Precise specification of hosting location

Is it required to specify in advertising which company exactly operates the data centre when hosting uses servers of group companies? The Higher Regional Court (OLG) Düsseldorf had to decide on this matter.

A company that offered web design and web development as well as hosting had advertised that the hosting of web pages developed for customers ran on company-owned servers. In fact, however, the hosting was provided by a foreign subsidiary in its data centre. A competitor then sued for misleading advertising. He argued that a customer had deliberately chosen a company that had its own data centre. If this is not the case, there is a purchase-decision-relevant misleading statement that must be discontinued or eliminated by appropriate clarification.

The court's decision

In its judgment of 03.06.2014 (Az. I-20 U 66/13), the Higher Regional Court (OLG) Düsseldorf ordered the advertising company to cease and desist. The advertising statement that hosting on company-owned servers was misleading because it was to be understood as meaning that the company itself operated its own data centre. However, this was not the case, as the data centre was only operated by a – albeit 90% owned – subsidiary. The court, however, deemed this irrelevant. For customers, the group affiliation and ownership structure did not change the fact that they themselves have no contractual claims against the subsidiary based abroad. Moreover, a subsidiary could be removed from the control of the parent company upon sale or insolvency.

Conclusion

Caution is warranted when making statements about the hosting location. As a hoster, the group company whose data centre is being used should be named. This applies all the more when the data centre is located abroad and, for example, less stringent requirements regarding security and data protection are imposed there.