Ad Exodus From Google Drives Change, Lawsuit Doesn’t

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By Michaela Ross and Alexis Kramer

A large-scale pullout of advertising dollars from Alphabet Inc.'s Google may have more clout in revising the search engine’s policies on offensive content than a lawsuit alleging its ads supported terrorism groups.

AT&T Inc. and Verizon Communications Inc. suspended some advertising with the world’s largest digital advertiser amid worries that their ads had run alongside offensive YouTube videos and websites. The wireless carriers join the U.K. government and a slew of companies that reduced or ended their ad buying with Google over the past week, after media reports revealed some ads were featured alongside videos that supported terrorism and anti-Semitic content.

Johnson & Johnson, GlaxoSmithKline, British Broadcasting Corp., Sainsbury Plc, Volkswagen AG and Toyota Motor Corp. have also pulled ads, according to Bloomberg News.

The search engine already faces a U.S. lawsuit alleging its pairing of advertisements with terrorist content supported the Islamic State Group, or ISIS, in its efforts. The Communications Decency Act at Section 230, 47 U.S.C. § 230, likely protects Google from the claim. But the advertiser exodus has forced the company to take steps to self-police its ad and content policies.

“It’s the power of purse strings to change behavior faster than any lawsuits,” Ron Urbach, co-chair of the Advertising, Marketing & Promotions Practice Group at Davis & Gilbert LLP, told Bloomberg BNA. “You can have all the protections you want but you’re not going to have any advertising money.”

Millions in Lost Revenue?

The fallout potentially could cost Google hundreds of millions of dollars in lost revenues. Verizon and AT&T are two of the largest advertisers in the U.S., spending $1.5 billion and $2 billion in ads, according to Kantar Media data for 2015, the latest full year for which data was available. Google ranks as the No. 1 digital platform, receiving 243 million views a month, according to January data from media analytics researcher ComScore Inc.

Google is responding to the pressure. It will introduce default settings that make it easier for advertisers to exclude websites, videos and content paired with their ads, according to a March 21 company blog post. The company will also aim to be more effective in removing ads harassing people based on their race, religion and gender, the post said.

The search engine has “begun an extensive review of our advertising policies and have made a public commitment to put in place changes that give brands more control over where their ads appear,” a company spokeswoman said in a statement to Bloomberg BNA.

The more Google tinkers with its policies, the more it may be at risk of losing its immunity as a platform under Section 230, Colleen Devanney, attorney at Vorys, Sater, Seymour and Pease LLP, told Bloomberg BNA. Section 230 shields online platforms like Google from being held liable for content published on their sites by third parties.

The company may be moving into a gray area if it steps too far outside its traditional publisher role, Devanney said. “At some point that could cross the line,” she said.

Advertisers Suspend Accounts

For decades, internet platforms have known it is risky to place ads on user-generated sites, like Google’s YouTube, where they can’t control the content, Eric Goldman, co-director of the High Tech Law Institute at Santa Clara University, told Bloomberg BNA.

The search engine already is under fire in a lawsuit brought by three families of victims of the December 2016 Orlando nightclub terrorist attacks. They alleged Google’s ad tactics supported ISIS’s operations, violating the Anti-Terrorism Act, 18 U.S.C. § 2333 Crosby v. Twitter, E.D. Mich., No. 2:16-cv-14406, motion to dismiss filed 3/10/17 . Twitter Inc. and Facebook Inc. also are defendants in the case.

The plaintiffs in Crosby alleged Section 230 did not apply because the online platforms created their own content by choosing which ads would appear with which posts based on information the sites collect about their viewers.

The plaintiffs in the Orlando case are unlikely to succeed against the online platforms, according to several attorneys with knowledge of Section 230. But the sweeping exit of advertisers has already spurred Google—which generated 88 percent of its revenues in advertising last year, according to Bloomberg data—to rethink its ad policies.

“We’re seeing the evolution of self regulatory measures all driven by market forces,” Goldman told Bloomberg BNA.

Still, the new tools announced by Google may not prove to be enough to satisfy advertisers, who continued to suspend accounts even after new policies were announced.

“Until Google can ensure this won’t happen again, we are removing our ads from Google’s non-search platforms,” a spokesperson from AT&T told Bloomberg BNA.

Verizon spokesperson Richard Young said, “We are working with all of our digital advertising partners to understand the weak links so we can prevent this from happening in the future.”

To contact the reporters on this story: Michaela Ross in Washington at mross@bna.com; Alexis Kramer in Washington at akramer@bna.com

To contact the editor responsible for this story: Keith Perine at kperine@bna.com

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