The US District Court Northern District of California ("Court") dismissed on 10 January 2022 the case Coffee, et al. v. Google LLC and did not hold Google liable for consumer complaints against "loot boxes," which allow users to make in-app purchases in games downloaded from Google Play Store. The decision is available here.
Background
The case is about the sale of loot boxes in the apps offered in Google Play Store. Loot boxes are items that can be purchased in video games using virtual currency. With such loot box, a player gets a random chance of receiving an item in a video game. Players can buy the item using virtual currency by way of in-app purchases.
The plaintiffs claimed that Google obtains a 30% commission from the sale of virtual currency in the apps that are offered in Google Play Store and that the loot boxes constitute an illegal slot machine under California laws. Accordingly, Google is civilly liable to all persons in United States that purchased a loot box in an app downloaded from Google Play Store. Google as defendant argued that it is immune from liability as per the Communications Decency Act (CDA), which according to the Barnes v. Yahoo decision protects internet-based actors from certain lawsuits. Google says that the plaintiffs could not establish the essential elements of their claims and therefore, the loot boxes cannot be considered illegal slot machines under California law.
Evaluation of the Court
The Court first evaluated whether Google is immune from liability pursuant to Section 230 of the CDA, where it referred to the Barnes test for immunity. According to the Barnes test, "there is an immunity from liability for (1) a provider or user of an interactive computer service (2) whom a plaintiff seeks to treat, under a state law cause of action, as a publisher or speaker (3) of information provided by another information content provider."
As per the first condition of the Barnes test, the Court evaluated whether Google is an interactive computer service. Websites are the most common interactive computer services according to case law. Since Google is the developer and holder of a virtual online store that provides a medium for apps created by third parties to be presented to customers, Google is also an interactive computer service provider, as agreed on by the Court, the plaintiffs and the defendant. As per the second condition of the Barnes test, the Court evaluated whether the plaintiffs seek to treat Google as a publisher or speaker with respect to content that it presents in the Play Store. The Court decided that Google's role on the demonstration of the apps does not go beyond the role of a publisher and therefore, Google is a publisher of the content. Finally, as regards the third condition of the Barnes test, the Court evaluated whether the published material, i.e., apps with loot boxes, are being provided by another content provider. The plaintiffs argued that Google is the co-developer of these games. However, the Court did not accept this argument and stated that "Google only provides "neutral tools" that third parties use to create illegal content" and therefore, it is not the developer of the games in question. Accordingly, the Court found that Google is immune from liability as per the CDA.
On their second argument, the plaintiffs provided an analogy where they tried to depict Google Play Store as a casino that permits and promotes gambling. The plaintiffs argued that the loot boxes especially have negative effects on kids. The Court pointed out that there are more than 2.9 million third-party apps on the Play Store and even if some apps offer loot boxes, this does not make Play Store a casino.
On their third argument, the plaintiffs argued that they lost money and property when purchasing virtual currency to buy loot boxes. However, as per the Court's discretion, the plaintiffs did not suffer damage with the purchase of virtual currency because they received the exact amount of virtual currency in exchange for what they paid for. Furthermore, the Court decided that even if the plaintiffs lost property when they bought loot boxes with virtual currency, those transactions concern the app developers, not Google.
Finally, the Court evaluated whether the loot boxes are slot machines. Google's argument was that loot boxes cannot be deemed slot machines because they do not offer a chance to win a thing of value. The Court agrees and found, based on case law, that "a virtual item cannot be a thing of value based on its alleged market value."
In the light of above evaluations, the Court dismissed the case for good, without leave to amend.
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