German Court Finds Meta Liable for Fraudulent Third-Party Ads

A German court has ruled that Meta Platforms Inc. is liable for fraudulent advertisements posted by third parties on its Facebook and Instagram services, ordering the company to remove the content and pay damages. The decision, dated September 16, could set a significant precedent for platform liability under European digital regulations.

Details of the Ruling

The lawsuit was initiated by a German financial portal operator and its founder after their trademarked logo and image were used without consent in advertisements promoting what the court described as fraudulent investments. According to the court's findings, the plaintiff reported nearly 260 violations to Meta in August 2024, yet the company took up to 62 days to remove some of the content.

The court ordered Meta to cease the infringements, pay damages, and disclose details of the fake advertisements, including the revenue generated from them. This ruling adds to the legal and regulatory pressure on social media companies to police content more effectively.

Rejection of 'Safe Harbor' Defense

A key aspect of the ruling is the court's rejection of Meta's defense under the EU's Digital Services Act (DSA). The court determined that Meta could not rely on the DSA's "lack-of-knowledge" provision, which typically shields platforms from liability for user-generated content.

Ad

The court argued that Meta's use of algorithms and advertising practices to control content distribution distinguishes it from a neutral host with a purely chronological feed. This interpretation aligns with a June ruling by the European Court of Justice, which was cited as a precedent.

Company Response and Next Steps

A spokesperson for Meta stated that the company disagrees with the decision and is considering its next steps. The spokesperson added that Meta has been taking action against such ads, including proactive detection measures and the removal of reported content.

The court noted that the ruling is not yet final and may be challenged through an appeal. The outcome of any potential appeal will be closely watched by investors and the tech industry, as it could have broad implications for the operational and financial liabilities of major digital platforms in Europe.