Antitrust Law Daily Digital media company fails in its second attempt to assert antitrust claims against Google
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Wednesday, September 22, 2021

Digital media company fails in its second attempt to assert antitrust claims against Google

By Steven D. Cole, J.D.

After having its first complaint of 105 pages rejected as a “shotgun pleading,” plaintiff Inform Inc. submitted an amended complaint of 89 pages, which suffered from the same deficiencies.

Google LLC, Alphabet Inc., and YouTube, LLC (collectively Google) was granted dismissal of an antitrust suit brought by digital media company Inform Inc. (Inform) for lack of standing and pleading deficiencies by the federal district court in Atlanta. The digital media company alleged that because a company’s advertising services must be compatible with Google’s ad products and Google’s Chrome Browser, Google is able to influence industry standards in its own favor by setting arbitrary and anti-competitive rules by which video content and video advertisements are enabled, viewable and audible, which ultimately preference Defendants’ products and services. The court dismissed the complaint for failure to identify precisely what conduct was attributable to each individual defendant, and contained numerous conclusory, vague and immaterial facts not obviously connected to any particular cause of action. Also, the court concluded that the media company was not the proper plaintiff to bring this suit, and dismissed the claim for failure to show an antitrust injury (Inform Inc. v. Google LLC, September 20, 2021, Boulee, J.).

Background. Inform works with both publishers and advertisers to manage the distribution and delivery of video advertisements from content creators into articles on newspaper, magazine, radio, and television websites. Between 2010 and 2017, Inform garnered a revenue of more than $180 million and, at its peak, had an inventory of ad space from a network of approximately 5,000 publishers. Inform commenced this suit against Google on November 25, 2019, asserting federal antitrust claims and a state law claim for tortious interference.

The court ordered Inform to file an amended complaint, which it submitted on October 9, 2020. The amended complaint asserted seven causes of action against Google: five Sherman Act violations, one Clayton Act violation, and one claim for tortious interference.

Inform alleged generally that Google influenced the industry standards for online advertising in its favor. It did so by setting arbitrary and anticompetitive rules by which video content and video advertisements are enabled, viewable, and audible, which ultimately preferenced Google’s products and services. Figuring prominently in its amended complaint was Inform’s assertion that Google’s decision in 2014 to begin transitioning from Flash to HTML5—software that enables videos to be played on websites—gave Google more control over how, when, and what video advertisements could be shown online. Inform contended that when Flash was disabled in 2017, this had the immediate effect of foreclosing a significant portion of online advertisers from reaching users and target audiences, and as a result of this conduct, Google “syphoned off customers” from Inform and other competitors and “plundered valuable video advertisements.” Inform further alleged that Google engaged in numerous other acts of anticompetitive conduct.

Inform’s original complaint was rejected by the court as an impermissible “shotgun pleading.” According to the court, it was virtually impossible to decipher the 105-page complaint, which was littered with immaterial facts and conclusory statements, and in which each of the asserted causes of action incorporated more than 190 paragraphs of factual allegations. Instead of outright dismissing the complaint, the court identified the pleading deficiencies and ordered Inform to file an amended complaint in accordance with the court’s instructions. In response, Inform pared down its pleading to 89 pages. Google filed a motion to dismiss Inform’s amended complaint, asserting that it was still a shotgun pleading and, alternatively, that Inform lacked antitrust standing.

Pleading deficiencies. The court granted Google’s motion on both grounds. First, it noted that Inform’s amended complaint suffered from many of the same deficiencies as its first. The amended complaint still contained conclusory statements and was replete with vague and immaterial facts that were not clearly connected to any particular cause of action. For instance, the pleading went on for ten pages describing the growth of Google’s search engine, which bore no role in any of Inform’s claims, and asserting that Google improperly influenced the government, yet without stating a claim based on this purported influence. Count 1 of the amended complaint asserted a violation of 1 of the Sherman Act, but failed to identify any specific agreement between any two or more parties to support this claim. And in the same manner as its first complaint, Inform again failed to identify precisely what conduct was attributable to each individual defendant.

Antitrust standing. Dismissal of Inform’s amended complaint was also warranted on the alternative ground that it failed to establish standing as an antitrust plaintiff. Inform stated in conclusory fashion that Google weakened competition in the online advertising market, drove Inform out of business, caused advertisers to pay higher prices for advertising, and caused consumers to pay higher prices for retail products. However, the amended complaint contained no factual support for these allegations. Moreover, Inform was not an efficient enforcer for Google’s alleged antitrust violations. Inform’s claimed injury was remote and speculative, not direct. Based on the allegations in the amended complaint, the court explained that Inform would have shown an antitrust injury only if had alleged that: (1) a publisher provided video advertising space on its website to Inform; (2) Inform selected advertisements for the space that were not compatible with HTML5; (3) a consumer viewed the publisher’s website using Google’s Chrome browser; and (4) the consumer would have clicked on or viewed the advertisement but did not do so because of Chrome’s limitations. The court also noted that online advertisers, publishers, and Adobe (the developer of Flash) would be better suited to bring this action because, if the allegations in the amended complaint were true, they—not Inform—suffered a direct injury.

The case is No. 1:19-cv-05362-JPB.

Attorneys: Carlton R. Jones (Herman Jones LLP) for Inform Inc. Carol Joan Pruski (Williams & Connolly, LLP) for Google LLC and Alphabet Inc.

Companies: Inform Inc.; Google LLC; Alphabet Inc.

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