Adblocking goes to Court

Sean Blanchfield Adblocking, Uncategorized

In 2014 the publishers of Europe began mobilizing for war against Eyeo GmbH, the small company that operates Adblock Plus, the most popular browser plugin on the planet. Since the PageFair mission is to defend publishers from the phenomenal rise of adblocking, we’ve been monitoring events closely. There’s been a major lack of coverage of these developments in English, so we thought we’d try to fill in the gaps.

Our own business model gives us an interest in this debate, and to be honest we can see the validity in both sides of this controversy.  We’re pro-publisher and know from personal experience that being a publisher is expensive, and selling advertising is the only practical way to stay in business.  However, suing the free software used by tens of millions of people to improve their internet experience is a tactic that can easily backfire.

The Lawsuits Begin

We first heard that RTL, ProSiebenSat.1, Axel Springer and Die Zeit were planning to sue Eyeo in Summer 2014. These are four of the biggest names in mass media in Europe, and it was clear to us that adblocking had finally percolated to the top of the publishing industry. On 17th December 2014, a court in Munich held separate hearings for RTL and ProSiebenSat.1.  Although the proceedings are not published, I understand that there were several complaints:

  1. That adblocking constitutes copyright infringement, as it modifies the publisher webpage. The judge felt that this had to be evaluated by the court, but the typical consensus is that people are entitled to modify anything they have bought or received for personal consumption.
  2. That adblocking breaches the terms and conditions of the websites. This was deemed to be invalid, since the website visitors do not generally agree to be bound by these rules (and in fact, users don’t have an opportunity to do so prior to actually visiting a website).
  3. That Adblock Plus is a monopoly guilty of anti-competitive behavior. Apparently this got somewhat stuck at the philosophical question of whether any open-source project can possibly have a monopoly. Also, what market could they be alleged to have a monopoly on? (if you’re interested, you can get the facts on their actual share of adblock users later in this article). Monopolies aside, the anti-competitive allegation may get some traction on the basis that Eyeo charges large publishers to participate in their Acceptable Ads whitelisting program, which allows non-intrusive ads formats to display by default. According to an article covering the hearing, the lawyer for RTL claimed that Eyeo asks for  30% net additional revenue from large publishers it admits to the whitelist program, but approached Google with more favorable terms for whitelisting Adwords (which might still mean a lot of cash, considering the cost of the problem to Google). Although I can understand why publishers would feel this is unfair, this kind of differential pricing is a standard tool of modern commerce, and will be familiar to anyone who has booked a flight online during the last 10 years.

In December, the French publisher group Le Geste and advertiser industry group IAB announced their intention to follow their German colleagues’ lead, but they seem to have cooled on the idea while they wait to see what happens in Germany. The rumor mill hit its zenith with one site claiming that Microsoft was also going to sue Adblock Plus. This seems incredibly improbable given that Bing search ads are whitelisted just like Google’s, which would confusingly put Microsoft on both sides of this particular anti-competitive case.

All this is just the beginning of the story, with other publishers looking forward to their own days in court against Adblock Plus this year. Axel Springer will be probably be heard in March in Cologne (Adblock Plus’s hometown), RTL and ProSiebenSat.1 will get a decision in Munich on March 25, and Zeit Online will have a hearing in Hamburg on April 21. The content industry has now officially woken up to the realization that its future is once again in jeopardy. With so much happening amid rife speculation, let’s contribute some context and cold facts to the story.

The Root of the Controversy

It was courageous of Adblock Plus to launch the acceptable advertising program. After all, by permitting some non-intrusive ads to display by default, they probably lost part of their community to more radical adblock projects, such as Adblock Edge.

Meanwhile, publishers are offended by having terms dictated to them. They believe that the quality of their user experience is a matter between them and their audience, and that a third party has no business inserting itself into the relationship. They see Adblock Plus as an executioner, who has self-righteously appointed itself judge and jury too. They do not like that in the court of adblocking, you are guilty until proven innocent. Worse, they are appalled that innocence alone is insufficient – some publishers are also asked to also pay up. As a result they are quick to cry foul with synonyms like extortion, blackmail, bribery, shakedown, protection racket, or (as of the Dec 17th hearing) “Robber Baron”. Meanwhile, Eyeo responds that charging big publishers for participation on the Acceptable Ads program is the only way to put it on a sustainable footing.

The root of this controversy is not that Eyeo charges some publishers for their participation on the Acceptable Ads program, but that they are the same guys who blocked their ads in the first place. If there was suddenly a lot of vandalism on your street, you wouldn’t think twice about paying a security firm to protect your property. If you then found out that the same security company was responsible for the vandalism, their promise to keep your property safe would suddenly feel more like a threat. Likewise, the problem is that Acceptable Ads feels like extortion.

If Acceptable Ads were whitelisted by an independent group, it would be easier to applaud Adblock Plus for not blocking them. As it stands, there’s no way to know how the proceeds are reinvested. Do they allocate the funds towards promotion of better ads, or do they spend it on developing even more advanced adblocking for next year?

The “Robin Hood” of the Web?

Through PageFair’s ongoing negotiation with Eyeo, I’ve gained my own perspective. I know the guys in Eyeo are trying to do good, and clean up an internet that has descended into advertising chaos and broken usability. They do not see themselves as pirates; at worst they see themselves as Robin Hood. They charge the rich so that they can make the web better for the users, or at least the users who have opted to install their adblocking software. Their hope is to incentivize innovation towards more sustainable funding models for online content.

That said, it’s human nature for people to think they’re the good guys.  Eyeo sees themselves as the good guys, but it’s an incomplete kind of good. Adblock improves web usability for users, but it simultaneously damages the websites that those users love the most. When I asked Eyeo CEO Till Faida about this, he said something that gave me pause:

The open source project Adblock Plus may seem like a threat to publishers. But whether we like it or not, on the Internet the user is in control. Some companies haven’t fully understood the consequences of that. Our Acceptable Ads program brings both sides together, benefiting everyone in the long run. We are popular only because we do a good job of cleaning up all the excessive advertising, and we also provide significant and measurable value to our partners. We are ready to work with anyone who brings positive innovation in the shape of Acceptable Ads.

– Till Faida, CEO of Eyeo GmbH

Reading this, I realized Eyeo might argue that PageFair is one example of positive innovation borne from the crisis that they’ve provoked. We started PageFair to combat adblocking, but we decided not to declare outright war, because that would be tantamount to declaring war on the hundreds of millions of users who have rejected current forms of advertising. Instead, we chose to open diplomatic relations. With Eyeo we eventually found enough middle ground to agree on an acceptable PageFair Ad unit. This is currently the closest we can get to approval from the users, and we value our ability to say that our ads are so polite that even the leading adblock plugin chooses not to block them.

There is No Monopoly

It’s totally understandable that many publishers want to attack adblocking in whatever way they can. However, the argument that Eyeo wields a monopoly is false. There are many options for people who want to block ads, but most people choose either Adblock Plus or the (rather generically-named) “AdBlock”. Both are incredibly popular. Confusingly, Adblock Plus is the original of the two, and can be traced back to Firefox circa 2004. Their competitor “Adblock” stole the lead on Chrome in 2009, where most people mistakenly think that it is the original. While Chrome has been steadily stealing users over from the other browsers, “Adblock” has grown a little faster than Adblock Plus. Our data indicates that the two plugins are now roughly on a par, and we have no way to say which will have the lead in 2016. One thing’s for sure: with an occasional public flamewar thrown in for good measure, the two plugins are the dictionary definition of genuine competition.

The Cost of Attacking the Users

It seems like the greatest damage these lawsuits will inflict will be distraction for the executives in charge of Eyeo. Meanwhile, the adblocking community will be galvanized against the publishing industry and tens of millions of people who never heard of adblock will read about it in the newspapers. We have seen this play out with online file sharing, and we know how it will go.

The recent speculation about similar lawsuits in France has generated hundreds of stories already, many in mainstream media. In the PageFair & Adobe report we established that people discover adblocking through word of mouth – friends, family, colleagues and through reading online. Simply learning that something called “adblock” exists is enough to convince many people to install it. In our report we revealed the exponential growth of adblocking over the last 4 years, but preliminary data shows that adblock growth may have actually slowed down a little in 2014. These lawsuits will likely reverse that slowdown and give adblock adoption a new lease of life in 2015.

By suing an open-source project, the users will polarize against publishers. Not only will more people install adblock, but they will feel justified in doing so; able to deal with any discomfort at hurting publishers by reminding themselves that it was the publishers who threw the first punch.

Even if the lawsuits succeed, and Adblock Plus is somehow stopped, the victory will be short-lived. Just as Gnutella, Kazaa, Morpheus, eMule and BitTorrent quickly filled the void left by Napster, there are many less moderate plugins ready to take the place of Adblock Plus.

What’s the Alternative to Litigation?

150 million adblock users can’t all be wrong. The root problem is not the adblock plugins, but the typical quality of online advertising. Our goal is to provide publishers with pro-consumer alternatives with which to monetize their content. Our current flagship is PageFair Ads – a non-intrusive advertising platform – and we’re happy to be whitelisted by one adblock plugin (and hopefully more in the future). We intend to show that pro-user advertising encourages visitors to return time and again, putting publishers in a position to build Life-Time-Value instead of Cost-Per-Click; that there’s more to online journalism than clickbait and listicles, and that it’s  once again possible to build a publishing business upon audience loyalty.