Protecting business reputation in the age of AI content
LAYTONS ETL Yarnwicke, 119 - 121 Cannon Street, London EC4N 5AT +44 (0)20 7842 8000 www.laytons.com
INTRODUCTION Most businesses these days rely on good online reviews for promotion.
Good reviews are reassuring to potential customers and encourage the
purchase of goods or services from the business. Poor online reviews can have the opposite effect.
Businesses invest large amounts of time and capital in promoting their
online presence, maximising their SEO and encouraging favourable customer reviews. A single unfavourable review can very quickly
undermine the reputation of a business and may cause financial
damage to the business as customers become discouraged from purchasing from it.
So, what happens when an AI-generated overview of a business contains false and disparaging information about a business?
This is precisely the question that a German regional court had to
grapple with recently. In what may be seen as a landmark European
decision, Google was found liable for the damage caused to two businesses.
THE FACTS The applicants were two German companies. The first applicant was a publishing house which used an online shop through which it offered its publications for sale. The second applicant was also a publishing house, in fact is a subsidiary of the first applicant, and published books and magazines on technology and history. The defendant was Google which operates a search engine at google.de in Germany. When a user enters search terms, the search engine produces results sorted by relevance using algorithms. The search engine also offers a summary of the search results which is generated by generative artificial intelligence (AI) entitled, “Overview with AI”. In relation to the two applicants, the AI generated overviews which linked them to scams and disreputable business practices. That linkage was wrong and the result of the increasingly infamous phenomenon of AI hallucinations – it had been dreamt up by the AI and the applicants were not in fact connected to any
THE COURT’S FINDINGS
scams or disreputable business practices. Despite letters from the lawyers for the applicants to Google, the problem was not addressed, and so, court
The German court made the following findings: •
The summary went beyond the reviews about the applicants made by third parties
proceedings ensued. •
The summary produced false statements about the applicants
•
The AI generated statements were not presented as opinion but as fact;
•
The statements were not a mere reproduction of third-party reviews;
•
The false statements were defamatory of the applicants;
•
Consequently, the applicants suffered reputational damage, and the statements infringed the applicants’ corporate personality rights under German law.
The court imposed a temporary injunction on Google to restrain it from disseminating the untrue statements about the applicants and ordered it to pay substantial damages. It is reported that Google may appeal the decision.
HOW MIGHT SIMILAR CLAIMS PLAY OUT IN ENGLAND & WALES? If this has happened in Germany, it is very likely to have happened and to be happening in other jurisdictions in Europe and perhaps beyond. So, what might the position be in England & Wales? The decision of the German court is not binding judicial authority in England & Wales, but it could be persuasive, particularly in respect to the approach and the principles applied by the German court. However, there may be several defences available to the operators of internet search sites (ISS) which derive from the E-Commerce Regulations 2002, the Defamation Act 1996, and the Defamation Act 2013: •
Generally, ISS operators are not considered to be publishers of defamatory statements that appear automatically in search results, because they do not control the search terms.
•
The ISS provider is a “mere conduit” and is not liable for defamation if it merely transmits communications without initiating the transmission, selecting the receiver, or modifying the information.
•
Where the provider does not have actual knowledge of the unlawful content, it may have a “hosting defence”.
•
Where the ISS operator did not itself post the defamatory content.
•
THE POTENTIAL IMPLICATIONS
Where the ISS operator was not itself the author, editor or publisher.
Thus, we can infer that, if the courts here did follow the approach of the court in Munich by holding that an ISS operator could be liable in defamation for the publication of AI-generated statements containing false and disparaging information, then these defences may not save them. Where AI simply makes up false statements, the ISS operator may be more than a mere conduit; it may be regarded as having itself posted the offending posts, and not as having merely hosted other people’s views. It may be regarded as the author or publisher of the offending content.
WHAT SHOULD BUSINESSES DO? A business facing the publication of false and damaging content online should scrutinise whether the content arises from an AI summary and then consider whether the summary is a true reflection of the search engine results on which the summary is based. If it is not, then the business may have a claim from the ISS operator. But even then, there would be potentially significant hurdles to overcome, not least the requirement to demonstrate “serious harm” to reputation. Furthermore, a company (as opposed to an individual) must demonstrate serious financial loss or a serious risk of such loss, not merely loss of reputation. The issues that arose in Germany are not likely to be unique and could occur anywhere. If you have experienced or are experiencing similar issues, please contact Laytons Disputes Team.
Geraint Thomas Partner | Head of Disputes geraint.thomas@laytons.com +44 (0)20 7842 8048
ABOUT THE AUTHOR John Abbott FCIArb Consultant
john.abbott@laytons.com +44 (0)20 7842 8063
(Author’s note: No part of this article was written using AI and any hallucinations are entirely the author’s responsibility)
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LAYTONS ETL Yarnwicke, 119 - 121 Cannon Street, London EC4N 5AT +44 (0)20 7842 8000