EFF to 9th Circuit (Again): App Stores Shouldn’t Be Liable for Processing Payments for User Content

EFF filed an amicus brief for the second time in the U.S. Court of Appeals for the Ninth Circuit, arguing that allowing cases against the Apple, Google, and Facebook app stores to proceed could lead to greater censorship of users’ online speech.

Our brief argues that the app stores should not lose Section 230 immunity for hosting “social casino” apps just because they process payments for virtual chips within those apps. Otherwise, all platforms that facilitate financial transactions for online content—beyond app stores and the apps and games they distribute—would be forced to censor user content to mitigate their legal exposure.

Social casino apps are online games where users can buy virtual chips with real money but can’t ever cash out their winnings. The three cases against Apple, Google, and Facebook were brought by plaintiffs who spent large sums of money on virtual chips and even became addicted to these games. The plaintiffs argue that social casino apps violate various state gambling laws.

At issue on appeal is the part of Section 230 that provides immunity to online platforms when they are sued for harmful content created by others—in this case, the social casino apps that plaintiffs downloaded from the various app stores and the virtual chips they bought within the apps.

Section 230 is the foundational law that has, since 1996, created legal breathing room for internet intermediaries (and their users) to publish third-party content. Online speech is largely mediated by these private companies, allowing all of us to speak, access information, and engage in commerce online, without requiring that we have loads of money or technical skills.

The lower court hearing the case ruled that the companies do not have Section 230 immunity because they allow the social casino apps to use the platforms’ payment processing services for the in-app purchasing of virtual chips.

However, in our brief we urged the Ninth Circuit to reverse the district court and hold that Section 230 does apply to the app stores, even when they process payments for virtual chips within the social casino apps. The app stores would undeniably have Section 230 immunity if sued for simply hosting the allegedly illegal social casino apps in their respective stores. Congress made no distinction—and the court shouldn’t recognize one—between hosting third-party content and processing payments for the same third-party content. Both are editorial choices of the platforms that are protected by Section 230.

We also argued that a rule that exposes internet intermediaries to potential liability for facilitating a financial transaction related to unlawful user content would have huge implications beyond the app stores. All platforms that facilitate financial transactions for third-party content would be forced to censor any user speech that may in any way risk legal exposure for the platform. This would harm the open internet—the unique ability of anyone with an internet connection to communicate with others around the world cheaply, easily, and quickly.

The plaintiffs argue that the app stores could preserve their Section 230 immunity by simply refusing to process in-app purchases of virtual chips. But the plaintiffs’ position fails to recognize that other platforms don’t have such a choice. Etsy, for example, facilitates purchases of virtual art, while Patreon enables artists to be supported by memberships. Platforms like these would lose Section 230 immunity and be exposed to potential liability simply because they processed payments for user content that a plaintiff argues is illegal. That outcome would threaten the entire business models of these services, ultimately harming users’ ability to share and access online speech.

The app stores should be protected by Section 230—a law that protects Americans’ freedom of expression online by protecting the intermediaries we all rely on—irrespective of their role as payment processors.