$168 billion in Google ad revenue at risk in Supreme Court case

Washington:

The US Supreme Court is set to hear a case that could pose a threat to the internet’s most lucrative business: online advertising.

The case, Gonzalez v. Google, will be argued on Tuesday and will center on whether Internet companies are liable for the content their algorithms recommend to users. The tech industry says it is protected by a legal shield contained in the Communications Act called Section 230.

Much of the discussion surrounding the case has focused on the costs to online companies if the court determines they are legally responsible for the hundreds of millions of comments, videos and other content posted daily by users. . However, such a decision could also come at the heart of automated advertising, on which Meta Platforms Inc’s Facebook and Alphabet Inc’s Google rely for the bulk of their revenue.

In fact, social media companies are viewing the issue as a potential threat.

“This case could have adverse effects on the entire advertising ecosystem,” said Mark Beckmann, chief executive of DMA United, an advertising firm that regularly uses Google and Facebook’s tools to deliver targeted advertising to potential customers around the world. uses.

Google is being sued by the family of Nohemy Gonzalez, a 23-year-old US citizen who was one of at least 130 people killed in attacks coordinated by the Islamic State in Paris in November 2015. The family argues that Google’s YouTube should be held responsible. For automatic recommendations of Islamic State videos.

Websites and advertising networks automatically target ads based on information collected about users, including their location, browsing history, topics they follow, and more. Advertisements are posted on websites by online tools without human intervention.

Google declined to comment about the case. But in its Supreme Court brief, it said it is concerned about the effect of the case on the economy, including on advertisers. Meta believes that Section 230 protects the company from liability for all third-party content, including ads, and the social media giant is concerned that the court could undermine those protections, a Meta spokesperson confirmed. Did.

Experts say a sweeping Supreme Court ruling could effectively end the business of serving personalized ads on the Internet and bring online advertising practices back to the early 90s. This could force platforms to launch a wave of lawsuits over the millions of ads they target to users, resulting in exponential legal costs for smaller ad networks and exchanges.

“If we’re not targeting ads, we’re going back to the old ’90s model of ‘see who bites,'” said Jess Mears, legal advocacy attorney for the tech-funded group Chamber of Progress. . Mears previously worked for Google.

Together, Google and Facebook account for about 50% of all digital advertising revenue worldwide. The companies, which have been referred to as the “duplexes” of online advertising, collect data about their users in order to serve them relevant ads — a business that nets both companies billions of dollars a year. Globally, Google is set to generate $168 billion in ad revenue in 2022 while Meta will generate $112 billion, according to data analytics company Insider Intelligence. This year, Google alone is projected to reach $73.8 billion in US revenue, while Meta is expected to reach $51 billion. A High Court ruling would only apply to the US, but it would be technically difficult for companies to handle advertising differently in its biggest market than in other countries around the world.

The companies are already facing legal challenges over the advertisements they serve, especially those related to sensitive issues such as health care, politics, employment opportunities and more. With few exceptions, because of Section 230, Facebook and Google successfully dismiss most cases that hold them responsible.

This could quickly change if the Supreme Court decides to narrow down Article 230. While the shield protects companies from lawsuits over content generated by ordinary people, Kathy Gelis, a California attorney who has represented tech companies in online speech cases, said the ads could be classified as “user- generated content” if the Supreme Court’s judgment is comprehensive.

The digital advertising industry is already coming under fire as governments around the world argue that companies collect too much information about people without their consent and violate their privacy. Beckmann said privacy regulations in countries including the European Union have allowed the amount of data companies can collect on users, already putting a huge strain on the digital advertising ecosystem.

“We are already implementing new marketing initiatives as an agency that will not only face up to when the 230 is limited, but also in the face of these new third-party data privacy restrictions,” Beckman said. He added that the era of “pretty” and niche advertising may be back as advertisers can no longer rely on the hyper-personalised and cheap ad networks they have become accustomed to. While targeted advertising allowed firms to reach their target audiences with little effort, a pivot away from algorithmic recommendations may require advertisers to work harder to attract attention.

Mears said it is likely that Google and Facebook will bear the brunt of the lawsuits the court found to have weakened Section 230. But smaller ad agencies and ad networks will face “trickle-down” effects.

Online advertising is so important to Meta and Google’s business model that they will likely try to fight it in court, said Gelis, a California attorney. They will try to handle the legal costs and see if they can win the case on merits. “Everyone will try to do as best they can,” Gelis said.

For some critics of tech companies, turning off targeted ads on the Internet could benefit some of the Internet’s most vulnerable users. Children’s advocacy group Common Sense Media and Facebook whistleblower Frances Haugen argued at the Supreme Court that Google’s video and advertising recommendations could create a “feedback loop” that leads children and teens down a rabbit hole that leads to eating disorders. , revolve around self-harm and extremism. In his view, Google and Facebook should better control the ads it serves to younger audiences.

The case could be “a blow to many businesses,” said Eric Goldman, a law professor at the Santa Clara University School of Law.

“So much advertising is now being delivered in a dynamic way,” Goldman said. “If that dynamic evaluation is an algorithmic recommendation that disqualifies ad networks for 230 protection, then the advertising industry has to do something different.”

(Except for the headline, this story has not been edited by NDTV staff and is published from a syndicated feed.)