The Italian Communications Authority issues Google Ireland the first administrative pecuniary sanction for breach of the general ban on gambling advertising
This article has been also published on the EACCNY website on November 30, 2020.

On October 22, 2020 through Resolution No. 541/20/CONS, the Italian Communications Authority (“AGCOM”) issued an administrative pecuniary sanction in the amount of EUR 100,000.00 to Google Ireland Limited (“Google Ireland”) for infringing the general ban on gambling advertising prescribed under Article 9 of Law Decree No. 87/2018 (the “Ban” and the “Decreto Dignità”, respectively).

The decision in question is particularly interesting from a twofold perspective.

Firstly, in the decision AGCOM further elaborates on the subjective and territorial scope of application of Article 9 of the Decreto Dignità and the resulting guidelines on the implementation of the Ban adopted by AGCOM by means Resolution No. 132/19/CONS (the “Guidelines”).

Secondly, AGCOM provides additional insights into how the safe harbor exemption for hosting providers, prescribed under Article 16 of Legislative Decree No. 70/2003 (the “E-Commerce Decree”), which implemented in Italy Directive 2000/31/EC (the “E-commerce Directive”), should be interpreted. In particular, AGCOM does so by (i) qualifying the Google Ads service provided by Google Ireland as falling outside the safe-harbor exemption; and (ii) stating that the only beneficiary of such an exemption could be Google Inc. in relation to the Google Search service it provides to users.

The factual background of the case

In the realm of AGCOM’s monitoring activity aimed at verifying and ensuring compliance with the Ban prescribed under Article 9 of the Decreto Dignità, AGCOM noted that on November 14 and 15, 2019, the first result appearing to Italian users who typed the keywords “online casino” on the search page www.google.com was a link to the website http://sublime-casino.com (the “Website”). The Website was described as follows: “Join Now The Newest Italian Online Casino. Play Now More Than 400 Games – Subscribe Now and Sign Up in Less than 30 seconds! No Download. Safe and Secure.” The Website was classified as an ad.

Specifically, the Website took the form of a virtual game room that allowed users to play by providing them with links that then redirected the users to other paid gaming websites. Such paid gaming websites, managed by foreign entities, were not authorized in Italy and, thus, were unlawful.

In light of the foregoing, AGCOM initiated proceedings against Google Ireland, Google Italy, and Google Inc. for disseminating on the search engine available at www.google.com advertisements for websites that provide paid gaming and gambling services.

The regulatory background

To properly understand AGCOM’s reasoning, one must first understand the ratio underlying the Ban prescribed under Article 9 of the Decreto Dignità, as well as the regulatory background underlying the Ban, as provided by the Guidelines.

Article 9 of the Decreto Dignità prescribes that “[…] any form of advertising, even indirect, relating to games or bets with money winnings, as well as gambling, carried out in any way and on any medium, including sports, cultural, or artistic events, television or radio broadcasts, daily and periodical press, publications in general, billboards, and computer, digital, and telematic channels, including social media, is prohibited. In addition, paragraph 2 of the same provision states that that prohibition is imposed on “the entity who commissioned the ad, the owner of the medium or website of dissemination or of destination, and the organizer of the manifestation, event, or activity.

The ratio underlying the Ban is identified in contrasting gambling addiction and reinforcing consumer protection, with an emphasis on more vulnerable categories of players (i.e., gambling addicts, minors, the elderly).

AGCOM adopted the Guidelines with the aim of coordinating the new prescriptions provided under the Decreto Dignità with the already existing legal framework on gambling advertising. In particular, the Guidelines provided interpretative insights on the objective, subjective, and territorial scope of application of Article 9 of the Decreto Dignità.

The territorial and subjective scope of application of the Ban

With this in mind, AGCOM first clarified that in relation to the territorial scope of application, the case in question requires territorial scope to be identified in light of the principle of destination of the service. In doing so, AGCOM expressly referenced Regulation (EU) 2019/1150 “on promoting fairness and transparency for business users of online intermediation services,” stating that it applies “to online intermediation services and online search engines irrespective of the place of establishment or residence of the provider of those services and irrespective of the law otherwise applicable.” Taking this into account, AGCOM stated that the Ban prescribed under Article 9 also applies to indexing platforms established abroad that offer their services to the Italian public.

Of relevance in the case at hand is that AGCOM seems to have further extended the scope of application of the Ban, since the Guidelines expressly provided that the Ban should apply only to (i) entities having their registered offices, including secondary offices, in Italy; and (ii) entities having their registered offices outside Italy, provided that they have obtained licenses to operate gambling services in Italy from the Customs and Monopolies Agency or authorization to provide audiovisual media services in Italy (paragraph 4 of the Guidelines).

In relation to the subjective scope of application of the Ban, AGCOM notes that it applies to the “owner of the medium or website of dissemination or of destination” and that, under paragraph 3.1 of the Guidelines, such expression should be interpreted as encompassing any “entity that has the potential to affect the content or the dissemination of the advertising message.” In turn, that category includes providers of services aimed at improving the positioning and visibility of a given website on the pages of search engines as a consequence of the keywords input by users (paragraph 3.1, let. m of the Guidelines). In addition, AGCOM clarifies that the Ban applies only to the providers mentioned above that offer their services for remuneration, whereas, providers that offer their services free of charge are excluded.

In light of the foregoing, AGCOM assessed, in practice, the Google Ads service offered by Google Ireland. In particular, AGCOM observed that it can be categorized as a service offered for remuneration that indexes and promotes websites on the search engine with the aim of ensuring better positioning for those websites in users’ search results in response to queries submitted by users based on keywords defined by the advertisers.

In light of the above, AGCOM concluded that Google Ireland, as owner of the Google Ads service, is subject to the Ban. Furthermore, AGCOM also observed that Google Inc., as owner of the Google Search service, also falls within the scope of the Ban in its capacity as “owner of the website of dissemination.

Google Ireland and the safe harbor exemption

One of the defensive arguments put forth by Google Ireland was that it should be considered a hosting provider under Article 16 of the E-Commerce Decree. This would have meant that Google Ireland could not be held liable for information hosted on its service if it did not have actual knowledge that such information was unlawful and upon obtaining knowledge it acted expeditiously to remove it.

Notwithstanding the above, AGCOM has stated that the Google Ads service does not possess the proper elements characterizing services offered by a hosting provider. For this reason, Google Ireland cannot be classified as a hosting provider under Article 16 of the E-Commerce Decree and therefore cannot benefit from the safe harbor exemption prescribed therein.

More specifically, according to AGCOM, the Google Ads service does not consist in the mere storage of the advertising content created by the user, but includes having the system process that content (prior to an assessment of the lawfulness of the same content undertaken by Google Ireland) with the aim of effectively guaranteeing its positioning in response to keywords input by users. Indeed, according to AGCOM, in the case at hand, the storage activity is merely ancillary and technically necessary for the provision of the main services, which focus on directly promoting paid gambling and games—again, something that is expressly prohibited under Italian law.

Moreover, according to AGCOM, the only beneficiary of the abovementioned exemption would be Google Inc. in relation to the web page displaying the results of user searches carried out using the Google Search service; however, AGCOM stated that the subject of the dispute is not the hosting of unlawful advertising content but the fact that Google Ireland, through the Google Ads service, allowed that content to be disseminated. In particular, AGCOM is specifically challenging the content that formed the subject of the agreement between Google Ireland and the advertiser. Interestingly, AGCOM argues that the execution of that agreement then implies that Google Ireland accepted the burden of liability related to the advertising activity.

For the reasons detailed above, AGCOM concluded that the Google Ads service is of a different nature than hosting services provided under Article 16 of the E-Commerce Decree and therefore Google Ireland’s defense on this basis is unfounded.

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