EFF to 9th Circuit: App Stores Shouldn’t Be Liable for Processing Payments for User Content

EFF filed a brief this week in the U.S. Court of Appeals for the Ninth Circuit arguing that app stores should not be liable for user speech just because they recommend that speech or process payments for those users. Those stores should be protected by Section 230, a law that protects Americans’ freedom of expression online by protecting the intermediaries we all rely on. Absent Section 230 immunity in these contexts, the platforms would be forced to censor user speech to mitigate their legal exposure.

The case is actually three consolidated cases where the plaintiffs sued the leading app stores: Google Play, Apple’s AppStore, and Facebook. The plaintiffs’ claims relate to the app stores offering “social casino” apps, where users can buy virtual gambling chips with real money but can’t ever cash out any chips they win. The plaintiffs argue that these apps amount to illegal gambling. The app stores not only offer and promote these social casino apps, they also facilitate the in-app purchases (also called microtransactions) for the virtual gambling chips.

At issue on appeal is the part of Section 230 that provides immunity to internet websites, apps, and services when they are sued for user-generated content. Section 230 is the foundational internet law that has, since 1996, created legal breathing room for online intermediaries (and their users) to host or share third-party content. Online speech is largely mediated by these private companies, allowing all of us to speak online, access information, and engage in commerce, without requiring that we have loads of money or technical skills.

In this case, the plaintiffs are arguing that Section 230 should not apply to the app stores for promoting or recommending the social casino apps, nor for facilitating the in-app purchases for virtual gambling chips. Both the apps and the chips are types of third-party content.

The district court rightly ruled that Section 230 does apply to the app stores’ promoting or recommending the social casino apps within their platforms. In our brief we urged the Ninth Circuit to affirm this holding. This case gives the court another bite at the apple to hold that Section 230 applies to online intermediaries that recommend content created by others, after its opinion in Gonzalez v. Google was vacated by the U.S. Supreme Court earlier this year.

If platforms lost Section 230 immunity for recommending user-generated content, they would cease to offer recommendations, harming users’ ability to find the content they want. Or the platforms would censor any third-party content that might pose a legal risk should the content be swept up in the platforms’ recommendation algorithms, harming user speech in the process—both the ability to share and to access content.  

However, the district court erred when it ruled that the app stores do not have Section 230 immunity for facilitating the purchase of virtual gambling chips within the social casino apps. In our brief we urged the Ninth Circuit to reverse the district court on this issue. We argued that a rule that exposes online intermediaries to potential liability for facilitating a financial transaction related to unlawful user-generated content would have huge implications beyond the app stores.

The plaintiffs argue that the app stores could preserve their Section 230 immunity by simply refusing to process in-app purchases. But banning the easiest purchasing method would degrade the user experience in online stores—and not just in the three large stores sued here. The plaintiffs’ position fails to recognize that other platforms don’t have such a choice. Etsy, for example, facilitates purchases of virtual art, while Patreon enables artists to be supported by “membership” fees. If platforms like these were to lose Section 230 immunity and thereby be exposed to potential liability simply because they process payments for user-generated content, their entire business models would be threatened, ultimately harming users’ ability to share and access online speech.