Judge blocks Georgia's online sales law, a win for Meta, Craigslist, others

“No matter how you look at it, Act 564 violates federal law and the (U.S.) Constitution’s Supremacy Clause, smothering Georgia’s thriving businesses with red tape,” Marchese said. “We look forward to seeing Act 564 struck down in full.”

Carr typically doesn’t comment on pending litigation. A spokesperson for his office did not immediately respond to an inquiry about the ruling.

Stephen Petrany, the state’s solicitor general, argued on Carr’s behalf in court Friday. He told Grimberg that the new law does not conflict with the federal INFORM Consumers Act.

“State law can regulate on top of federal law,” Petrany said. “The Georgia law is exactly the same as the federal law and then requires a little bit more.”

Petrany also said the new state law “doesn’t affect all that many sellers.” He said NetChoice had overstated how difficult it would be for online marketplaces to gather the necessary information from high-volume sellers whose sales were processed outside the marketplace.

“The entire transaction still has to happen on the website,” Petrany told the judge “It’s not going to be hard for online marketplaces to make sure they know what is happening on their sites.”

Georgia’s new law imposes “pretty minimal fines” against violators, Petrany said. He said the state hasn’t yet enforced its earlier “Inform Consumers Act,” implemented in 2022, which only requires online marketplaces to gather data from high-volume sellers whose sales they processed.

Erin Murphy, an attorney for NetChoice, said the federal law, like Georgia’s earlier law, “makes a lot of practical sense.” She said the state’s new law is “unduly burdensome” for online marketplaces, which can’t feasibly collect the data that Georgia now wants.

“Once we are not the payment processor, we don’t have visibility into the transaction in the same way,” Murphy told Grimberg. “The way these sites work, there’s really not a feasible means for us to gather that information with any meaningful reliability.”

Grimberg said Georgia’s new law would likely force online marketplaces to “track third-party communications related to potential offline transactions,” which would be “no small ask.”

“It strikes the court as making little sense to allow Act 564 to go into effect, require NetChoice members to incur unrecoverable compliance costs and reputational risks related to monitoring private conversations, all in the name of complying with a preempted law,” he said.