Cryptocurrency entrepreneurs are preparing to sue Google, Facebook and Twitter in an Australian class action lawsuit that could cost the tech giants up to US$300 billion (A$436 billion).
The David-and-Goliath case has attracted litigants with US$600million (A$872million) worth of claims so far – a number that has increased as more people join.
The no-win no-fee case has now been put before a senior barrister for review, pending funding to file.
Cryptocurrency entrepreneurs are suing Google, Facebook and Twitter in Australia under anti-cartel laws, saying the big tech firms colluded to ban crypto and blockchain ads
The companies and individuals, represented by Sydney-based firm JPB Liberty, say their businesses were harmed when Google, Facebook and Twitter all banned cryptocurrency advertising in 2018.
The social media giants acted within weeks of each other, and included the ban in their terms and conditions of service.
Google announced it would partially reverse the sweeping ban in September of 2018, to allow regulated exchanges to buy ads in the US and Japan.
Facebook said in 2019 it would no longer require pre-approval for ads related to blockchain technology, also caught up in the ban, however those advertising cryptocurrency would still have to go through a review.
Australia’s Moneysmart government website warns of people losing their money in speculative cryptocurrency initial coin offerings on unregulated exchanges, saying many have turned out to be scams.
JPB Liberty’s Vice President of Technology Brian Bishko (left) and chief executive Andrew Hamilton (right) pictured in July last year. The pair are spearheading the lawsuit
Other cryptocurrencies, most famously Bitcoin, have turned into widely used products useful for moving money across borders, while the blockchain technology that underpins it is revolutionising data security.
The entrepreneurs say there were very few regulated exchanges in 2018 so the social media advertising ban hurt their legitimate business growth as they were prevented from using the world’s largest online advertising platforms to reach potential customers.
JPB Liberty is organising funding for the case from institutional litigation funders, venture capital and ideologically aligned investors.
Claimants will get 70 percent of any eventual settlement or damages while the funders will get 30 percent.
Brian Bishko, JPB Liberty’s Israeli-based Vice President of Technology & Public Affairs, and himself a conservative blogger, said the social media giants had become too large.
‘I think Facebook is too powerful to exist in the world – I honestly think it’s a danger to the world,’ he said.
Dr Bishko said the ban on cryptocurrency advertising was also crushing new social media networks that run on blockchains such as Hive which pays content creators in its own Hive cryptocurrency.
‘Hive, which back then was called Steem, had been growing and growing – and suddenly they couldn’t advertise on Facebook and get new users,’ he said.
Social media giants Facebook, Twitter and Google cannot be held accountable for content on their platforms in the US despite increasingly making editorial decisions like a publisher
‘It caused enormous damage.’
‘If your business had as a component of it anything that looked like a cryptocurrency, you got caught in the same net.
‘So maybe you’d get a few adverts but eventually they’d do a review and your account would be blocked.’
These new emerging social media platforms that use blockchain technology are a threat to YouTube and Facebook, Dr Bishko said.
Draft code of conduct for digital platforms due at the end of July
The power and market dominance of the social media giants has been on Australia’s radar over the past year.
The Australian Competition and Consumer Commission (ACCC) launched a lawsuit last year against Google in October last year over alleged misleading conduct over the tech giant’s use of personal location data.
The Morrison Government then moved this year to force the social media giants to share revenue with traditional news media.
Treasurer Josh Frydenberg directed the ACCC to develop a code of conduct on digital platforms after the media giants failed to come to a voluntary agreement.
A draft code is to be finalised by the end of July and will include enforcement, penalties and ways to deal with disagreements between the global platforms and local media companies.
It will cover issues such as data sharing, ranking and display of news content in search engines, monetisation and revenue sharing.
Once a content creator puts a post up on Hive, it can’t be taken down as it is on the blockchain – and the decentralised system cannot be controlled.
‘It’s like there’s a power to it, it’s decentralised, it’s not controlled by a central authority called ‘Mark Zuckerberg’,’ he said.
By contrast the big four social media giants own all content posted to their platforms and can censor or delete at will.
‘You don’t own your stuff when you post it on Facebook, you don’t own it on Twitter – your account can be taken away,’ said Dr Bishko.
The social media giants cannot be held accountable for the content on their platforms due to a US legal protection that deems them to be a platform not a publisher, however they are increasingly making editorial decisions over what content they will host.
They may delete or demonetise accounts, and ban or deplatform people and businesses who make their living on social media with ideas that Silicon Valley disagrees with.
Social media giants such as Google’s parent Alphabet have the power to demonetise content creators who spend years producing videos for YouTube. It can also deprive websites of advertising dollars
Google Ads recently demonetised finance and free speech website ZeroHedge.com on June 16 for racist content that stemmed from unmoderated comments beneath the site’s articles.
Google and Facebook combined accounted for 60.9 percent of all US digital ad spending in 2019 according to digital advertising projections by eMarketer.com in October last year.
The pair also dominated the UK with a combined share of digital advertising revenue of 63.3 percent in 2019, according to eMarketer’s forecast.
Google was projected to take 38.8 percent of the 2019 UK market worth £5.72 billion, while Facebook would account for 24.5 percent or £3.62 billion.
Google’s parent company Alphabet also owns YouTube and thus controls the advertising on that platform also.
Together with Twitter, the social media giants control the majority of online advertising platforms in the English speaking world.
Daily Mail Australia has contacted Google, Facebook and Twitter for a response.