BGH: is Adblock dominant as a provider?

Adblock provider Eyeo is involved in numerous litigation and has now also lost a case in the Federal Court of Justice in antitrust matters.

The BGH ruled that competitive forces faced by a company operating on a two-sided market, which provides a service to one side of the market
free of charge and demands remuneration
from the other side of the market, could not generally be correctly identified without considering both sides of the market
and their mutual influence.

In addition, the Cartel Senate ruled that Adblock would be dominant in the market if the operator of a website had no other economically viable access to users, but adblock itself was responsible for suppressing advertising, on the one hand, offer others, however, for a fee, the activation of the blocked advertising by inclusion in a white list.

Both the Munich Regional Court and the Munich Higher Regional Court dismissed the claim that Eyeo must refrain from, among other things, making the activation of advertising dependent on the conclusion of a contract or the payment of a fee, in particular a revenue-based fee, encouraging users to use the
ad blocker to block advertising on their websites, to impair communication between user devices and the servers of media agencies by interfering with messages about displayed advertising, to deceive users by purporting to activate advertising through a “user community” and, finally, to present the functionality of the ad blocker to users as an altruistic or non-profit activity.

While the BGH mainly rejected unfair claims and thus largely in accordance with its previous case law, it annulled the Higher Regional Court of Munich in all questions, the rejection of antitrust claims under Section 18 para. 1 i.V.m. s. 19 para. 1, paragraph 2 No. 1 GWB.

A company is dominant in accordance with Paragraph 18 para. 1 GWB, where, as a supplier or a customer of a particular type of goods or commercial services, it is without competitors on the relevant product and geographic market, is not exposed to substantial competition or is a competitor in relation to its competitors has an outstanding market position.

However, the OLG had decided that, although Eyeo was the only provider of an advertising release and that users who have adblock installier could only be reached by activating Eyeo with advertising, it would not be able to position on the relevant market. Just as a food discounter with a small market share in the food market is not dominant in the market over food manufacturers because the food manufacturer cannot reach the discounter’s regular customers if the discounter does not include the manufacturer’s food in its range, Eyeo does not have a dominant position on the ground that only it can bring access to users by activating advertising.

This is not the subject of the BGH.

If, as in the case of a dispute, it concerns a potentially dominant supplier, the product (or service) that it offers must first be identified. Only on this basis can it be meaningfully examined whether products offered by
other suppliers are interchangeable from the point of view of the customers, i.e. the
(potential) buyers of the product, in terms of their properties, intended use
and price to cover a specific need.

The comparison of the Higher Regional Court is wrong, since, unlike the discounter, Eyeo is not a demand agent but a provider, and it is therefore not a question of what proportion of all Internet users it can make available to the site operators, but on which market it is it offers the removal of the barrier to access which it has created itself.

Eyeo’s pricing leeway and thus also the objective of the ARC would only be controlled by competition if the operators of ad-financed websites could also obtain access to
internet users who have installed Adblock and preset the “Easylist Germany” in a way other than by inclusion in the preset white list for a fee, i.e. Eyeo’s corresponding service could therefore be substituted by other services from the point of view of the other side of the market.

The BGH therefore referred those claims back to the OLG in order to assess that circumstance and, at the same time, to determine whether Eyeo, as the standard addressee of Paragraph 19(4) of the 2 No. 1 GWB unfairly hinders another company or treats it differently from similar companies without objectively justified
reason. In order to do so, the OLG must carry out a comprehensive balance of the interests involved, taking into account the objective of the Law against Restrictions of Competition, which is aimed at freedom of competition.

The following statement of the Federal Court of Justice is interesting in this consideration, which at first impression seems to be a weakening of the Adblock II judgment:

It follows, however, that the defendant’s interest in controlling the advertising of the site operators by blocking and unlocking them and participating in their advertising proceeds is not worthy of protection as such, but may only be taken into account to the extent that it does: legitimate interests of those Internet users who have installed the defendant’s ad blocker, or to finance the development and maintenance of the ad blocker, thereby achieving a reasonable and risk-appropriate profit.

The BGH therefore turns in circles, weakens corresponding jurisprudence and does not seem to know correctly in the numerous judgments itself whether it wants to protect users, whether it should protect advertisers or whether there is anything in between. So it remains exciting, because the path of jurisprudence in these and similar cases is currently difficult to predict.