Tuesday, March 27, 2007

Monopoly Claims Against Google Dismissed; Amendment of Complaint Denied

This posting was written by Jeffrey May, editor of CCH Trade Regulation Reporter.

A Web site operator—which provided links to information and resources on subjects related to young children—failed to allege that Internet search engine company Google engaged in monopolization or attempted monopolization, the federal district court in San Jose, California, has ruled. Because the complaining Web site operator failed to sufficiently allege the elements of a Sherman Act, Sec. 2 claim, despite several opportunities, further amendment of the complaint would have been futile. Accordingly, the second amended complaint was dismissed without leave to amend.

Relevant Market

The Web site operator's failure to define the relevant market required dismissal of the monopoly claims. Neither the "search market" nor the "search ad market" were relevant product markets, according to the court. A "market" was any grouping of sales whose sellers, if unified by a monopolist or a hypothetical cartel, would have market power in dealing with any group of buyers.

The Web site operator failed to allege that the search market was a "grouping of sales." To the extent that the search ad market was severable from the search market, the Web site operator could not bring a claim for monopolization or attempted monopolization of the search ad market.

The search ad market was too narrow to constitute a relevant market, in the court's view. The Web site operator argued that the search ad market was distinct from other forms of advertising on the Internet and that it should be considered as such for purposes of antitrust analysis. However, there was no logical basis for distinguishing the search ad market from the larger market for Internet advertising.

Intent to Monopolize

Even if the complaining Web site operator had identified a proper relevant market and had alleged that Google arbitrarily and unfairly removed the operator from its search results for reasons unrelated to business efficiency, it failed to demonstrate an intent to monopolize. The complained-of conduct, such as de minimus misrepresentations, did not amount to actionable exclusionary or anticompetitive conduct, either individually or collectively.

The Web site operator’s pleading also was inadequate with respect to the elements of the claim: monopoly power, willful acquisition or maintenance of monopoly power, and causal antitrust injury.

False Advertising Claim

The complaining Web site operator was not permitted to amend its complaint to add a Lanham Act false advertising claim. The Web site operator lacked standing to proceed with false advertising claims under Sec. 43(a) of the Lanham Act against Google for misrepresenting the objectivity of Google's search engine results. The complaining Web site operator did not allege an injury to itself from the misrepresentation as such; rather, it alleged that is had been injured by Google's alleged manipulation of its purportedly objective search results. Moreover, misrepresentations in the ranking of search results would not amount to commercial advertising or promotion, the court held.

The decision is Kinderstart.com, LLC v. Google, Case Number C 06-2057 JF (RS), March 16, 2007 (2007-1 Trade Cases ¶75,643).

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