Cologne court bars Snap from using My AI chats for advertising, fines up to €250,000 per breach

A German court ordered Snap▲+4.98% — Snap, up 4.98 percent today on October 15 to stop using conversations with My AI, its chatbot, for advertising, including data from minors: data Snap is simultaneously selling to advertisers. The ruling came from Cologne's Regional Court, a first-instance court, and it binds in Germany rather than across the EU ¹.

Cologne upheld a suit by VZBV, the Federation of German Consumer Organizations, finding the practice breaks EU data protection law, with penalties of up to €250,000 per breach↗ ¹. The court also banned preselected advertising consent boxes and the default alcohol and gambling ad categories in minors' accounts ¹. Every prohibition targets the same thing: advertising built on choices no user actively made.

Snap built the pitch on the chat feed

More than half a billion users have messaged My AI since its 2023 launch ². In April, AI Sponsored Snaps put brands' own AI agents into the main Chat tab↗, with credit bureau Experian testing one in a small early trial↗ ²³. Snap's chief business officer, Ajit Mohan, called conversation "the most valuable real estate in advertising" ².

In June, an MCP server, a standard connection for outside AI software, let external agents operate inside Snap's ads platform ⁴. On September 30, the Spend Smarter campaign asked planners to move budget onto Snapchat, claiming roughly 19.3% higher incremental return on ad spend↗ than their blended social average ⁴.

The footnote beneath that claim is titled with a 12.9% figure, which describes combined search-and-social lift, a different measure; Snap's post does not explain how the two relate ⁴. Snap has also never said how much of its targeting rests on chatbot conversations.

Advertising is the slow half of the business

The pitch exists because advertising is lagging. In the quarter ended June 30, advertising revenue grew 9%, to $1.28 billion ⁴. Subscriptions and partnerships grew 85% in the same quarter ⁴. North American daily users, Snap's highest-value audience, have shrunk to 92 million ⁴. Spend Smarter asks planners to shift budget already allocated elsewhere onto Snapchat ⁴.

Florida cuts the same audience at the other end

A day before the Cologne ruling, the Eleventh Circuit, a US federal appeals court, let Florida enforce its ban on social media accounts for children under 14↗, with parental consent required at 14 and 15 ⁶. The two orders cut different ends of the same audience: Florida keeps under-14s off the app entirely, while Cologne restricts how conversations from the users who stay can be used. The Florida case now returns to a trial court, so the law's fate is still open ⁶.

The market is pricing hardware instead

UBS kept a Neutral rating on October 14 while raising its price target to $7.00↗ ⁷. An activist investment firm pressing Snap to sell a minority stake in Spectacles, its augmented-reality glasses unit, argues the stock is worth $12 to $14↗ ⁸. Shares rose almost 7% that day, and Snap reports third-quarter results on November 4 ⁸.

The November 4 call will show whether the order bites

Three disclosures would settle it: whether advertising revenue growth beats last quarter's 9%, whether Snap quantifies how much of its targeting leans on My AI conversations, and what it says about Cologne ⁴⁸. Snap's models can target ads well enough. The open question is which conversations they may lawfully learn from, and a German court has just narrowed the answer ¹.

Conversational advertising is still worth building. What changed this week is that it must run on conversations users actually agreed to share. Consent screens and data defaults are engineering work, and Snap now has to show that work.