9th Circuit Unceremoniously Dismisses Antitrust Lawsuit Against Google–Dreamstime v. Google
I previously summarized this case:
Dreamstime sells stock photos. It had favorable organic indexing that made it some money, and it bought Adwords advertising that made it more money. Dreamstime was a big enough player that it got personal support from Google, including actual responses to its email inquiries. But over time, its organic indexing declined and so did its conversion rate on advertising. Thus, Dreamstime sued Google on its unsubstantiated belief that Google was trying to screw it over.
The case survived two motions to dismiss (1, 2), only to fall apart completely on summary judgment. Now, it’s the Ninth Circuit’s turn to tell the plaintiff to pound sand.
Dreamstime appealed its Sherman Act Sec. 2 claim, alleging that Google willfully monopolized a market. But which market? Dreamstime now says it’s complaining about the online search market; but the appeals panel concludes that Dreamstime repeatedly insisted to the lower court that it was complaining ONLY about the online search ad market.
Dreamstime’s allegations are not compelling, even a little, with respect to its monopolization claims. The court says:
Four of the anticompetitive behaviors alleged by Dreamstime relate to purported mistreatment of Dreamstime as a Google customer: (1) rigging the advertisement auction bidding, (2) selectively enforcing its terms and rules, (3) removing Dreamstime’s mobile application, and (4) favoring contractual stock photo partners over Dreamstime and smaller stock photo websites. These allegations fall short of alleging anticompetitive conduct in the online search advertising market. Google harming one of its own online search advertising customers does not exclude its competitors in the online search advertising market, i.e., Yahoo! and Bing….Indeed, Google’s alleged mistreatment of customers may lead harmed customers, such as Dreamstime, to spend more on paid search opportunities with Google’s competitors
The court continues:
three of the alleged anticompetitive behaviors relate to Dreamstime’s performance in Google’s unpaid, organic search results: (1) demoting Dreamstime’s organic search results on Google; (2) elevating inferior stock photo websites above Dreamstime in search results; and (3) misappropriating Dreamstime’s licensed photos and showing them on Google Images….these allegations could be taken to show harm to Dreamstime in the online search market for images. However, Dreamstime disavowed any reliance on the theory that Google is harming competition in the online search market for images…
Dreamstime has not plausibly alleged that its diminished performance in Google’s search results has inhibited other online search advertisers from accessing stock images from anyone other than Dreamstime. Nor, as the district court noted, has Dreamstime alleged that Google bars its stock image partners from contracting with other online search advertisers
Case dismissed.
This case never should have been brought, let alone survive two motions to dismiss. As I wrote about the first motion to dismiss:
this is surely a frustrating ruling for Google. Dreamstime is almost certainly going to lose this case eventually. However, by greenlighting the case to the next stage and opening up discovery–including investigations for a dismissed claim–the judge ensured that the parties will spend a lot of time and money reaching the inevitable denouement. Even if the judge technically got the legal standard right for a motion to dismiss, this is one of those situations where Google surely wished the judge would demand more rigorous factual support in the complaint. I’m confident this judge will eviscerate Dreamstime’s case when it fails to deliver on its allegations with credible and admissible evidence, but it will take a lot of resources from both parties to prove that negative.
When Judge Alsup finally dismissed the case, I wrote:
This case took 2.5 years, extensive discovery, and an ever-shifting plaintiff’s theory of the case before Judge Alsup finally shut it down. Judge Alsup may have skillfully filleted this nothingburger case, but his approach cost everyone extra time and money.
To me, this lawsuit highlights some structural problems with antitrust litigation. Plaintiffs can always find SOMETHING to bitch about, and plaintiff-slanted antitrust doctrines often lets that bitching fester in court far too long–in this case, 4 years–before reaching the obvious denouement.
Case Citation: Dreamstime.com, LLC v. Google LLC, 2022 WL 17420930 (9th Cir. Dec. 6, 2022)