Is the use of an ad-blocking application (e.g., AdBlock) unlawful?

1. The most recent phase of the long-standing dispute between YouTube and ad blockers began in May 2023, when YouTube introduced a feature on its platform that warned users with ad blockers that their video player would be blocked after playing three videos with the ad blocker enabled.
2. Subsequently, in early September 2023, YouTube increased its efforts and began blocking video playback for users who ignored the warning. In October 2023, YouTube officially confirmed its attempt to defeat ad blockers when spokesperson Christopher Lawton told The Verge about the “launch of a global effort” aimed at encouraging users to allow ads on YouTube or try YouTube Premium.
3. YouTube’s efforts, which many IT journalists do not hesitate to call a war between YouTube and ad blockers, appear to have at least partially paid off. According to the portal techbyte.sk: “YouTube has succeeded in getting people to stop using ad blockers. However, it was mistaken in assuming that many of them would be willing to pay for premium membership. This trend was noted, for example, by the company AdGuard. Its ad-blocking tools are reportedly used by approximately 75 million people, with about 4.5 million paying for them. Normally, around 6,000 people uninstall its blockers from their browsers each day. And now? From October 9 to 18, the average number of people uninstalling the extension rose to 11,000 per day, with the number reaching as high as 52,000 on October 18.”
4. Naturally, the developers behind ad blockers refused to remain solely on the defensive in this so-called war and began updating their applications to bypass YouTube’s restrictions. This also applies to Slovak developers of ad blockers. As reported, for example, by techbyte.sk: “Not all companies in this field have reason to complain. For instance, the Slovak company Hankuper, which developed the ad blocker AdLock, is still doing relatively well, as it has recorded both an increase in uninstallations and in new installations. However, later this week the balance may shift in favor of installations, as it plans to release an update that will make its blocker undetectable by YouTube.”
5. This “global conflict” between YouTube, owned by Google, and other companies that generate revenue from advertising on the one hand, and ad blockers on the other, inevitably overlaps not only with the world of IT specialists but also with the world of lawyers. Let us therefore turn to the promised analysis of the legal aspects of this dispute.

Ad Blockers and Possible Copyright Infringement

1. For many lawyers, when reflecting on this issue, copyright law is the first thing that comes to mind. In the Slovak Republic, the core regulation of copyright is contained in Act No. 185/2015 Coll., the Copyright Act, as amended (the “Copyright Act“). The very first provision of the Copyright Act states: “This Act regulates the relationships arising in connection with the creation and use of a copyrighted work (the “work”) or artistic performance, in connection with the production and use of a sound recording, audiovisual recording, or broadcast, and in connection with the creation or production and use of a computer program or database, so that the rights and legitimate interests of the author, performing artist, producer of a sound recording, producer of an audiovisual recording, radio broadcaster and television broadcaster (the “broadcaster”), publisher of a periodical, author of a computer program, author of a database, and maker of a database are protected.”
2. Furthermore, pursuant to Section 87(1) of the Copyright Act: “A computer program, which is a set of commands and instructions expressed in any form used directly or indirectly in a computer or in a similar technical device, is protected under this Act if it is the result of the author’s creative intellectual activity. The commands and instructions may be written or expressed in source code or in machine code. A computer program also includes the underlying material used to create it. The ideas and principles on which an element of a computer program is based, including those underlying its interface, are not protected under this Act.”
3. According to Adamová et al.: “The essence of copyright protection of computer programs is based on the fact that all three elements of a computer program are protected: the source code (Eng. “source code”), the object code (Eng. “object code”), and the related documentation. A computer program therefore does not necessarily have to be expressed in binary or textual code. It may also, for example, be an algorithm described in a book (an algorithm is understood as a set of defined rules for solving a problem, with algorithms being part of computer programs), provided that its textual expression meets the conditions under Section 4.

The source code is the version of a computer program written in a programming language that a human can read and understand, especially if they are an expert in that programming language. It is thus a form of expression of a computer program usually written in a high-level programming language (e.g., Python, Visual Basic, or Delphi). However, it may also be expressed, for example, in a low-level programming language (Eng. “assembler”) for computers or other programmable devices, where there is a strong connection to the architecture of the given device.

The object code is the version of a computer program that can be directly used by a computer in binary form – a series of ones and zeros that the computer processor can process. Binary code is not directly comprehensible to humans unless it is decompiled, that is, transformed into source code. Conversely, to run source code on a computer, a process of interpretation or compilation is necessary, the result of which is object code that the computer can process.”

1. As follows from the above doctrine, unauthorized interference with the source code of a computer program may be considered an unauthorized interference with copyright. This was precisely the argument made by the German media giant Axel Springer, which, in one of a series of long-standing disputes against the company eyeo (Adblock Plus), claimed that ad blockers infringe copyright by modifying the HTML code of websites in order to block advertisements.
2. Specifically, the publisher Axel Springer argued that its websites are protected under German copyright law as a computer program, including their HTML code. Axel Springer claimed that due to the way Adblock Plus interacts with the website, its copyrights were infringed, since copies and modifications of the code occurred without the publisher’s consent.
3. Both the first-instance and appellate German courts disagreed with Axel Springer and held that the use of Adblock Plus affects only the flow of the program through external commands, without altering the essence of the program or generating a modified version. The result of using the Adblock Plus extension is therefore merely a configuration of the browser carried out by users according to their preferences.
4. The courts stated that internet users do not need to obtain permission from website owners when they wish to adjust their settings so that the displayed page appears better according to their preferences. Modern websites consist of many separate components that can be technically distinguished from one another, including text, images, and videos, as well as software embedded in the HTML of the site. For the courts, the mere fact that these software components were used in the HTML of a website was not sufficient to conclude that the website itself is a protected computer program.
5. In other words, how a particular website is displayed to an internet user is (also) within the user’s control. This applies even if the internet user does not wish advertisements to be visible on a given website.
6. Despite the above, the courts’ decision also implies that although internet users may (legally) use tools of their choice when browsing the internet, the publisher Axel Springer may exclude users with an activated ad blocker from accessing its content. It can therefore be concluded that, according to the German courts, the use of ad-blocker detection tools by companies that generate revenue from advertising is, in principle, permitted. The courts also stated that Axel Springer may block its content with a paywall, that is, a barrier through which an internet user may access the content only upon payment.
7. The problem, however, may lie in the manner in which an ad-blocker detection tool detects ad blockers. Privacy activist Alexander Hanff argues that YouTube’s new ad-blocker detection is unlawful. According to Alexander Hanff: “ The script that [YouTube] uses determines what software people are using on their devices or what behavior their browser exhibits in connection with their private activities. That is not acceptable. It is unlawful. We have a fundamental right to privacy under Article 7 of the Charter of Fundamental Rights of the European Union. We have a fundamental right to data protection under Article 8 of the Charter of Fundamental Rights of the European Union.“
8. On the basis of Hanff’s claim, Patrick Breyer, a member of the German Pirate Party (Piratenpartei Deutschland), addressed the European Commission on November 6, 2023, requesting a legal opinion on whether “the protection of information stored in the terminal equipment (Article 5(3) of the Directive of the European Parliament and of the Council on Privacy and Electronic Communications) also covers information as to whether the user of the device hides or blocks certain elements of a website or whether ad-blocking software is used on the device,” and whether this type of detection is “strictly necessary for the provision of a service such as YouTube.”
9. Google, the owner of YouTube, naturally denies interfering with the privacy of internet users, claiming that it merely seeks to maintain its revenue from the YouTube platform. Thus, another phase in the battle between ad blockers and companies that generate revenue from advertising appears to be emerging. Should the European Commission side with privacy and data protection activists, companies that rely on ad-blocker detection tools will find themselves in a weaker position, as they could eventually lose one of the most effective tools currently available against ad blocking.

Ad Blockers and Unfair Competition

1. An interesting line of argument in the web of disputes between ad blockers and companies that generate revenue from advertising is the reasoning presented by the publisher Axel Springer before the German courts, according to which the company eyeo (Adblock Plus) violates German competition law by using so-called whitelisting.
2. Adblock Plus operates a program that may be translated into Slovak as “Acceptable Ads,” under which advertisements are classified as respecting the user experience on the internet, meaning ads that are not intrusive or annoying. This program is free of charge for smaller companies, but larger market players must pay to be included in the program.
3. In other words, ad blockers operate on a system of blacklisting, that is, placing advertisements on a “blacklist” of ads that will be blocked, and on a system of whitelisting, that is, placing advertisements on a “whitelist” of less invasive ads that will be permitted. However, whitelisting is subject to fees for larger companies, which also answers the question of how companies operating ad blockers are financed.
4. Axel Springer is a publishing house whose main source of income is the sale of advertising space; and
5. eyeo’s ad blocker causes Axel Springer to lose advertising revenue.

Axel Springer emphasized that while the whitelisting of certain advertisements is unlawful because it pressures advertisers to share their revenues with the ad-blocker provider, even the mere offering of a plug-in that blocks certain ads constitutes a violation of German competition law.

Axel Springer further argued that ad blocking threatens the free media landscape, claiming that such programs “jeopardize the quality and pluralism of information providers, and thus harm the public interest.”

1. The Federal Court of Justice overturned the decision of the Higher Regional Court in Cologne, which, like the Federal Court of Justice, did not categorize the offering of an ad blocker as an unfair competition practice, but considered paid whitelisting unlawful in the dispute between Axel Springer and eyeo.
2. The German Unfair Competition Act is intended to protect competitors, consumers, and other market participants against unfair commercial practices. The Act designates market conduct as unfair if it deliberately obstructs competitors. The Federal Court of Justice held that eyeo’s business does not amount to such deliberate obstruction of competition. According to the court, eyeo does not seek to obstruct other market participants through its business practices. Instead, the company pursues its own competing business model: generating revenue by offering advertisers the possibility of having their ads included on the whitelist.
3. The court also stated that an internet user independently decides whether to use an ad blocker, and eyeo merely provides the tool to enable the internet user to realize that decision. According to the court, the indirect obstruction of a content provider’s offering cannot be considered unfair, because internet users must actively install the ad-blocking program themselves. In general, if eyeo did not provide internet users with an effective tool to block ads, someone else could. However, it would still be internet users who would install and use the ad blocker.
4. The relevant decisions of the German courts are, from the perspective of the Slovak Republic, of course decisions of foreign courts. However, they may to some extent serve as an argumentative basis for Slovak courts as well. In addressing this issue, Slovak courts would likely take into account in particular the provisions concerning unfair competition contained in Act No. 513/1991 Coll., the Commercial Code, as amended (the “Commercial Code“).
5. Pursuant to Section 44(1) of the Commercial Code: “Unfair competition is conduct in economic competition that is contrary to the good morals of competition and is capable of causing harm to other competitors or consumers. Unfair competition is prohibited.”
6. According to Moravčíková: “Paragraph 1 is a so-called general clause, defining the basic features of conduct that is considered unfair competition and thus prohibited. An exact qualification of the acts that may be anticipated in the conduct of participants in economic competition is not possible, whether in view of the development of relations between entrepreneurs in the market with each other, or between entrepreneurs and consumers, as well as in view of the evolution of competitors’ sensitivity to particular activities and the development of case law. Just as parasitism on reputation was not initially regarded as an unfair practice from a historical perspective, but is now expressly listed in the qualification under paragraph 2, practices such as direct product comparisons are, under certain conditions, becoming permissible practices in advertising, although until recently they were considered unfair competition.“
7. According to Moravčíková: “The term “good competitive practices” must be distinguished from the general term “good practices” as encountered in civil law regulations. Their assessment is always a legal issue; only the determination of the content of conduct that is contrary to fair competition can be a factual issue, while the assessment and interpretation of legal regulations is a legal issue.”
8. According to Moravčíková: “The concept of ‘good morals of competition’ must be distinguished from the general concept of ‘good morals’ as encountered in civil law regulations. Their assessment is always a legal question; only the determination of the content of conduct that exhibits a conflict with the good morals of competition can be a question of fact, whereas the assessment and interpretation of the legal provision is a question of law.”

In case law, we also find an attempt to define such morals within competition as ‘the rules and customs observed in a competitive environment and regarded by competitors themselves as corresponding to business fairness’ (Decision of the Supreme Court of the Slovak Republic of July 29, 1994, no. 1 Obo 180/94). Above all, the good morals of competition cannot be equated with the general principles of decent behavior or ethics, since economic competition has its own specific features, and what might generally be assessed as ‘immoral’ may in the context of economic competition be regarded as a permissible practice (e.g., a certain degree of exaggeration in superlative advertising, which in ordinary interpersonal interaction might be considered impermissible deception).

One may agree with the view of P. Hajn that the good morals of competition are a subset of moral norms and, in particular, a subset of ‘good morals’ under Section 3(1) of the Civil Code. Conduct contrary to the good morals of competition need not be intentional (e.g., in the case of confusion of a trade name, such conduct may result from mere ignorance of the existence of another entity); it is sufficient to meet the requirement of objective capacity to cause harm to another entity. As we note later in the text, especially with the development of new methods of commerce and communication (the internet), the content of the category of good morals of competition is evolving, and therefore this concept cannot be precisely defined nor equated with customs established in a particular field of economic competition as developed in case law.“

Legal theory generally distinguishes between two approaches to violations of the good morals of competition, namely:

1. violations of the rules of economic competition through unfair practices of competitors in the sense of breaching the technical rules of competition (this may include conduct falling under unfair practices as defined by the Unfair Commercial Practices Directive);
2. violations of certain conventions of decency (so-called advertising against good taste, typically exemplified by the practices of the company United Colors of Benetton).“
3. According to Moravčíková: ”When assessing conduct within economic competition, a basic rule applies (the concept of the general and permanent validity of the general clause):
4. conduct that meets the characteristics of the general clause is always considered unfair competition, and thus prohibited;
5. if conduct meets one of the explicitly expressed characteristics defined in paragraph 2 and at the same time meets the basic characteristics of the general clause, it will constitute unfair competition prohibited by law.

Unfair competition is conduct that cumulatively meets the following characteristics:

1. the conduct takes place within economic competition (see commentary on Section 41);
2. the conduct must be contrary to the good morals of competition;
3. the conduct is capable of causing harm to other competitors or consumers (in this case, it is the objective capacity to cause such harm) “
4. As follows from the above doctrine, in the event of a dispute concerning unfair competition between a company that generates revenue from advertising and a company operating an ad blocker, a Slovak court would primarily have to assess whether ad blocking is capable of causing harm to other competitors and whether it is contrary to the good morals of competition.
5. The answer to the question of whether ad blocking causes harm to other competitors is fairly straightforward. Companies that generate revenue from advertising lose part of their income due to ad blocking, and in the case of whitelisting must also pay companies that operate ad blockers. Thus, companies generating revenue from advertising do indeed suffer harm as a result of ad blocking.
6. The core of the legal argument in such a hypothetical dispute would therefore likely focus on the issue of whether ad blocking and whitelisting violate the principles of fair competition. It is difficult to predict how a Slovak court would decide this matter, given the relative abstractness of the concept of “good morals of competition.” We are inclined to conclude, however, that a Slovak court would probably not consider ad blocking to constitute unfair competition. Ad blockers on the internet, including on the “Slovak internet,” have been functioning for some time, and competitors, including the “big” players, have long been aware of them and have adapted their websites accordingly.
7. Similarly, ordinary internet users have long used ad blockers and regard them as a normal part of browsing the internet. Under these circumstances, a relevant argument appears to be that conduct long knowingly accepted by competitors cannot be regarded as conduct contrary to the good morals of competition. This should not be taken as a claim that “everyone does it, therefore it is acceptable,” since there are many types of conduct engaged in by a significant part of society that cannot be considered lawful.
8. An example is the unauthorized downloading of games, songs, and movies from the internet. This conduct is indisputably unlawful, as it violates copyright law and, under certain circumstances, criminal law, which in itself makes it conduct contrary to good morals (a broader concept than “good morals of competition”). Our argument, however, lies rather in the fact that in the case of unauthorized downloading of games, songs, and movies from the internet, competitors themselves made their opposition to such conduct explicitly clear.
9. Millennials will likely remember the anti-piracy advertisement included on many legally purchased DVDs of films between 2004 and 2007, urging viewers not to “steal a movie, because you wouldn’t steal a car” (incidentally, according to a study published in The Information Society, the campaign that included this ad may actually have led people to “pirate” even more).
10. By contrast, as noted above, competitors in the Slovak market do nothing against ad blocking that could be regarded as an expression of their conviction that ad blocking is unlawful, but rather adapt to it without (loud) “complaints.” We therefore believe that even if ad blocking could hypothetically have been considered contrary to the good morals of competition in its early days, over time and through the acceptance of the status quo by both competitors and ordinary internet users ad blocking has, so to speak, become normalized.

Conclusion

1. In view of the above, we are inclined to conclude that the use of ad blockers is not unlawful. The war between ad blockers and companies that generate revenue from advertising, however, continues to rage and is likely far from over. In the next phase of this long-standing battle, we will probably learn whether ad-blocker detection itself is unlawful. At present, this is the most effective tool available to companies that generate revenue from advertising in their fight against ad blockers.
2. In addition to the clash between lawyers and IT specialists, we also see in this war a conflict between internet users who wish to browse the internet without being forced to watch intrusive ads, and companies that derive revenue from those ads. The average internet user will likely instinctively side with users employing ad blockers rather than with companies they may perceive as greedy profit-driven giants forcing them to surf the web while being bombarded with advertisements in which they have no interest.
3. Nonetheless, it is possible to express some understanding for the arguments of companies that generate revenue from advertising, especially in the case of media companies. Advertising revenues often constitute a significant portion of these companies’ income, and if lost, the quality of their work may deteriorate, or they may even cease to exist. Many media companies already suffered a major blow with the advent of the internet, as readers stopped buying print media and grew accustomed to free access to content on media websites. The loss of advertising revenue could be devastating for many media companies. Such an outcome would likely not be in the public interest, since limiting advertising revenues for media companies could jeopardize the quality and pluralism of information providers and even threaten the independence of the media.
4. Be that as it may, only time will tell how the long-running conflict between ad blockers and companies that generate revenue from advertising will unfold. For now, all eyes are on the European Commission in connection with Patrick Breyer’s aforementioned request for a legal opinion from the European Commission on whether the use of detection tools to identify activated ad blockers is compatible with European Union law.

References

1. Available at: www.theverge.com/2023/10/31/23940583/youtube-ad-blocker-crackdown-broadening
2. www.techbyte.sk/2023/11/prisna-politika-youtube-zne-uspech/.
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6. Tamtiež.
7. Available at: www.wired.com/story/youtube-ad-blocker-detection-eu-privacy-law/
8. Dostupné na: www.wired.com/story/youtube-ad-blocker-detection-eu-privacy-law/
9. Available at: www.sociallyawareblog.com/topics/german-federal-court-unfair-competition-law-no-basis-to-ban-ad-blocking-and-whitelisting
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11. MORAVČÍKOVÁ, A. § 44 [Basic Provisions]. In: PATAKYOVÁ, M. et al. Commercial Code. 1st ed. Bratislava: C. H. Beck, 2022, p. 195.
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14. Available at: www.novinky.cz/clanek/koktejl-slavna-protipiratska-kampan-ze-zacatku-tisicileti-mohla-vest-k-tomu-ze-lide-vice-kradli-filmy-40405413