The Law and Business of Social Media
June 09, 2021 - Litigation

Northern District of California Holds that Section 230 Applies to App Store

Northern District of California Holds that Section 230 Applies to App Store

While Section 230 of the Communications Decency Act continues to face significant calls for reform or even elimination, the recent Coffee v. Google case illustrates that Section 230 continues to provide broad protection to online service providers.

In Coffee, the Northern District of California invoked Section 230 to dismiss a putative class action against Google alleging various claims premised on the theory that video games in the Google Play store with a gaming feature called “loot boxes” constituted illegal “slot machines or devices” under California state law.

To obtain these loot boxes, players must purchase virtual in-game currency through Google Play’s payment system. Players can then exchange the virtual currency for loot boxes, which give them a chance to obtain rare virtual items. Google charges a 30% commission on purchases of such virtual currency.

The plaintiffs asserted that these loot boxes “entice[d] consumers, including children, to engage in gambling and similar addictive conduct.” Because Google profited from the loot boxes through commission it charged on sales of virtual currency, the plaintiffs argued that Google should be held liable under a variety of state law claims.

In response, Google moved to dismiss the plaintiffs’ claims, arguing that it was immune under Section 230, which provides a safe harbor from claims that treat an online intermediary as the publisher or speaker of any information provided by another party.

The court evaluated Google’s Section 230 defense using the standard three-prong test as enunciated by the Ninth Circuit in Barnes v. Yahoo!, Inc.: Immunity exists for a “(1) a provider or user of an interactive computer service (2) whom a plaintiff seeks to treat, under a state law cause of action, as a publisher or speaker (3) of information provided by another information content provider.”

On the first prong—whether Google is a provider of an interactive computer service—the court determined that Google was a provider of such a service because it maintains a virtual online store where consumers can download various software applications that are generally created by other developers.

On the second prong—whether the plaintiffs seek to treat Google as a publisher or speaker under a state law cause of action—the court cited Fair Hous. Council of San Fernando Valley v. Roommates.Com for the proposition that publication includes “any activity that can be boiled down to deciding whether to exclude material that third parties seek to post online.” Because the plaintiffs apparently sought an order requiring Google to screen apps offered through its Google Play store for those containing the loot boxes, the court reasoned that the plaintiffs’ claims did treat Google as the publisher of the video game apps at issue.

The plaintiffs argued that Section 230 only protects publishers of “speech” rather than publishers of other content such as software. But the court rejected that argument, citing Evans v. Hewlett-Packard Co., which held that the defendant enjoyed immunity under Section 230 in connection with the operation of a web-based store that distributed an app developed by a third party.

The plaintiffs also argued that Section 230 did not apply because their claims did not treat Google as a publisher of another’s content but rather sought to “hold Google accountable for permitting and facilitating illegal gambling.” The plaintiffs cited Barnes for the proposition that Section 230 does not insulate interactive computer service providers from liability for their own wrongful conduct that goes beyond merely publishing another’s content.

Unconvinced, the court noted that Barnes denied Section 230 immunity to Yahoo! with respect to a promise that Yahoo! had made to the plaintiff to remove certain third-party content subsequent to, and separately from, the initial publication of the content. Google had made no such promise to the plaintiff in the instant case.

Finally, on the third prong—whether the information was provided by another information content provider—the plaintiffs noted the holding in Roommates that “[a] website operator is immune [under Section 230] only with respect to content created entirely by third parties.” Specifically, a provider that materially contributes to the illegality of the content at issue is not entitled to immunity under Section 230. However, the court held that the plaintiffs failed to allege any conduct by Google that would constitute a material contribution to the video games on its app store.

Accordingly, the court held that Google met all three prongs of the test and was entitled to immunity under Section 230 with respect to the apps in the Google Play store. Accordingly, the court dismissed the case with leave to amend.