Section 230 Protects App Store from Liability for Apps With Loot Boxes–Coffee v. Google

Many video games have loot boxes, where players can exchange valuable consideration (like in-game currency purchased for cash) for a chance to win something really valuable to gameplay. Because loot boxes may involve chance, consideration, and prizes, loot boxes may look like gambling. The plaintiffs in this case claim that loot boxes in video games are illegal gambling devices. The plaintiffs sued Google for offering videogames (specifically, Final Fantasy and Dragon Ball Z) with loot boxes in Google’s app store, Google Play. The plaintiffs argue that Google profits from the loot boxes (and thus from “gambling”) by taking a 30% cut of in-app purchases. The plaintiff sued for 17200 unfair competition, CLRA, and unjust enrichment. The court dismisses the claim on Section 230 grounds.

The court runs through the standard three-part Section 230 defense:

ICS Provider. The plaintiffs didn’t dispute this.

Publisher/Speaker Claim. The plaintiffs apparently “seek an order requiring Google to screen apps offered through its Google Play store and exclude those containing Loot Boxes – conduct that is squarely within the role of a publisher under Roommates.”

To get around this, the plaintiffs argued that Section 230 only protects speech, and the lawsuit targeted apps–which I guess by inference the plaintiffs think aren’t speech? The court points to the Chubby Checker case as showing that Section 230 does indeed apply to apps and app stores. Thus, “Section 230 may apply when the published content is an app.” (The court doesn’t discuss the Free Kick Master v. Apple ruling, which also applied Section 230 to app stores).

The plaintiffs also tried to get around Section 230 by arguing that they were suing Google for permitting/facilitating illegal gambling. However, defects in the complaint undermined this argument.

Third-Party Content. The complaint acknowledged that it was suing over third-party apps, but they claimed that Google “co-developed” the apps. The plaintiffs cited the following evidence that Google contributed to the alleged illegality:

• Google requires apps to disclose the odds of winning. The “Court is at a loss to understand how Google’s conduct in requiring such disclosure contributes to the alleged illegality.”
• Google provides ESRB ratings for apps. This doesn’t matter to the court either.
• Google doesn’t warn parents/kids that apps contain loot boxes. The court says this omission doesn’t constitute “development.”

The court summarizes its Section 230 analysis:

Even if the Court were to find that Loot Boxes constitute illegal slot machines or devices under California’s gambling laws, and that Google knew as much, the immunity applies because Plaintiffs have alleged no more than Google’s “passive acquiescence in the misconduct of its users.” Google cannot be held liable for merely allowing video game developers to provide apps to users through the Google Play store, as “providing third parties with neutral tools to create web content is considered to be squarely within the protections of § 230.” [cite to Goddard]

The court added the prima facie elements of the claims failed even if Section 230 didn’t apply:

17200. The plaintiffs don’t allege economic injury. Loot box purchases require two steps: first, buy currency, then buy loot boxes. Google was only involved in step 1, not step 2. Thus, any defect in the loot box purchase isn’t necessarily Google’s fault: “the in-app purchase of a Loot Box is a transaction between the player and the app developer, in which Google is not involved.”  Furthermore, Plaintiffs can also spend the currency on other purchases than loot boxes. Finally, Plaintiffs may have gotten what they bargained for. “Plaintiffs do not allege that they received fewer Lapis Crystals (Final Fantasy) or dragon stones (Dragon Ball Z) than the amount for which they paid.”

CLRA. Virtual currency doesn’t constitute a “good or service” covered by the CLRA.

Case citation: Coffee v. Google LLC, 2021 WL 493387 (N.D. Cal. Feb. 10, 2021). The complaint.