On October 8, 2019, the German Federal Court of Justice (“FCJ”) partially quashed a 2017 decision of the Munich Court of Appeal,[1] finding that ad-blocking software provider eyeo GmbH (“Eyeo”) may have abused a dominant position.[2] The FCJ referred the case back to the Court of Appeal.

Eyeo’s free browser plugin “Adblock Plus” determines, based on filter lists, the online advertisements that are blocked (“blacklist”), and the advertisements that are displayed to internet users (“whitelist”). A website can be included in Eyeo’s default whitelist if its publisher signs a whitelisting agreement, accepting the obligation to only show unobtrusive ads. Large entities are only whitelisted for a fee, while other entities are generally whitelisted for free, if they meet Eyeo’s whitelisting criteria.

In 2017, the Munich Court of Appeal had rejected online publisher RTL interactive GmbH’s (“RTL Interactive”) application for a cease and desist order against Eyeo. In the Munich Court of Appeal’s view, Eyeo did not hold a dominant position in the market for access to Internet users in Germany, as only 20% of all Internet users in Germany used Eyeo’s ad-blocker.

On appeal, the FCJ found that the Munich Court of Appeal’s definition of the relevant market was flawed. The FCJ considered that the relevant market should be the market for access to Internet users who have installed Adblock Plus, rather than the market for access to all Internet users, and—based on a lack of sufficient factual findings by the lower courts—referred the case back to the Munich Court of Appeal. When assessing whether Eyeo holds a dominant position in this narrower market, according to the FCJ, the Munich Court of Appeal must consider whether online publishers have any other economically viable means of accessing users who have installed the ad-blocker than entering into a whitelisting agreement (e.g., by using software that bypasses the ad-blocker or by blocking users who use the ad-blocker from accessing their website). In order to assess whether Eyeo abused a dominant position, the Munich Court of Appeal has to weigh the interest of operators of advertising-financed websites in distributing advertisements (thus enabling them to make the websites available to users free of charge) against Eyeo’s interest in helping the users pursue their legitimate interest of blocking such advertisements. It remains to be seen how the Munich Court of Appeal will decide this time, taking the requirements identified by the FCJ into account.

[1]              Munich Court of Appeal decision (U 2184/15 Kart) of August 17, 2017, only available in German here. On the Munich Court of Appeal’s decision, see also our article in the National Competition Report Q3 2017, p. 9 et seq., available here.

[2]              Werbeblocker III (KZR 73/17), FCJ decision of October 8, 2019, only available in German here.