Mobilia Gallery, Cambridge, Mass.

French Court Decision Leads to Dip in Shares

By Kelly S. Mittleman

Yahoo! Inc. has been socked twice this week-first by a Paris judge who ordered the site to block French citizens from taking part in auctions of controversial Nazi memorabilia on the company’s English-language Web site, then via an alarming tumble in the company’s stock. Consumer confidence in the mega-Internet search engine giant deflated as shares fell sharply after the “blocking” news – down 4.63 percent (NASDAQ, symbol:YHOO)).

The Paris court’s decision on November 20 followed a preliminary ruling in May when French judge Jean-Jacques Gomez, in response to a lawsuit filed by the International League Against Racism and Anti-Semitism (LICRA), asked Yahoo!.fr.com to put a filtering system in place that would block French users from viewing allegedly offensive material involving Nazi rdf_Descriptions ranging from flags with swastikas to belt buckles.

Judge Gomez has given Yahoo! Inc., three months to find a technological alternative to keep French Web surfers from accessing the site. If Yahoo! does not comply with the order after the deadline expires, the company will be fined $13,000 for each day of non-compliance.

According to Auction Watch’s Daily News, Yahoo!’s associate general counsel international, Greg Wrenn, says the case is not over. “The real issue is whether there is any meaningful limit to a court’s jurisdiction in cyberspace.” Wrenn also said that for the ruling to stick it would first have to be enforced by a US court.

According to Wrenn, there are technical problems behind blocking French access. The filtering process involves identifying a geographic location, identifying the content in question, and blocking one from the other. This process, according to Yahoo! executives, is only successful about 70 percent of the time.

“It is impossible to comply with that order,” Wrenn told the Associated Press. “The judge’s main order … nobody has the technology to comply with that.”

But officials from Redwood City-based Quova Inc. say they’ve got technology that identifies where users log on, making it possible for Yahoo! to block certain sites from French users.

The company is developing software called GeoPoint, which targets locations where users are accessing the Internet, said Mitchell Golden, company co-founder.

Once Yahoo! determined where users were logging in from, Golden told AP, it could then filter out Web pages deemed inappropriate for users in France.

Yahoo! contends that because of its vast number of users on its site (166 million) there is no way of previewing posts. Wrenn added that computer experts looking to resolve the problem have suggested using a keyword to block auction rdf_Descriptions that have the word Nazi in them. Using The Diary of Anne Frank as an example, Wrenn says, “that would have to come down [by blocking] because it has the word Nazi in it.”

Yahoo! has at least two appeals available in France, making the case far from over. One thing is for certain in this case: the legal ramifications of the final decision could have far-reaching results for the future of e-commerce on the Internet.