Unlockd Media, Inc. Liquidation Trust v. Google LLC

Background

Unlockd Media, Inc. Liquidation Trust alleged that Google removed Unlockd’s rewards-based advertising applications from the Google Play Store and disabled Google advertising services for those applications. Unlockd’s applications showed full-screen advertisements when users unlocked Android smartphones and gave users virtual points redeemable for various rewards. Unlockd alleged that Google’s actions violated antitrust law and ultimately contributed to Unlockd’s bankruptcy.

Unlockd alleged that Google applied its policies pretextually, treated similar applications differently, and used its position in related markets to limit competition in digital advertising. Unlockd claimed that its exclusion reduced consumer choice, advertising supply, innovation, and service quality, and increased prices.

Judicial Notice and Incorporation by Reference

The court denied Google’s request to treat four emails referenced in the complaint as incorporated into the complaint for the purpose Google proposed. The court said the emails did not form the basis of the complaint and could not be used at the dismissal stage to resolve factual disputes against Unlockd’s allegations.

The court granted Google’s request as to the Google Play Developer Distribution Agreement and the Google AdSense Terms of Service because the complaint extensively referenced those policies and appeared to rely on them. The court did not accept the truth of representations in those documents merely because it considered them. The court also took judicial notice of a publicly available Federal Reserve exchange rate between Australian and U.S. dollars.

Analysis

Google moved to dismiss, arguing that Unlockd had not adequately pleaded antitrust standing or the elements of its attempted-monopolization claim. The court decided that the failure to plead antitrust standing was dispositive and did not reach Google’s alternative arguments.

Antitrust standing is the requirement that a plaintiff be an appropriate party to bring a private antitrust action. The court explained that this requires antitrust injury: harm caused by unlawful conduct that flows from the conduct’s alleged unlawfulness and is the type of harm antitrust laws are intended to prevent. The injury must involve harm to competition, not merely the removal or loss of one competitor.

The court found that the complaint primarily described lost profits and the loss of Unlockd’s business. To the extent Unlockd alleged broader harm to advertisers, consumers, and the digital advertising market, the court found those allegations conclusory. Unlockd had asserted that its continued operation would have lowered advertising prices, benefited consumers, encouraged new competitors, and increased innovation, quality, and output. But the court found that Unlockd did not provide supporting facts making those assertions plausible, such as facts showing that removing its application caused a market-wide reduction in output or an increase in prices.

The court concluded that Unlockd failed to provide the factual detail needed to plausibly allege a legally recognized injury to competition in the digital advertising market.

Disposition

The court granted Defendants’ motion to dismiss. The court stated that amendment might cure the pleading problems and therefore allowed Unlockd to file an amended complaint within 21 days of the order. The order did not reach Google’s alternative arguments concerning the attempted-monopolization claim.