and co-founder Thomas Kehl, sued Meta after scammers used the company’s trademarked logo and Kehl’s photograph in hundreds of advertisements promoting investments the court deemed fraudulent. Meta argued that, under the EU’s Digital Services Act, hosting services generally are not responsible for content they do not have specific knowledge about. The court rejected that defense, citing Meta’s control over what users see through its algorithms and advertising practices. The judges relied on a June ruling by the EU’s top court indicating that platforms can lose host provider protections when platform algorithms determine content placement.
Context – Court decisions are rapidly eroding the legal basis of the EU hosting provider liability regime that for decades has required intermediaries to play an “active role of such a kind as to give knowledge of, or control over” the content at issue to be liable. In June, the Court of Justice ruled that a platform using algorithms to determine how and which order users see information can lose hosting provider classification, and in July the court ruled that Google can be held liable for YouTube videos uploaded by content creators with whom the company did a general content review as part of a commercial partnership. Given that nearly every platform uses algorithms to format and direct its feeds and pages, while nearly all revenue sharing programs involve some review of the qualified creators, the current state of liability protection in Europe seems precarious. Finally, a German court also recently found Google liable for AI Overview answers despite labeling them as generative AI that can include errors. In the US, the Supreme Court was teed up to address the question of whether algorithms nullified platform liability protection under Sec. 230 in Gonzalez v Google in 2023, but they dispensed with the case without addressing it.