After winning several previous victories against media organizations in German courts, Adblock Plus lost its latest battle in the Cologne higher regional court. While German courts still contend that the use of ad blockers is legal, the court said that Adblock Plus cannot charge Axel Springer to have its ads appear before any of Adblock Plus’s 1 million desktop and mobile users, reports Fortune.
With the Adblock Plus browser extension, ad block users can opt to whitelist “acceptable ads” from specific companies, or they can opt to see no ads at all. According to Adblock Plus most publishers (i.e., “small entities”) can get their ads whitelisted for free, but larger publishers who serve “acceptable ads” to ad block users more than 10 million times per month have to pay Adblock Plus 30 percent of the additional revenue created by whitelisting.
“…because of this finding, we have to change how we offer whitelisting to Axel Springer in Germany. Normally, because Axel Springer would probably qualify as a ‘large entity’ per our rules, they would pay; but because of this ruling, we have to treat them as a special case. Simply put, we can’t accept compensation for the services we might render to them. So, if Springer brings us ads to whitelist, and these fit our criteria, we’ll whitelist them for free just like the other 90 percent of the companies on our whitelist.
“Rest assured, we’re going to appeal. And we’re confident that Germany’s supreme court (the Bundesgerichtshof) will overturn this one part of the decision.”
In the “per our rules” guidelines on its website, Adblock Plus explains larger entities pay a licensing fee for whitelisting, but the “acceptable ads criteria must be met independent of the consideration for payments.” In other words, publishers like Axel Springer cannot buy exceptions; they must meet the “acceptable ads criteria” to be shown to Adblock Plus users.
In the Fortune article, Axel Springer’s head of content and commercial law, Claas-Hendrik Soehring reacted to news of the favorable verdict. “Journalism costs money and must always have the option of financing itself through advertising revenues, be it in the offline world or in the digital space,” Soehring said.
“We will not accept illegal interferences with our constitutionally guaranteed freedom in designing media products – in particular, the ‘cutting out’ of ads from our digital media offerings. We are happy that the court declared the concrete business model of Adblock Plus illegal.”
Axel Springer may have won this battle, but they have certainly not won the ad blocking war. Despite this one victory, German courts have upheld ad blockers as legal tools, provided they do not violate laws on competition, copyright or market dominance.
With this particular ruling, the court relied on a December 2015 statute in German unfair competition law that was passed to protect consumers against aggressive business tactics. Adblock Plus said this statute is “obscure” and was intended to address B2C concerns, but not B2B disputes.
If Adblock Plus appeals the ruling against it in this Axel Springer case, and the German supreme court upholds the Cologne court’s decision, this could have a big impact on Adblock Plus’s bottom line. In addition to not being able to charge Axel Springer revenue, it is likely that other media organizations will go to court to avoid paying fees for whitelisting too. With precedent already established, it will be an easy win.
That said, we expect Adblock Plus to aggressively fight this in court and for that fight to be a very public one. In the meantime, Adblock Plus should explore other revenue-generating opportunities if its business model is dependent on the whitelisting revenue to support itself. On the publishing end of things, publishers like Axel Springer can appeal to their readers by better addressing user experience, privacy concerns and annoying or intrusive ads.