AdWords Collections Attempt By Google Mutates Into Antitrust Lawsuit

from the didn't-expect-that,-did-you.. dept

Last year, we wrote about an odd antitrust lawsuit against Google by a company named TradeComet. The lawsuit was a joke. Basically, the company was an arbitrage player that tried to create spam-like pages that people would find on Google searches, and would make money by then getting people to click on pay-per-click ad links to get where they really wanted to go. Google properly classifies sites like this as spam, and its ranking methodology punished the site accordingly. It had nothing to do with being "anti-competitive," it was just Google making sure its search results were better for users. That lawsuit is basically in a holding pattern right now, as the judge considers Google's motion to dismiss.

However, a similar lawsuit has popped up, and it's a bit strange. Eric Goldman has all the murky details, of how a shopping search engine named myTriggers apparently got a line of credit from Google and used it to buy a bunch of AdWords search ads to drive traffic to its site (and then raised money based on the resulting traffic). Once again, Google rejiggered its algorithm, and suddenly the ads for myTriggers were a lot more expensive (by one to two orders of magnitude). The company couldn't pay its bill to Google, so Google hired a local lawyer (in Ohio) and went to court to try to get myTriggers to pay the $335,000 it owed. Simple enough.

Except that myTriggers returned fire by claiming antitrust violations by Google, and even went out and hired three separate lawfirms, including (conspiracy theory time) the same law firm that represented TradeComet and which is closely connected to Microsoft. As Goldman notes:
I am struggling to make sense of myTriggers' litigation choices. Assuming myTriggers even has the money, writing a $335k check to Google (and I bet Google would have taken less!) is almost assuredly cheaper than paying three law firms to mount an antitrust assault on a $20B/year behemoth. Assuming that myTriggers wants to maximize profits, then either (1) myTriggers thinks its odds are good enough that it will win AND make enough money to pay the 7 lawyers on the counterclaim's signature page plus their teams, or (2) the law firms struck an unbelievably sweet deal on fees.
Goldman also notes that Google probably wishes it hadn't filed a claim in a local Ohio state court, as the antitrust battle might now need to be fought there, rather than in a friendlier federal court closer to home:
Whatever the case, I suspect the antitrust claims caught Google flat-footed. A simple and low-stakes collections matter has blown up into a potentially significant lawsuit in an undesirable forum. Google chose Ohio state court for the collections matter despite its AdWords contract, so now it will have a tough time extricating itself from that court. But I suspect it would rather have an antitrust case in federal court, not state court--often (but not always) federal judges are more sophisticated than state judges and less susceptible to hometown bias. And I'm sure Google would rather fight antitrust claims on one of the coasts than in the Rust Belt, especially if myTriggers argues that Google's evilness cost Ohioans jobs. Google probably didn't mean to offer battle in this venue, but someone did a really good job of seizing the opportunity and forcing Google to fight the battle in a suboptimal setting.
As with the TradeComet case, the antitrust claim from myTriggers sounds incredibly weak, and it probably should be thrown out, but given the uncertainties of it being filed in the local court, Google may have to take it a bit more seriously. And, of course, the possibility of a secret Microsoft connection makes this even more interesting. Still, I can't see this getting that far in the long run. I hope that the judge recognizes the basic weaknesses of the case: here's a company that relied entirely on a single supplier who had every right to change its policies if it felt it didn't deliver a good customer experience, and it did so. myTriggers now seems to be suing as some sort of sour grapes for its own business failings.


Reader Comments (rss)

(Flattened / Threaded)

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    HymieS (profile), Feb 19th, 2010 @ 5:49am

    Please forgive my being naive in this matter. I want to know how Google can be named in an "antitrust" suit, if there are at least 6 other, major, search engines in this country alone. Most of which are quite large in their own right.
    I always thought that antitrust suits were based on someone trying to be a 'monopoly' and controlling the business they were in. I doubt that Microsoft Bing is going to let Google control them.
    Google has the right to charge any fees that they deem adequate, and to do business or not with anyone they choose. I firmly believe that if Google does not want to include my business in the results of a search, for businesses like mine, that's their right.

     

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    Robert Ring (profile), Feb 19th, 2010 @ 6:26am

    AdWords Confusion

    I'm a bit confused as to how myTriggers got stuck with suck a huge bill in the first place. AdWords accounts are set up by budget (unless there's some no-budget option that I'm unaware of). So, Google upping their fees should have resulted simply in less ad-clickthroughs to myTriggers. It sounds like myTriggers said, "Ok," paid the higher fees and then got stuck with a huge bill after their revenue was unable to cover their advertising costs.

    Unless I'm getting something wrong here, you would think that mT would have realized the cashflow problem before raising their AdWords budget.

     

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    NAMELESS.ONE, Feb 19th, 2010 @ 2:58pm

    SCO version 2.0

    nuff said

     

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    fentex, Feb 19th, 2010 @ 5:25pm

    If this sentence characteriese the facts accurately:

    "Google leant someone money to pay for a Google service, then Google raised the price of that service"

    One might think a sort of bait and switch happened that is open to legal sanction (though not neccessarily an anti-trust case).

     

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    jonerik, Feb 20th, 2010 @ 6:52pm

    antitrust

    I agree with the lawyers who are representing myTrigger that Google might have been in violation of the antitrust laws. Google might be trying to rely on a precedent in the patent law where the US Supreme Court in the last 15 years has basically gutted a similar defense in a patent misuse action. What Google may not understand is that deision where the Supremes overruled an antitrust "misuse of patent monopoly" defense was based on the express language of an amendment to the Patent Act that precluded antitrust claims from being raised as a defense to a patent misuse action.

    The problem for Google might be that the same provision was never added to the copyright laws. Google, Microsoft and for that matter the entire industry rely on protections under the copyright laws (for the most part)rather than the patent laws (because the Supreme Court some years ago held algorithms could not be patented) so upholding this defense could be very big.

     

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    SEO Packages, Aug 23rd, 2010 @ 7:30am

    Unless I'm getting something wrong here, you would think that mT would have realized the cashflow problem before raising their AdWords budget.

     

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    chris, Nov 12th, 2010 @ 10:29pm

    I think one of the big issues mytrigger.com finds cause for court action is simply that the way Google applies its quality score in Adwords is not uniform. Google states that all Adwords advertisers are subject to the same rules and standards but that is very clearly not so.

    Many sites with unique content and user experience, not just arbitrage players have seen cpc penalties, yet it is clear that such penalties are selectively applied to some but not others.

    For example does anyone seriously believe that the likes of Ask.com and info.com, both of whom are thin arbitrage advertisers and Google search partners do not have an understanding with Google that wholly or partially excludes them from price hike penalties?

    Yet other companies with arguably superior offerings are penalised which is unfair competition. There is most certainly a case to answer and those business owners whom have had their revenues murdered by Google will be watching closely.

     

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    Matt, Nov 26th, 2010 @ 3:38pm

    Google Issues

    Google is a PIA with their adwords platform, but..... where else can you generate millions of dollars in revenue overnight but typing in a couple of keywords and placing a bid?

     

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