A New York federal judge dismissed the first of two antitrust lawsuits against Google filed by smaller Internet search engines that accuse the search giant of manipulating its rankings in order to punish rivals.
In a ruling on Friday, Judge Sidney Stein dismissed the complaint brought by TradeComet.com and said that the company should bring its claims in California, not in New York.
“We’re pleased that the court agreed that the Tradecomet case was filed in an improper venue,” said Google spokesman Andrew Pederson.
Tradecomet’s attorneys said the dismissal was only a minor setback.
“It’s a purely procedural ruling, and doesn’t affect the underlying claims in TradeComet’s case,” said the company’s lawyer, Jonathan Kanter, a partner at Cadwalader, Wickersham & Taft, which also represents Microsoft Corp. “We are considering all options at this point, but we intend to press forward.”
The TradeComet lawsuit, filed a year ago, was one of the first attempts by rivals to go after Google on antitrust grounds. Since the TradeComet suit, Microsoft’s lawyers at Cadwalader filed a similar case on behalf of myTriggers.com, a comparison shopping Web site, in Ohio state court. The European Commission also is looking at similar complaints filed by smaller search Web sites ejustice.fr, Foundem, and Microsoft’s Ciao!
TradeComet, which operates a business-to-business search Web site called SourceTool.com, accused Google of making the Web site’s ad rates prohibitively expensive in an effort to shut a potential competitor out of the market. The company also claimed that Google cut deals with various Web sites in order to exclude SourceTool and other potential rivals.
Google urged the judge to dismiss the complaint because TradeComet’s contract with Google required advertisers to bring any claims in a California court near Google’s headquarters.
TradeComet argued that a previous contract applied, but the judge disagreed. The company can either appeal the ruling to the 2nd Circuit Court of Appeals or file the case in California.
The Ohio suit against Google was filed last month in response to an attempt by Google to collect on $335,000 of unpaid bills. MyTriggers accused Google of changing the company’s Web site ratings, known as quality scores, in order to raise the price of its ads. Google has not yet responded to the claims.
In a recent SEC filing, Google said it competed not only with traditional search engines run by Yahoo! Inc. and Microsoft, but also with specialized search Web sites like WedMD, Kayak, Monster.com, Amazon.com, and eBay, social networks like Facebook and Twitter, and mobile applications that let users bypass search engines and access Web sites directly.
Separately, the Federal Trade Commission is examining Google’s purchase of mobile advertising platform AdMob to determine whether it violates antitrust laws. According to a person familiar with the review, Google has turned over the bulk of the documents needed for the review; in industry parlance, Google has certified that is has “substantially complied” with the FTC’s request for documents. A decision is expected in the next month.
Google’s antitrust lawyers got some good news today, when word broke that Apple Inc. is buying mobile advertising company Quattro Wireless.
Apple’s entry into the mobile advertising market comes two months after Google’s $750 million bid for rival mobile advertising platform AdMob. Critics of the deal have said it would substantially decrease competition in the nascent mobile advertising market and put Google on the path to having a monopoly in that industry.
The entry of another large rival into the field could help Google’s claim that the deal does not raise antitrust concerns.
In a post on it’s public policy blog today, Google product manager Paul Feng argued that Apple’s purchase of Quattro proved that mobile advertising is a competitive industry.
“[W]ith more investments and acquisitions in the space, including from established players like Apple and Google, that’s a sign that vigorous growth and competition will continue,” Feng writes.
The Federal Trade Commission extended its review of Google’s purchase of AdMob last month, a sign that it had some concerns about the deal.
Google’s critics remain skeptical the Apple-Quattro deal will alter the landscape for Google. “It really doesn’t change things because the core fact of Google being the dominant search engine buying the number one in applications advertising isn’t changed,” said Scott Cleland, a consultant and vocal Google critic who has urged the FTC to block the deal.
Critics have also raised concerns that extend beyond a traditional antitrust analysis. Two watchdog groups, The Center for Digital Democracy and Consumer Watchdog argued that the deal raises concerns about consumer privacy that arise from combining the Google’s vast data mines with those of AdMob.
Even though privacy issues are not often considered by the FTC when it reviews a merger, Chairman Jon Leibowitz has raised the issue in reviewing a previous Google deal.
After an eight-month investigation in 2007, the Commission approved Google’s purchase of DoubleClick, an online display advertising platform (as opposed to Google’s text-based advertising). In a separate statement then Commissioner Leibowitz called attention to the privacy concerns the deal, and the industry, raised.
The “rampant tracking of our online conduct…raises critical issues about the sufficiency of companies’ disclosures…and the security and confidentiality of the massive collection of sensitive personal data,” he said at the time.
Google’s critics raise that precedent in arguing against this deal. “The Obama FTC has shown a willingness to use [its authority] to protect competition but also to protect consumers,” Jeff Chester, the director of the Center for Digital Democracy, said in a interview.
Google also launched its own Nexus One phone today, highlighting the potential vertical concerns of its AdMob acquisition. “The FTC may be concerned that Google will control access to key mobile advertising technology or services needed by competing smart-phone platforms,” said former FTC assistant director and current Howrey partner Michael Cowie, in an interview.
Google has continued to say it doesn’t anticipate any regulatory issues with the deal.
updated 1/6/09 at 9:47 am
Posted in Antitrust, News | 1 Comment »
The Federal Trade Commission has asked for more information on Google’s proposed purchase of mobile communications device advertising service AdMob, according to a posting on Google’s public policy blog.
The agency has issued a “second request” for more information on the purchase, according to Google Project Manager Paul Feng. That will extend the review past the initial 30-day period and signals that the agency has some concerns about the deal.
Critics have argued that the deal would give Google more than 75 percent of the market for mobile advertising.
Google says the market would remain competitive. “We don’t see any regulatory issues with this deal, because the rapidly growing mobile advertising space is highly competitive with more than a dozen mobile ad networks,” Feng writes.