Mobile App Platform Authorized for CDA Immunity on State Law Claims Related to In-App Purchases of Loot Boxes
Happy Silver Anniversary to section 230 of the Communications Decency Act (“CDA” or “Section 230”), signed into law by President Bill Clinton in February 1996. At the time, Congress enacted Section 230 of the CDA in response to case law that raised the specter of liability for any online service provider which has attempted to moderate its platform, thereby discouraging the exclusion and blocking of offensive material. As has been widely reported on this blog, the world of social media and user-generated content is supported by the protections afforded by Section 230. Now, 25 years later, the CDA is at something of a crossroads and its protections have fueled some controversy. However, as it stands, Section 230 continues to provide robust immunity for online vendors.
In a recent case, Google LLC (“Google”) successfully argued for Section 230 enforcement, resulting in a California District Courtdismissal, with possibility of modification, a purported class action related to consumer legal claims against the Google Play App Store. The claims concerned third-party mobile video game download offerings that allow users to purchase Loot Boxes, which are in-app purchases that contain a random assortment of items that can improve a player’s chances of progressing through a video game . The plaintiffs said that these offers were illegal “slot machines or devices” under California law. (Coffee vs. Google LLC, NO. 20-03901 (ND Cal. Feb. 10, 2021)).
The plaintiffs are John Coffee, Mei-Ling Montanez, and Monteanez’s younger son SM (“Quellanti”). Coffee downloaded Final Fantasy Brave Exvius (“Final Fantasy”) from the Google Play Store in 2018. Final Fantasy is a free-to-play fantasy RPG in which players control their own characters as they move through the game’s story. The game in question involves the use of virtual currency called “Lapis Crystals” to summon a randomized special character. Players can obtain Lapis Lazuli Crystals through in-game or real money purchases. The character summoning system is essentially the “Loot Boxes” in the game, the plaintiffs say, because characters are summoned at random and the best ones are the rarest and hardest to summon. The plaintiffs allege that Coffee was tricked into spending an excess of $500 on in-game Loot Boxes while playing Final Fantasy.
SM Actor downloaded Dragon Ball Z Dokkan Battle (“Dragon Ball Z”) from the Google Play Store in 2019. Dragon Ball Z is also a free mobile game based on the Dragon Ball anime brand. The game is similar to a board game, with players moving through the game to different spots which allow for different actions. Again, throughout the game, players are able to unlock new characters with summons, which the plaintiffs claim are this game’s Loot Boxes. Players must use “Dragon Stones”, Dragon Ball’s virtual currency, to purchase Summons. Dragonstones can be earned through gameplay or purchased for real money. The plaintiffs allege that SM spent more than $100 on in-game purchases, including Loot Box purchases.
Google operates the Google Play online app store. Despite the aforementioned game apps being free, the plaintiffs allege that Google still profits from apps containing Loot Boxes because in-app payments are made using Google Play’s payment system and Google took 30% of payments for purchases in app. In their complaint, the plaintiffs allege that Google entices consumers, including children, to participate in addictive gambling in violation of state consumer protection laws.
In response, Google moved to dismiss the claims, mainly arguing that it was immune from potential state law claims, as it did not create the video games or loot boxes in question and only acted as a passive host of an app platform, and that while Google might be an intermediary if a user buys virtual currency for a particular game, it has no role in what users decide to buy with it.
Refusing to decide whether or not the Loot Boxes constitute slot machines or devices that are illegal under California law, the district court examined the plaintiffs’ claims through the lens of CDA immunity. The court quickly ruled that Google qualified as an “interactive service provider” under the CDA because Google creates and maintains a virtual online store available to multiple users to download various software applications created by other developers.
The court then noted that the plaintiffs sought to impose liability on Google based on the content (specifically Loot Boxes) of those apps, which the court decided was an attempt by the plaintiffs to treat Google like a publisher of such contents.
The court ultimately found that the content in question – video game apps containing Loot Boxes – was provided by another content provider. The court rejected the plaintiff’s attempt to classify Google as a co-developer of the apps simply because Google required game developers to provide certain information regarding game ratings and loot boxes.
The court also rejected the plaintiffs’ argument that Section 230 did not apply because the CDA applies only to “speech” postings, the ruling that Section 230 applies to content posted in an app, not just to online speech affirmations. (Note: Interestingly, a CDA reform bill that has been touring Congress, the SAFE TECH Actincludes an amendment to section 230(c)(1) which would attempt to narrow the publisher’s liability provision which covers “information provided by another information content provider” by changing the term to “speech.”) Thus, the court had little difficulty establishing that Section 230 applied and that Google could not be held liable in this case simply for allowing game developers to deliver apps to users via the Google Play Store.
An interesting theory articulated by the plaintiffs was that Section 230 did not apply because Google went beyond publishing when it would have facilitated illegal gambling. However, the court said that the complaint itself did not raise any facts to support these claims and therefore declined to consider these allegations on their merits. The court noted that even if the loot boxes in question were found to violate California law, Google would still be protected by the CDA because Google’s alleged involvement amounts to “passive acquiescence” or merely providing a neutral platform for the app downloads: “(And) even if a service provider knows that third parties are using such tools to create illegal content, the service provider’s inaction is immunized.” Ultimately, the court dismissed the case with discretion, leaving the door open for plaintiffs to change their claims to show how Google’s conduct went beyond passively posting third-party content. (One wonders whether such a claim would still have succeeded, since the CDA’s barring for violating federal criminal laws, for example, has generally been interpreted as applying only in the case of government enforcement of those laws. Regardless, to get around the CDA immunity, the plaintiffs would have to offer evidence of Google’s actions, statements or behavior that would constitute illegal gambling under the state statute, in addition to the allegations already filed over the game developer’s Loot Box offerings).
THE Coffee The case is one of the more recent cases illustrating the broad immunity the CDA offers to online providers, including mobile platforms. Until there is some modification of the immunity outlines in a future CDA reform bill, it is likely that the courts will continue to extend broad protections to online providers. We will continue to follow developments surrounding the push for CDA reform.