Advertising is the major source of revenue for tech giants like Google and Meta. However, an ongoing case in the US Supreme Court may hit the online advertising business of these companies.

The case, which will soon be heard in the US Supreme Court, centres around the debate if internet companies are liable for the content their algorithms recommend to users, Bloomberg reported.

The family of Nohemi Gonzalez, a 23-year-old US citizen who was among the 130 people killed in Paris in 2015 in attacks by the Islamic State, has sued Google, arguing that it should be held responsible for YouTube recommending the videos related to the terrorist group.

If the court determines that the tech companies are legally responsible for the hundreds of millions of comments, videos and other content posted by users every day, it can impact the automated advertising that generates a chunk of revenue for firms like Google, Meta. These companies provide targeted advertisements to their users based on the information they have about them, including browsing history, likes and dislikes, and more.

“This case could adversely impact the entire advertising ecosystem,” Marc Beckman, Chief Executive Officer of DMA United, an advertising firm, was quoted as saying in the report.

In its Supreme Court brief, Google expressed concerns about the case’s impact on the economy, including advertisers.

On the other hand, Meta expressed its worry that the court could weaken the protection under Section 230 that shields such companies from liabilities for all content from third parties, including ads.

According to Google’s Q4 numbers, advertising revenue accounted for 78% of its overall revenue. Google posted $59 Bn advertising revenue in the quarter across all its platforms, down 4% from the corresponding period in the previous year.

Meta reported a total revenue of $32.2 Bn in Q4, of which $31.3 Bn was ad revenue from platforms including Facebook and Instagram.

India And Its Stance On Social Media Content

The development comes at a time when the tech companies are facing increased scrutiny across the world, including the European Union and India.

The Indian government notified the IT Rules, 2021 to make tech companies like WhatsApp, YouTube accountable. The rules were amended in October last year to make the social media platforms acknowledge user complaints within 24 hours and resolve such complaints within a period of 15 days from the date of receipt.

Following the notification, MoS IT Rajeev Chandrasekhar said that the amendments would put greater obligations on social media platforms to ensure that no misinformation or unlawful content is being posted across their platforms.

“The obligations of intermediaries earlier were limited to notifying users of rules, but now there will be much more definite obligations on platforms. Intermediaries have to make efforts so that no unlawful content is posted on the platform,” the minister said.

Last month, the Ministry of Electronics and Information Technology (MeitY) also proposed new amendments to the IT Rules, 2021, which will require social media intermediaries to remove content flagged as fake or false by the central government’s fact-checking mechanisms.

MeitY will reportedly work with internet intermediaries like Google and Meta to create a framework for “trusted fact checkers”.

Meanwhile, Twitter is already involved in a legal battle with the Indian government over its order to remove some tweets, while Meta-owned WhatsApp is also fighting multiple cases over a contentious 2021 privacy policy update.