Google Moves to Dismiss Third Complaint Alleging Tying of Google Maps API Services

BACKGROUND

Google LLC and Alphabet Inc. (Google) moved to dismiss a third successive complaint that alleged it tied the sales of Maps, Routes and Places application programming interface (API) services to one another. A basic tying claim involves a seller leveraging its market power in one product (the “tying” product) to force sales and gain market share over a different product (the “tied” product).

Following the dismissal of an initial complaint filed in 2022, the plaintiffs filed an amended complaint alleging Google created a “three-way” tying arrangement by conditioning the sale of one API service (e.g., Maps) on the required purchase of the two other services (e.g., Routes and Places) through its contractual terms of service.

The plaintiffs alleged that the tying product could be any of the three APIs and that Google had market power in all three. Whichever plaintiffs bought first was the tying product, and the other two were tied products – allegedly locked in by forced sale or prohibition on use of competitor APIs as a condition of the first sale.

The court granted Google’s motion to dismiss because the plaintiffs did not explain how a product could be both a tying product (requiring market power) and the tied product (lacking market power) depending simply on the order of the sales.

In their second amended complaint, the plaintiffs abandoned the three-way tying claim, instead bringing a basic tying claim with Maps as the tying product and Routes and Places as the tied products. Google has again moved to dismiss the complaint.

THE DETAILS

  • Maps, Routes and Places APIs are interrelated but separately licensed services that appear alongside each other in mapping applications like Google Maps.
  • In response to the first amended complaint, Google argued that the plaintiffs did not explain how a product could be both a tying and a tied product depending on the order of sale, given the inherent conflicts in market power required of each.
  • Google also argued that it had broad rights to dictate the terms of use and display of its mapping services, including a right to protect and control user experience through restricting use of its mapping API services in conjunction with or in proximity to non-Google mapping API services, relying in part on a case called Sambreel. 906 F. Supp. 2d at 1073 (S.D. Cal. 2012).
  • The US Department of Justice Antitrust Division (DOJ) intervened, filing a Statement of Interest urging the court to reject Google’s interpretation of Sambreel as establishing an “unqualified right” over the use and display of its services. The DOJ did not take a position on whether the claim should survive otherwise.
  • The court agreed with the DOJ, holding that Google’s interpretation of “control” is too broad and could justify any tying arrangement as an exercise of a supplier’s right to determine or dictate the terms on which its product or service was used.
  • The court also found that the plaintiffs failed to explain how a product could be either a tying [...]

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Antitrust M&A Snapshot | Q4 2023

Topics covered in this edition:

  • New Merger Guidelines Released
  • FTC Focused on Pharmaceutical Companies
  • FTC Targets “Moat-Building” Mergers
  • Fifth Circuit Fuels FTC’s Vertical Mergers Agenda
  • FTC Losing Streak Reverses During the Fourth Quarter
  • Ex post Review in the Merger Control Sphere Occurring More and More Frequently

Access the full issue.




The Fix Is In – Key Learnings From Recent Vertical Merger Challenges

Vertical mergers are inherently more difficult for the government to litigate than horizonal mergers. After not litigating a vertical merger case since the 1970s, the Federal Trade Commission and the US Department of Justice have recently tried several matters.

In this Westlaw Today article, Jon Dubrow, Stephen Wu, Matt Evola and Bailey Sanders discuss key insights from these cases and provide useful guidance for companies contemplating such transactions.

Read more here.




Year in Review: Criminal Enforcement by the DOJ Antitrust Division in 2023

When it comes to antitrust criminal enforcement, 2023 will be remembered as the year when the US Department of Justice’s (DOJ) Antitrust Division redefined and tested the outer boundaries of its authority. This report looks back at the key events from the DOJ’s year in criminal antitrust enforcement.

Here’s a glimpse of what’s inside:

  • Despite four straight losses and a voluntary dismissal in labor market cases, the DOJ remains undeterred in bringing additional criminal wage-fixing and no-poach suits.
  • DOJ’s Procurement Collusion Strike Force secured several guilty pleas and stiff penalties in 2023 and will most likely continue pursuing aggressive investigative and litigation strategies moving forward.
  • The nearly decade-long investigation of the generic drug industry appears to be ending after the DOJ recently resolved and dismissed the remaining cases.
  • Deputy Attorney General Lisa Monaco highlighted cybersecurity, tech and national security as areas of heightened risk and thus heightened scrutiny, so corporations in these markets should take heed of the DOJ’s emphasis on corporate compliance in 2024.

Read full report.




Court Finds Red Cross Has Antitrust Immunity, Rejecting Broad Interpretation of the Sherman Act

WHAT HAPPENED

Recently, in a rarely considered question, the US District Court of Massachusetts held that the American Red Cross (ARC), a federally chartered corporation, is not subject to liability under the Sherman Antitrust Act (Sherman Act) because it is not an antitrust “person.” The court narrowly construed the Sherman Act to exclude a quasi-public entity like ARC, resulting in a broad interpretation of immunity for quasi-public entities under the antitrust laws.

ARC is the largest supplier of blood platelets in the United States and, until recently, sold “untreated” platelets to hospitals which then employed various services to mitigate the risk of platelets becoming infected. Verax Biomedical Inc. (Verax) manufactures one such mitigation service. After ARC announced its plan to begin using Cerus Corporation’s INTERCEPT Blood System on its platelet supply prior to sale – a system that is incompatible with Verax’s service – Verax sued ARC for allegedly leveraging its power in the market for platelets to monopolize the market for mitigation services.

The court found that, although Congress had clearly waived ARC’s sovereign immunity, it did not constitute a “person” under the Sherman Act in form or function because its public attributes outweighed its private ones.

BACKGROUND

  • ARC is a federally chartered nonprofit corporation responsible for “provid[ing] volunteer aid in time of war to the sick and wounded of the Armed Forces.” 36 U.S.C. § 300102(1). It is also the largest supplier of blood platelets in the United States.
  • Verax produces and sells US Food and Drug Administration (FDA)-cleared tests for detecting bacterial growth in platelets.
  • In the past, ARC sold both “untreated” and “treated” platelets to hospitals. Untreated platelets require further treatment to ensure bacterial growth is controlled. Hospitals could choose which mitigation services to use, including Verax’s.
  • In 2020, ARC announced its intention to stop selling untreated platelets and to begin treating all platelets with Cerus Corporation’s INTERCEPT Blood System prior to sale. Verax’s service cannot be used on platelets that have been treated with the INTERCEPT system, as the FDA has not endorsed the pairing of the two technologies.
  • Verax filed suit against ARC, bringing three counts under the Sherman Act: tying, exclusive dealing and attempted monopolization.
  • ARC moved to dismiss the lawsuit, arguing, in part, that ARC cannot be sued under the Sherman Act. Shortly after, the federal government filed a statement of interest arguing that ARC can be sued under the Sherman Act.
  • The court concluded that, although it was a close question, ARC was not a “person” under the Sherman Act in either form or function and therefore dismissed the antitrust claims.

HOW THE DECISION WAS REACHED

  • To determine whether the Sherman Act extends to ARC, the court applied the two-step analysis laid down by the US Supreme Court in FDIC v. Meyer and asked (1) whether there was a waiver of sovereign immunity for actions against ARC and (2) whether the substantive prohibitions of the Sherman Act apply to ARC.
  • The [...]

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