Google, Apple, and Meta lose Section 230 Protection in Gaming Case

In what may be a landmark federal ruling, a California federal judge has stripped the so-called Section 230 protection from Apple, Meta, and Google in a case alleging that the tech giants helped facilitate illegal online gaming.

By refusing to grant the protection granted publishers in the 1996 Communications Decency Act, Judge Edward Davila stated that the act was intended to protect speech, not financial transactions. His 37-page decision basically holds that the plaintiffs did, in fact, improperly process payments for casino-style apps.

While the lawsuits, which have been slowly winding their way through various state and federal courts since 2021, have been on the backburner for some time, today’s decision will certainly catch the attention of not just Meta, Google, and Apple but also third-party hosting companies of all shapes and sizes as they begin to wonder if and when other somewhat questionable apps may be held to a similar standard.

Perhaps realizing the scope of his decision in allowing the case to move forward after prohibiting the companies from using their 30-year-old shield, with which they’ve mostly been able to quash these kinds of lawsuits, Davila did grant the defendants the right to an immediate appeal to the Ninth Circuit. The companies had already availed themselves of a prior attempt to get the Ninth Circuit involved last year, but were at that time denied due to a jurisdictional question.

The stakes, even in this case, are huge. The plaintiffs accuse the defendants of taking a 30% fee on over $2 billion in illegal casino-style gaming app transactions and also state that the tech giants went so far as to use their technology to help identify and land “whales,” which is a casino term for high rollers.

They also argue that these social and sweepstakes-style casino games can be just as addictive and just as life-destroying as those that feature actual gambling. In general, the games in question allowed customers to purchase tokens, which would then be used on games that played just like slot or table games that one might find in a Las Vegas casino. But in this case, while the customer’s money was real, the chips awarded by the app were not.

Davila’s ruling that “payment processing is not an act of publishing. Instead, it is better viewed as a generic business activity common to virtually all companies, publishers or not, just like hiring workers or paying taxes,” could upset decades of business models predicated on the idea that content and processing of payment of that content were protected. And could have implications not just in the US but around the world.

It is far too early, though, to determine what course the Ninth Circuit might take with an appeal, but it is fair to say that many tech giants, as well as social gambling operators, will be watching the courthouse in San Jose with bated breath for the next few months.