• by Wendy Davis  @wendyndavis, November 21, 2023

A recent California appeals court decision against Meta Platforms threatens to disrupt online advertising by effectively banning demographic targeting, the tech organization NetChoice warned this week.

The decision, handed down in September, allowed California resident Samantha Liapes to proceed with a lawsuit claiming that Facebook violated the Unruh Act -- a state civil rights law -- because the company's ad-targeting system allegedly failed to serve some life insurance ads to women and older people.

Meta recently asked the California Supreme Court to review the decision.

NetChoice this week backed that request, arguing in a letter to the state Supreme Court that the Court of Appeal ruling misinterprets “both the intent and the letter” of the Unruh Act.

“The Unruh Civil Rights Act was designed to prevent arbitrary discrimination against individuals; it was not intended to impede the flow of commercial information that can be beneficial to consumers,” the organization writes.

The group adds that if the ruling is left in place, it will “effectively ban” targeted advertising, “leading to a less personalized online experience, higher costs for small businesses, and a less vibrant and innovative online marketplace.”

“Targeted advertising ensures the content users receive is relevant to their stage in life, cultural context, and other personal aspects,” NetChoice writes. “For instance, a retirement planning service is likely more relevant to an older demographic, while ads for maternity wear are generally most appropriate for women of childbearing age.”

The organization adds: "If the lower court's ruling stands, it will effectively ban NetChoice's members -- and the entire online advertising industry -- from offering socially beneficial services to Californians."

Meta argued in its petition to the California Supreme Court that the lower court's ruling “disregards decades of judicial consensus” regarding the Unruh Act.

“Ad targeting has existed for decades, and it’s never been held to violate general anti-discrimination laws like the Unruh Act -- until now,” Meta wrote in a petition filed late last month.

“Courts have always understood that the Unruh Act isn’t meant to make established and legitimate business practices unlawful,” Meta argued. “Yet the Court of Appeal endorsed a limitless view of liability for targeted advertising whose effects will be as widespread as they are serious.”

Meta also argued even if the Unruh Act applied, Section 230 of the Communications Decency Act should have protected the company from liability. That law shields interactive companies from liability for third parties' online activity; in this case, the third parties are the advertisers who use Facebook's targeting tools.

“Facebook doesn’t require advertisers to select particular users to target for ads,” the company wrote. “So even as plaintiff reads the Unruh Act, those tools will be used toward discriminatory ends only if advertisers choose to do so.”