Did you actually read the text of the opinion that was highlighted in the ad?
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The PROTECT act makes it illegal to advertise or present any material in such a way as to lead someone to believe that the material contains "an obscene visual depiction of a minor engaging in sexually explicit conduct," or "a visual depiction of an actual minor engaging in sexually explicit conduct."
The Williams decision overturned the Ashcroft decision, which once made virtual child pornography legal as protected speech because no children were being harmed.
The photos of toddlers in the Balenciaga ad pictured near and around sexual as masochistic conduct but not actually "engaging" in sexual conduct (which is what the Williams decision banned) is essentially Balenciaga's way of saying a "F U" to this decision. They weren't honoring that the decision was trying to protect children from virtual depictions of child porn - they were MOCKING THE DECISION by pushing the limits of the Protect Act. That is why the toddlers were "holding" bears with BDSM gear and not wearing it themselves (which would be illegal because its a visual depiction of an actual minor engaged in sexually explicit conduct). This is why the toddlers were pictured around bondage material but not donning it. That's why the toddlers were laying on heart shaped pillows next to empty wine glasses instead of being photographed drinking it.