Axel Springer Faces Down Adblock Plus in Court

Sean Blanchfield Adblocking, Uncategorized

Last month we covered the unfolding legal attacks against Adblock Plus, which began in December with two hearings in Munich, Germany.  On Tuesday, March 10th the European media giant Axel Springer presented its case against Eyeo GmbH (the company behind the immensely popular free adblock plugin, Adblock Plus) in a short court hearing in Cologne, Germany.

Although it was just an initial hearing, there were clear similarities with the previous cases in December.  An initial attempt to target adblocking per-se failed to get traction, but was swiftly followed by a more fruitful attack on Adblock Plus’ primary business model.  Axel Springer first sought a court-ordered ban on Adblock Plus, but the court gave a preliminary opinion that banning any software in this way would not be possible.  Axel Springer then attacked Adblock Plus’ Acceptable Ads program, reiterating arguments that were made by media giant RTL in December.

The gist of this argument is that Adblock Plus’ behavior of selectively whitelisting publishers is anti-competitive; it puts companies that do not have access to the whitelist at an unfair disadvantage to those that do.  Eyeo is quite open about the fact that they charge larger publishers a fee as a condition of their participation in this program.  It seems that the publishers are not criticizing the fact they are being charged (as one might expect), but more specifically that publishers are being charged different rates.  They allege that there is an “insider” rate charged to some publishers, while everyone else is charged an exorbitant fee of 30% of the unblocked ad revenue.

The judge may agree, calling the whitelisting practice “highly questionable.”

The Financial Times recently revealed that Google and Bing are on Adblock Plus’ whitelist, and the sentiment is that they are probably among those charged this special flat rate.  If not, then Google would be paying Eyeo something in the region of $1BN per year (i.e. $40BN annual revenue x 10% est. adblocking x 75% approx. adblock plus marketshare x 30% rev share).  From the point of view of large publishers who are unwilling to pay the standard fee, the whitelist looks like a cartel.  To them, the handful of super-publishers that are getting the insider rate are simultaneously funding adblocking while enjoying immunity from it.  The judge may agree, calling the whitelisting practice “highly questionable.”

The question of whether the Acceptable Ads program is anti- or pro-publisher is clearly a complicated one that requires more analysis.  The court decided that it would consider oral arguments, but that the parties should also make written submissions, which will considered before the next hearing on May 5th.  This next hearing is likely to be the first of many required in order to resolve a case concerning competition law.  It is impossible to say which way this story will develop, but Claas-Hendrik Soehring, a media lawyer in Axel Springer was bullish, stating that the hearing “confirm[ed] our view that publishers do not need to accept extortion attacks on their web sites.”  Meanwhile, the German daily newspaper Süddeutsche Zeitung announced on Friday March 13, 2015 that they will be launching their own legal offensive against ABP, bringing the total number of simultaneous lawsuits against Eyeo to five.

…awareness of adblock is all that is required to turn someone into an adblocker.

Our opinion at PageFair is that these actions are more likely to contribute to the larger problem of adblocking, rather than to defeat it.  If Eyeo is somehow crippled by these lawsuits, there are many other adblockers ready to take its place, most of which are more radical in their desire to wipe out all online advertising.  The media storm caused by these cases just serves to raise public awareness of the existence of adblock.  And, as it was recently noted at the IAB leadership conference in Arizona, awareness of adblock is all that is required to turn someone into an adblocker.