Court Tosses Out Ridiculous Antitrust Lawsuit Against Google

from the nice-try,-redmond dept

A year and a half ago, we wrote about a bizarre antitrust lawsuit filed in Ohio state court by a small shopping search engine company most people haven't heard of called myTriggers. The details were particularly odd. First, myTriggers set up a line of credit with Google to buy AdWords advertisements. Then... it didn't pay. The company claimed that a rejiggered algorithm made the ads much more expensive than it expected. But that doesn't explain why it racked up a $335,000 bill that it refused to pay. You can put limits on your spend. Either way, Google went to court in Ohio to try to collect on the money owed.... and bam, myTriggers suddenly used that as an excuse to launch a giant antitrust lawsuit against Google in Ohio. And, on top of that, this tiny company in Ohio that no one had heard of somehow magically hired Microsoft's chief antitrust counsel, Rick Rule, who does not come cheap. As Eric Goldman noted at the time:

Assuming myTriggers even has the money, writing a $335k check to Google (and I bet Google would have taken less!) is almost assuredly cheaper than paying three law firms to mount an antitrust assault on a $20B/year behemoth. Assuming that myTriggers wants to maximize profits, then either (1) myTriggers thinks its odds are good enough that it will win AND make enough money to pay the 7 lawyers on the counterclaim's signature page plus their teams, or (2) the law firms struck an unbelievably sweet deal on fees.

Or... you know, perhaps someone else was financing the whole thing. Google has been pretty vocal about the fact that it suspects Microsoft is behind this. But, the bigger issue is that the case itself is a joke. Google can set up its ad ranking algorithms however it likes, and while this case was purposely filed in response to Google's attempt to collect in Ohio, since whoever was behind it knew that would keep it in an Ohio state court rather than a federal court, it turns out that the court might not have been as clueless as those who filed the lawsuit expected. That's because the case has been dismissed.

You can read the full ruling below. It consists of two key issues. First, Google tried to have the case dismissed under Section 230 of the CDA, claiming that as a service provider, it's not responsible for blocking or demoting ad content. This is a slightly different part of Section 230 than we usually discuss. This is the part that is designed to encourage companies to voluntarily filter "objectionable" content, and to not face liability for doing so. Here, the court ruled that ads don't qualify as objectionable content. The caselaw it relies on here is a little murky, but for the most part, this did seem like a bit of a stretch as an argument. So that wasn't very effective.

However, the case was still dismissed on a much bigger issue: which is that myTriggers failed to properly allege an antitrust violation. You would think that with all those big, fancy and expensive lawyers, they would have done a bit better. The problem, of course, is that to show antitrust you have to show harm to competitors. But, as the court notes, all myTriggers did was show (potential, possible) harm to myTriggers. In fact, part of myTriggers' own argument was to show how other vertical search engines performed much better in Google, which undermines myTriggers' argument:

"[T]o prove antitrust injury, the key inquiry is whether competition--not necessarily a competitor--suffered as a result of the challenged business practice."

Here, the counterclaim only alleges harm to myTriggers itself. In addition, myTriggers' counterclaims contain allegations that other competitive vertical search sites were indeed favored by Google. In paragraph 12 of its counterclaim, myTriggers alleges that "Google has entered these favorable agreements with Shopping.com, shopzilla.com, PriceGrabber.com, bizrate.com, NexTag.com * * *." Such an allegation undercuts myTriggers' argument that competition as a whole within the relevant market is being injured.

The court also notes that just because myTriggers thinks its been blacklisted, that's not a real claim. It's just a random guess by myTriggers.

There are a few other claims by myTriggers, and in each and every case, the court points out that it failed to establish a legitimate claim. It's a pretty complete rejection of the lawsuit, though you have to expect it'll be appealed/amended. This marks the second of a trio of such cases that has been tossed out by courts. One wonders if grandstanding politicians using these silly claims as evidence of Google antitrust violations may start to quiet down.

Filed Under: ad placement, antitrust, cda, ohio, search
Companies: google, microsoft, mytriggers

Texas Attorney General 'Investigating' Google, With Little Basis In Reality

from the not-this-again dept

I'm beginning to think we need a series of posts on "State Attorneys General Gone Wild." We've discussed the insider's view from Topix' Chris Tolles about how state attorneys general grandstand against tech sites, despite having absolutely no legal basis. We've seen it happen over and over and over and over and over again (most recently with Craigslist -- a favorite target).

Late Friday, the news broke that Texas' AG was "investigating" Google for antitrust violations, using the trio of companies that have been mentioned for a while now -- Foundem, MyTriggers and TradeComet -- who have all been making a stink about how Google is somehow violating antitrust laws because those three sites don't like their rankings in Google. All three claim that they're competitors to Google, and Google is somehow trying to hold them down. This is, frankly, ridiculous. As has been explained over and over again, rankings are an opinion, protected by free speech rights. And, furthermore, if Google was really trying to keep competitors down, wouldn't it actually focus on players that actually matter in the space? Besides, if you look on Google, you can easily find highly ranked links to all sorts of Google competitors. It's also worth mentioning, of course, that all three of these companies have some sort of connection to Microsoft.

So, once again, we have some silly grandstanding, and it's not at all clear what Texas has to do with any of this. None of the companies are based in Texas, and Google's not breaking any laws here. It seems like just more grandstanding by a state AG against Google. It'll be interesting to see what happens, because unlike sites like Topix and Craigslist, Google might actually have enough clout to not just give in and settle.

Meanwhile, Danny Sullivan does a nice job summarizing the ridiculousness of this (that's the link above):

My view is the arguments are generally absurd. None of these companies are large enough to pose any threat to Google, to the degree it would be compelled to take such stupid action. Moreover, if Google's going to act to block a competitor, I'd expect it to pick bigger targets -- say like Microsoft.

And for the legal view, we turn to Eric Goldman who sums it up with the title "Are You Kidding Me???":

I'm always amazed by people who forget that Google's organic search and ad ordering are editorial processes fully protected by the First Amendment. Part of this myopia is Google's own fault. It has so successfully sold itself as a technology platform that we forget about the editorial processes embedded in its core business. As a result of those judgments, any legal challenges to Google's search practices runs squarely into serious First Amendment considerations.

I'm also intrigued by the potential role of 47 USC 230(c)(2), a federal law which basically insulates websites' filtering decisions from any state law causes of action (except state wiretapping laws and possibly state IP claims). The interplay between 230(c)(2) and antitrust claims is hardly clear, but it's possible that the Texas AG's efforts are completely preempted by the federal statute.

Goldman also wonders what the actual result would be if Texas AG Greg Abbott "succeeds" in forcing Google to change its ranking process: "Let's assume Texas can actually establish a case against Google's algorithms. Then what? Will Greg Abbott start telling Google how it should run its search engine? It's hard to imagine that the cure will be better than the disease."

Finally, and in a way that no one else can, the folks over at Groklaw has an astoundingly detailed look at how ridiculous this claim is.

Filed Under: antitrust, greg abbott, texas
Companies: foundem, google, microsoft, mytriggers, tradecomet

AdWords Collections Attempt By Google Mutates Into Antitrust Lawsuit

from the didn't-expect-that,-did-you.. dept

Last year, we wrote about an odd antitrust lawsuit against Google by a company named TradeComet. The lawsuit was a joke. Basically, the company was an arbitrage player that tried to create spam-like pages that people would find on Google searches, and would make money by then getting people to click on pay-per-click ad links to get where they really wanted to go. Google properly classifies sites like this as spam, and its ranking methodology punished the site accordingly. It had nothing to do with being "anti-competitive," it was just Google making sure its search results were better for users. That lawsuit is basically in a holding pattern right now, as the judge considers Google's motion to dismiss.

However, a similar lawsuit has popped up, and it's a bit strange. Eric Goldman has all the murky details, of how a shopping search engine named myTriggers apparently got a line of credit from Google and used it to buy a bunch of AdWords search ads to drive traffic to its site (and then raised money based on the resulting traffic). Once again, Google rejiggered its algorithm, and suddenly the ads for myTriggers were a lot more expensive (by one to two orders of magnitude). The company couldn't pay its bill to Google, so Google hired a local lawyer (in Ohio) and went to court to try to get myTriggers to pay the $335,000 it owed. Simple enough.

Except that myTriggers returned fire by claiming antitrust violations by Google, and even went out and hired three separate lawfirms, including (conspiracy theory time) the same law firm that represented TradeComet and which is closely connected to Microsoft. As Goldman notes:

I am struggling to make sense of myTriggers' litigation choices. Assuming myTriggers even has the money, writing a $335k check to Google (and I bet Google would have taken less!) is almost assuredly cheaper than paying three law firms to mount an antitrust assault on a $20B/year behemoth. Assuming that myTriggers wants to maximize profits, then either (1) myTriggers thinks its odds are good enough that it will win AND make enough money to pay the 7 lawyers on the counterclaim's signature page plus their teams, or (2) the law firms struck an unbelievably sweet deal on fees.

Goldman also notes that Google probably wishes it hadn't filed a claim in a local Ohio state court, as the antitrust battle might now need to be fought there, rather than in a friendlier federal court closer to home:

Whatever the case, I suspect the antitrust claims caught Google flat-footed. A simple and low-stakes collections matter has blown up into a potentially significant lawsuit in an undesirable forum. Google chose Ohio state court for the collections matter despite its AdWords contract, so now it will have a tough time extricating itself from that court. But I suspect it would rather have an antitrust case in federal court, not state court--often (but not always) federal judges are more sophisticated than state judges and less susceptible to hometown bias. And I'm sure Google would rather fight antitrust claims on one of the coasts than in the Rust Belt, especially if myTriggers argues that Google's evilness cost Ohioans jobs. Google probably didn't mean to offer battle in this venue, but someone did a really good job of seizing the opportunity and forcing Google to fight the battle in a suboptimal setting.

As with the TradeComet case, the antitrust claim from myTriggers sounds incredibly weak, and it probably should be thrown out, but given the uncertainties of it being filed in the local court, Google may have to take it a bit more seriously. And, of course, the possibility of a secret Microsoft connection makes this even more interesting. Still, I can't see this getting that far in the long run. I hope that the judge recognizes the basic weaknesses of the case: here's a company that relied entirely on a single supplier who had every right to change its policies if it felt it didn't deliver a good customer experience, and it did so. myTriggers now seems to be suing as some sort of sour grapes for its own business failings.

Filed Under: adwords, antitrust, ohio
Companies: google, microsoft, mytriggers, tradecomet