Unlocked’s lonely battle against Google
“Investigations and legal proceedings are long and necessarily retrospective, seeking to remedy harms after they have occurred,” Cass-Gottlieb said. “To successfully pursue a case, we often have to narrow the allegations and ignore the broader concerns about the conduct. This is particularly problematic in cases of digital platforms where market power is multifaceted, must be assessed in multiple markets, and produces harm to consumers as well as competition.
According to some observers, the application of competition on digital platforms has become a game of chicken. The ACCC seems determined to hold back until it is sure it will get its money’s worth of deterrence, while limiting its lawsuits to privacy-based concerns under consumer law. As Cass-Gottlieb said, competition cases are simply much harder for the ACCC to win.
That’s why attention in Australia is now turning to legal actions involving tech companies claiming to have been treated unfairly – and in violation of competition law – by the platforms.
Unlockd’s decision against Google in a US federal court in California, as well as the Australian lawsuit brought against Meta by local tech start-up Dialogue Consulting, have now become the arena on which the competition regulation game is played. . Unlockd’s claim against Google, alongside Dialogue’s lawsuit targeting both Meta’s Facebook and Instagram platforms, boils down to basic provisions contained in US and Australian competition laws.
Before Google wrote to Berriman in 2018 announcing it was banning Unlockd from its app store, things had looked up for the Australian startup. By availing itself of the Google Play store and Google’s AdMob services, it had built a business model whereby users of handsets using the Android operating system received advertising on their locked phone screens, in exchange for vouchers and other promotional offers.
But just as Unlockd and Berriman were preparing to go public, Google pulled the plug, saying the company had breached its app store’s terms of access; despite a successful attempt to obtain an injunction in a UK court, Unlockd was brought to its knees and is now considered unlikely to be revived.
Unlockd never accepted Google’s contract arguments and told the U.S. Court for the Northern District of California that it was kicked out of the platform because the search giant had its own plan to set up a search service. advertising ; Google’s 2020 investment in Indian startup Glance, which provided the same ad-tech services as Unlockd, was part of the platform’s master plan, according to the lawsuit. The case had been the subject of a motion to dismiss from Google on July 14, but only this week that date was pushed back to September.
Meanwhile, Melbourne-based Dialogue was having comparable issues with Meta. The startup’s Sked Social service was designed to help businesses schedule their social media posts on Facebook and Instagram; and, once again, things were going very well, until they weren’t.
Despite years of success with Meta and the Meta-owned Instagram, the platform has suddenly changed course. Citing contractual breaches, Meta banned all Dialogue employees from its platforms – a move that could have destroyed the company had it not been for an injunction from the Federal Court of Australia forcing Meta to suspend the company. prohibition.
In both cases, the competition law logic of the start-up’s claims was clear. Unlockd alleges that Google shut it down because the tech giant intended to launch its own adware app; Dialogue claims that Meta, which at the time had no comparable social media scheduling service, also wanted to sink a future rival. Both cases are based on the assumption that tech giants should operate their platforms as neutral venues where all players – including the platforms’ parent companies – should compete on equal terms. Neither Meta nor Google responded to requests for comment.
Dialogue opted to pursue the case in Australia and has already achieved a breakthrough, with the Federal Court rejecting Meta’s claim that the dispute was a contractual matter that should be resolved by a California arbitration tribunal. Australian judges appear adamant that any allegation that the Competition and Consumer Act 2010 has been breached must be resolved in Australia.
With all the antitrust cases involving digital platforms, the ACCC seems to be lurking in the background, considering its next move. In the Australian lawsuit brought by Epic Games, the US company behind Fortnite, against what it claims are Google’s restrictive policies on its App Store, the ACCC has raised its head, filing an “amicus” brief against the attempt finally unsuccessful from Google to move the case. in a California court.
The Unlockd and Dialogue challenges, as well as the lawsuit filed by better-resourced Epic, can be read as companies feeling compelled to take legal action, when Big Tech decided to flip the switch to access to the platforms or threatens to do so.
It’s a strange situation for start-ups. On the one hand, they are opposed to the business practices of the tech giants – in the case of Epic, the grievance concerns the app stores of Apple and Google; but on the other hand, they still have access to a user base and a profitable business model.
This is where the chicken game comes in. Smaller tech companies have to consider whether legal action is worth it – and in the case of Unlockd and Dialogue, either sidelined altogether or threatened with closure. due to the behavior of the platforms, the answer is clearly “yes”. But for other companies that feel aggrieved but aren’t facing an existential crisis, keeping their heads down and waiting for ACCC enforcement or even new technology-focused antitrust legislation may be a preferable option.
As to why Australian tech start-ups would fight these battles in the US, one explanation is that only US courts can provide them with the large payout they deserve. The administrators of Unlockd, for example, had filed a lawsuit in the United Kingdom and in the Federal Court of Australia, to stop it and focus on the United States, where the sources of income of the start- up had been greater.
The problem with the ACCC’s wait-and-see approach is that regardless of where civil lawsuits against platforms are brought, start-ups taking on the world’s biggest and most powerful tech companies are facing enormous challenges. Platforms buy time wherever possible, drawing on seemingly limitless resources to fight antitrust claims every step of the way. It could dampen the willingness of cash-strapped start-ups to take on the tech giants – which could ultimately force Cass-Gottlieb to ditch the chicken game and get directly involved in both the room ratings and through new regulatory measures. The ACCC declined to comment.
Meanwhile, Berriman appears to have backed out of the ACCC, saying the antitrust authority had previously told him it wanted to take action but “hesitated at the last moment, [noting] we were using resources in the United States to pursue civil lawsuits.”
“[The ACCC] had more than enough evidence,” Berriman said. “Unfortunately, it appears there were broader considerations other than the sole merits of the Unlockd case at stake and they decided to prioritize other matters… It appears they decided to let us lead the fight.”
Laurel Henning and James Panichi report on regulatory affairs for MLex from LexisNexis.