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TripAdvisor € 500K fine is a risk for all social media?

The decision of the Italian competition authority might trigger considerable risks for social media and fashion blogs

TripAdvisor has been sanctioned by the Italian competition authority (AGCM) for the misleading advertising claims relating to the truthfulness of the reviews published by their users on the site that according to the AGCM cannot be guaranteed.  This case might trigger considerable risks also for other social media and fashion blogs.

The dispute against TripAdvisor

The Italian competition authority (AGCM) has jurisdiction also on unfair commercial practices and as part of such activity challenged some of its advertising claims used by TripAdvisor which referred to the fact that the reviews on the site are true and reliable.  Indeed, even though TripAdvisor puts in place quite stringent measures in order to ensure that the published reviews are not fake, the AGCM deemed such checks not to be sufficient to support the challenged claims.

Likewise, the AGCM argued that the liability exemption for hosting providers prescribed by the EU E-Commerce Directive was not applicable to TripAdvisor.  The social media was not deemed to merely provide a platform where its users could publish their reviews, but an essential component of the platform was its ranking tool managed by TripAdvisor that excluded the applicability of the liability exemption referred above.  And this position further narrows down the applicability of the liability exemption for hosting providers which was considered to be an essential principle of European Internet law, but as also experienced by Yahoo! and YouTube recently, authorities are limiting its scope.

Because of the breach mentioned above, the AGCM issued convicted TripAdvisor to pay a fine of € 500,000.

What consequences for social media and blogs?

It happens quite frequently that articles, pictures, posts and messages referring or showing brands/products are published by famous people on blogs and social media creating the impression to consumers that such messages are spontaneous, while there is a commercial arrangement with the owner of the brand/products behind them.  This often occurs on fashion blogs where the blogger publishes his/her pictures wearing branded clothes, but happens also for instance with athletes publishing messages on social media where they emphasize the qualities of their sponsors’ products.

I already discussed about the topic in this post and as part of a recent webinar whose slides are available hereThe main issue pertains to the liability of the advertised brand and the advertiser himself (i.e. the social media and the blogger themselves) for messages that appear truthful and spontaneous to consumers, but are either fake or the result of a financial contribution.  Such messages can be deemed to be misleading and unfair under consumer regulations with potential fines that in Italy can reach € 5 million.

The position recently taken by the AGCM might represent a further threat since it creates a precedent in which the social media platform has been deemed to be liable for the fake contents published by its users.  This precedent occurs a few months after a dispute between a restaurant arguing that a social media user had defamed them through his TripAdvisor review which shows how social media are increasingly becoming the potential source of disputes.

The issue is therefore on whether the AGCM and other competent authorities will further expand the principle set out in this last decision and this will require a further level of transparency also by social media and blogs.

This topic will certainly be at the center of the attention in the Internet law sector,

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Giulio Coraggio

I am the head of the Italian Technology sector and the global head of the IoT and Gaming and Gambling groups at the world-leading law firm DLA Piper. IoT and artificial intelligence influencer and FinTech and blockchain expert, finding solutions to what's next for our clients' success.

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