Kinderstart.Com, LLC v. Google, Inc.

Filing 56

Memorandum in Opposition 12(b) Motion filed byKinderstart.Com, LLC. (Yu, Gregory) (Filed on 10/13/2006)

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Kinderstart.Com, LLC v. Google, Inc. Doc. 56 Case 5:06-cv-02057-JF Document 56 Filed 10/13/2006 Page 1 of 43 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Gregory J. Yu (State Bar No. 133955) GLOBAL LAW GROUP 2015 Pioneer Court, Suite P-1 San Mateo, CA 94403 Telephone: (650) 570-4140 Facsimile: (650) 570-4142 E-mail: glgroup [at] inreach [dot] com Attorney for Plaintiffs and Proposed Class and Subclasses UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA SAN JOSE DIVISION Case No. C 06-2057 JF KINDERSTART.COM LLC, a California limited liability company, on behalf of itself and all others similarly situated, OPPOSITION TO DEFENDANT'S MOTION TO DISMISS THE SECOND Plaintiffs, AMENDED COMPLAINT v. GOOGLE, INC., a Delaware corporation, Defendant. Judge: Hon. Jeremy Fogel Date: October 27, 2006 Time: 9:00 a.m. Courtoom: 5th Floor, Room 3 OPPOSITION TO DEFENDANT'S MOTION TO DISMISS SECOND AMENDED COMPLAINT Case No. C 06-2057 JF i Dockets.Justia.com Case 5:06-cv-02057-JF Document 56 Filed 10/13/2006 Page 2 of 43 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 G. H. F. E. D. C. TABLE OF CONTENTS TABLE OF AUTHORITIES .......................................................................................................iv I. II. INTRODUCTION ........................................................................................................ - 1 ARGUMENT IN OPPOSITION TO THE MOTION............................................... - 1 A. B. The First Amendment Claim Ignores Speakers' and Listeners' Rights. ............ - 2 The Communications Decency Act is No Bar to This Action............................ - 3 1. 2. Google's Conduct Does Not Qualify for CDA Immunity...................... - 3 Google Has No Refuge for Authoring its Own False Statements. ......... - 4 - Attempted Monopolization is Fully and Properly Pled. ..................................... - 4 1. 2. 3. 4. 5. The Relevant Market Covers Search and Search-Led Advertising. ....... - 4 All Elements are Fully Pled Against Google.......................................... - 7 Antitrust Injury Pervades the Relevant Market. ................................... - 10 Google Harbors the Requisite Intent to Monopolize............................ - 13 Google's Patent and Copyrights Cannot Shield Liability. ................... - 14 - Monopolization, as Pled, Stands Against Google. ........................................... - 14 1. 2. Google Has Refused to Deal with Multitudes of Websites. ................. - 15 Google as an Essential Facility Unreasonably Denies Access. ............ - 18 - False Advertising under the Lanham Act States a Claim. ................................ - 18 1. 2. 3. Plaintiffs Plead Actionable Statements that are False Advertising. ..... - 19 Plaintiffs as a Putative Class Incurred Competitive Injury................... - 21 Search Objectivity and PageRank are Commercial Promotions. ......... - 22 - Free Speech Violations as Claimed are Sustainable......................................... - 22 1. 2. 3. 4. The Engine is a Public Speech Forum. ................................................. - 22 Google is a State Actor due to Deep Entwinement. ............................. - 25 The Engine Should Protect Both Users and Listeners.......................... - 28 The California Constitution Protects Plaintiffs' Speech....................... - 28 - Unfair Competition Law ("UCL") Violations are Properly Pled. .................... - 30 Defamation and Libel Properly State a Claim for Relief. ................................ - 32 Case No. C 06-2057 JF ii OPPOSITION TO DEFENDANT'S MOTION TO DISMISS SECOND AMENDED COMPLAINT Case 5:06-cv-02057-JF Document 56 Filed 10/13/2006 Page 3 of 43 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 III. 1. 2. 3. 4. PageRanks of `0' Are False and Falsely-Based Opinion...................... - 32 Defamation as Alleged is Grounded in Malice..................................... - 33 PageRank Deflation Caused Injury to Plaintiffs................................... - 34 California Privileges Do Not Cover False "0-PRs."............................. - 34 - CONCLUSION. .......................................................................................................... - 35 - OPPOSITION TO DEFENDANT'S MOTION TO DISMISS SECOND AMENDED COMPLAINT Case No. C 06-2057 JF iii Case 5:06-cv-02057-JF Document 56 Filed 10/13/2006 Page 4 of 43 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 TABLE OF AUTHORITIES CASES Union of Needletrades, etc. Employees v. Superior Court (1997) 56 Cal.App.4th 996, 1010, fn. 4 [65 Cal. Rptr. 2d 838].............................................................................................- 29 ABC Int'l Traders, Inc. v. Matsushita Elec. Corp. of Am., 14 Cal. 4th 1247, 1257, 1271, 61 Cal. Rptr. 2d 112, 931 P.2d 290 (1997)...............................................................................- 31 Advanced Health-Care Services v. Radford Community Hospital, 910 F.2d 139, 145 (4th Cir. 1990) ..........................................................................................................................- 17 Albertson's, Inc. v. Young, 107 Cal.App.4th 106, 117-18 (3rd App. Dist. 2003), review denied, 2003 Cal. LEXIS 3975 (Cal., June 18, 2003)..................................................- 28 Allied Grape Growers v. Bronco Wine Co., 203 Cal. App. 3d 432 (1988) ..............................- 31 America Online, Inc. v. GreatDeals.Net, 49 F. Supp. 2d 851, 857 (E.D. Va. 1999)..................- 6 American Ad Mgmt. v. GTE Corp., 92 F.3d 781, 789 (9th Cir. 1996) .....................................- 10 American Philatelic Soc. v. Claibourne, 3 Cal.2d 689, 698 (1935) .........................................- 31 American Professional Testing Service v. Harcourt Brace Jovanovich Legal and Prof'l Publications, 108 F.3d 1147, 1152 (9th Cir. 1997) ....................................................................- 9 Apex Hosiery Co. v. Leader, 310 U.S. 469, 493, 60 S. Ct. 982, 84 L. Ed. 1311 (1940) ..........- 11 Ashcroft v. ACLU, 535 U.S. 564, 566, 122 S. Ct. 1700, 152 L. Ed. 2d 771, (2002) ................- 23 Aspen Skiing Co. v. Aspen Highlands Skiing Corp., 472 U.S. 585, 608 n.39, 105 S. Ct. 2847, 86 L. Ed. 2d 467 (1985)..................................................................................................- 13 Batzel v. Smith, 333 F.3d 1018, 1031 (9th Cir. 2003), cert. denied, 541 U.S. 1085 (2004).......- 3 Board of Trustees, State Univ. of N. Y. v. Fox, 492 U.S. 469, 474, 109 S. Ct. 3028, 106 L. Ed. 2d 388 (1989)............................................................................................................- 2 Brentwood Academy v. Tennessee Secondary School Athletic Assn., 531 U.S. 288, 121 S. Ct. 924, 148 L. Ed. 2d 807 (2001).................................................................................- 25 Brewer v. Second Baptist Church, 32 Cal. 2d 791, 797, 197 P.2d 713 (1948) ........................- 34 Brookfield Communs., Inc. v. West Coast Entertainment Corp., 174 F.3d 1036, 1044 (9th Cir. 1999) ..........................................................................................................................- 23 Brown Shoe Co. v. United States, 370 U.S. 294, 325, 82 S. Ct. 1502, 8 L. Ed. 2d 510 (1962)..........................................................................................................................................- 5 Brown v. Kelly Broadcasting Co., 48 Cal. 3d 711, 732, 771 P.2d 406; 257 Cal. Rptr. 708 (1989)........................................................................................................................................- 35 Brunette v. Humane Society, 294 F.3d 1205, 1213 (9th Cir. 2002), cert. denied, 537 U.S. 1112, 123 S. Ct. 902, 154 L. Ed. 2d 786 (2003).......................................................................- 26 OPPOSITION TO DEFENDANT'S MOTION TO DISMISS SECOND AMENDED COMPLAINT Case No. C 06-2057 JF iv Case 5:06-cv-02057-JF Document 56 Filed 10/13/2006 Page 5 of 43 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Burnett v. National Enquirer, Inc. 144 Cal.App.3d 991, 1007-08, 193 Cal. Rptr. 206 (1993)........................................................................................................................................- 33 Burton v. Wilmington Parking Authority et al., 365 U.S. 715, 725, 81 S. Ct. 856, 6 L. Ed. 2d 45 (1961)................................................................................................................- 26 California Motor Transport Co. v. Trucking Unlimited, 404 U.S. 508, 513, 92 S. Ct. 609, 30 L. Ed. 2d 642 (1972)......................................................................................................- 9 Cel-Tech Communications Inc. v. Los Angeles Cellular Phone Co., 20 Cal. 4th 163, 187, 973 P.2d 527, 83 Cal. Rptr. 2d 548 (1999) ......................................................................- 31 Ciprofloxacin Hydrochloride Antitrust Litig., 166 F. Supp. 2d 740, 749 (E.D.N.Y. 2001).....- 14 Clipper Express v. Rocky Mountain Motor Tariff Bureau, Inc., 690 F.2d 1240, 1261 (9th Cir. 1982) ...........................................................................................................................................- 9 Clipper Express v. Rocky Mountain Motor Tariff Bureau, Inc., 690 F.2d 1240, 1261 (9th Cir. 1982), overruled on other grounds, Mayle v. Felix, 545 U.S. 644 (2005) .................................- 9 Coastal Abstract Services v. First American Title Ins. Co., 173 F.3d 725, 730 (9th Cir. 1999) .........................................................................................................................................- 20 CollegeNet Inc. v. XAP Corporation, 2006 U.S. Dist. LEXIS 49684 (Jul. 17, 2006)..............- 22 Cook, Perkiss and Liehe, Inc. v. Northern Cal. Collection Servs., Inc., 911 F.2d 242, 244 (9th Cir. 1990) ..........................................................................................................................- 19 Copp v. Paxton, 45 Cal.App.4th 829, 845-846, 52 Cal. Rptr. 2d 831 (1996) ..........................- 33 Cornelius v. NAACP, 473 U.S. 788, 800; 105 S. Ct. 3439, 87 L. Ed. 2d 567 (1985) ..............- 24 Costco Companies, Inc. v. Gallant, 96 Cal. App. 4th 740, 754-55, 117 Cal. Rptr. 2d 344 (2002)........................................................................................................................................- 29 Currier v. Potter, 379 F.3d 716, 727 (9th Cir. 2004) ...............................................................- 24 Denver Area Ed. Telecommunications Consortium Inc. v. FCC, 518 U.S. 727, 749, 116 S. Ct. 2374135 L.Ed.2d 888 (1996)...................................................................................- 23 Forsyth v. Humana, Inc., 114 F.3d 1467, 1477 (9th Cir. 1997), cert. denied, 522 U.S. 996, 118 S. Ct. 559, 139 L. Ed. 2d 401 (1997)...................................................................................- 7 Gentry v. EBay, Inc., 99 Cal. App. 4th 814, 834, 121 Cal. Rptr. 2d 703 (2002)........................- 4 Glen Holly Entertainment, Inc. v. Tektronix, Inc., 343 F.3d 1000, 1010 (9th Cir. 2002) ........- 11 Glendale Associates, Ltd., v. N.L.R.B., 347 F.3d 1145 (9th Cir. 2003)....................................- 28 Great Western Directories, Inc. v. Southwestern Bell Telephone Company, 63 F.3d 1378 (5th Cir. 1995), cert. denied, 518 U.S. 1048 (1996) ..........................................................................- 6 Home Placement Service, Inc. v. The Providence Journal Co., 682 F. 2d 274 (1st Cir. 1982), cert. denied, 460 U.S. 1028 (1983)...........................................................................................- 17 Hunt-Wesson Foods, Inc. v. Ragu Foods Inc., 627 F.2d 919, 925 (9th Cir. 1980), cert. denied, 450 U.S. 921 (1980)...........................................................................................................- 5 -, - 8 OPPOSITION TO DEFENDANT'S MOTION TO DISMISS SECOND AMENDED COMPLAINT Case No. C 06-2057 JF v Case 5:06-cv-02057-JF Document 56 Filed 10/13/2006 Page 6 of 43 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Image Tech. Servs. v. Eastman Kodak Co., 125 F.3d 1195, 1204 (9th Cir. 1997), cert. denied, 523 U.S. 1094 (1998)..................................................................................................................- 5 In re K-Dur Antitrust Litig., 338 F. Supp. 2d 517, 531-32 (D. N.J. 2004)...............................- 14 In re Lane [71 Cal.2d 872, 79 Cal. Rptr. 729, 457 P.2d 561 (1969)] .......................................- 28 International Society for Krishna Consciousness v. City of L.A., 966 F. Supp. 956, 964 (C.D. Cal. 1997)........................................................................................................................- 30 Jackson v. Carey, 353 F.3d 750, 755 (9th Cir. 2003).................................................................- 1 Kuba v. 1A Agricultural Ass'n, 387 F.3d 850, 858 (9th Cir. 2004)..........................................- 30 Kuba v. Six Flags Theme Parks Inc. et al., 2006 U.S. Dist. 33566 (E.D. Cal. May 17, 2006) - 26 La Sala v. American Sav. & Loan Ass'n, 5 C.3d 864, 97 Cal. Rptr. 849, 489 P.2d 1113 (1971)........................................................................................................................................- 30 Lee v. Katz, 276 F.3d 550, 554 (9th Cir. 2002) ........................................................................- 25 Lloyd Corp. v. Tanner, 407 U.S. 551, 563, 92 S. Ct. 2219, 33 L. Ed. 2d 131 (1972) ..............- 23 Lorain Journal Co. v. Milkovich, 474 U.S. 953, 963-64 (1985) ..............................................- 33 Lucas Auto. Eng'g, Inc. v. Bridgestone/Firestone, Inc., 275 F.3d 762, 768 (9th Cir. 2001) ......- 6 Marsh v. Alabama, 326 U.S. 501, 66 S. Ct. 276, 90 L. Ed. 265 (1946) ...................................- 22 MetroNet Servs. Corp. v. Quest Corp., 383 F.3d 1124, 1134 (9th Cir. 2004)..........................- 16 Motors, Inc. v. Times Mirror Co., 102 Cal. App. 3d 735, 740 (1980). ....................................- 31 National A-1 Advertising, Inc. v. Network Solutions, Inc., 121 F.Supp.2d 156, 179 (D. N.H. 2000) .........................................................................................................................................- 24 National Services Group, Inc. v. Painting & Decorating Contractors of America, Inc. 2006 U.S. Dist. LEXIS 52205 (S.D. Cal. Jul. 17, 2006), p. 9 ..................................................- 21 New.Net, Inc. v. Lavasoft, 356 F. Supp. 2d 1090, 1107-08 (C.D. Cal. 2004) ..........................- 28 Nobody in Part. Presents ("NIPP") v. Clear Channel Communication, 311 F. Supp. 2d 1048 (D. Colo. 2004) ................................................................................................................- 16 NYNEX Corp. v. Discon Inc., 525 U.S. 128, 134, 119 S. Ct. 493, 142 L. Ed. 2d 510 (1998)..- 10 Oahu Gas Service, Inc. v. Pacific Resources Inc., 838 F.2d 360, 368 (9th Cir. 1988) ............- 16 OBH, Inc. v. Spotlight Magazine, Inc., 86 F. Supp. 2d 176, 180 (W.D.N.Y. 2000) ................- 23 Pacific Express, Inc. v. United Airlines, Inc., 959 F.2d 814, 817 (9th Cir. 1992), cert. denied, 506 U.S. 1034, 113 S. Ct. 814, 121 L. Ed. 2d 686 (1992)...................................- 14 Pacific Gas & Electric Co. v. Public Utilities Commission of California, 475 U.S. 1, 8, 106 S. Ct. 903, 89 L. Ed. 2d 1 (1986).......................................................................................- 28 Case No. C 06-2057 JF vi OPPOSITION TO DEFENDANT'S MOTION TO DISMISS SECOND AMENDED COMPLAINT Case 5:06-cv-02057-JF Document 56 Filed 10/13/2006 Page 7 of 43 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Panavision International, L.P. v. Dennis Toeppen, Network Solutions, Inc., 141 F. 3d 1316, 1327 (9th Cir. 1998) ........................................................................................................ - 6 -, - 24 Paradise Hills Associates v. Procel, 235 Cal. App. 3d 1528, 1545 (1991)..............................- 12 Parker v. Google Inc., 422 F. Supp. 2d 492, 501-02 (E.D. Pa. 2006) .............................. - 3 -, -25Partington v. Bugliosi, 56 F.3d 1147 (9th Cir. 1995).................................................................- 2 Queen City Pizza, Inc. v. Domino's Pizza, Inc., 124 F.3d 430, 436 (3d Cir. 1997), cert. denied, 118 S. Ct. 1385 (1998)................................................................................................................- 6 Rebel Oil Co. v. Atlantic Richfield Co., 51 F.3d 1421, 1438 (9th Cir. 1995), cert. denied, 117 S. Ct. 515 (1995)................................................................................................................- 13 Robins v. Pruneyard Shopping Ctr., 23 Cal.3d 899, 908, 910, 153 Cal. Rptr. 854, 592 P.2d 341 (1979), ................................................................................................................- 28 Rohlfing v. Manor Care, Inc., 172 F.R.D. 330, 345 (N.D. Ill. 1997) .........................................- 6 Rosenberger v. Rector and Visitors of the Univ. of Va., 515 U.S. 819, 830, 115 S. Ct. 2510, 132 L. Ed. 2d 700 (1995) ..........................................................................................................- 23 Ross-Simmons Hardwood Lumber Company, Inc. v. Weyerhaeuser Company, 41 F.3d 1030, 1041 n. 38 (9th Cir. 2005), cert. granted on other grounds, 2006 U.S. LEXIS 4908 (U.S., Jun. 26, 2006) ...................................................................................................................- 7 Scheuer v. Rhodes, 416 U.S. 232, 236, 94 S. Ct. 1683, 40 L. Ed. 2d 90 (1974) ........................- 1 Shaw v. Rolex Watch, U.S.A., Inc., 673 F. Supp. 674, 678-79 (S.D.N.Y. 1987)........................- 7 South Pepsi-Cola Bottling Co. v. Pepsico, Inc., 1989 U.S. Dist. LEXIS 4639, No. 88 CIV 6243, 1989 WL 48400, at 8-9 (S.D.N.Y. May 2, 1989) .........................................- 7 Spanish Broad. Sys. of Fla. v. Clear Channel Communications., 376 F.3d 1065, 1071 n.2 (11th Cir. 2004) ..........................................................................................................................- 5 Suzuki Motor Corporation v. Consumers Union, 330 F.3d 1110 (9th Cir. 2003), cert. denied, 540 U.S. 983, 157 L. Ed. 2d 373, 124 S. Ct. 468 (2003).....................................- 33 Tancredi v. Metro. Life Ins. Co., 378 F.3d 220, 230 (2nd Cir. 2004).......................................- 26 Tercica, Inc. v. Insmed Incorporated, 2006 U.S. Dist. LEXIS 41804 (N.D. Cal. Jun. 6, 2006, at 61-62.) .............................................................................................................- 20 The Authors Guild, et al. v. Google, Inc., Case 1:05-cv-08136-JES, filed Sept. 20, 2005 pending in the Southern District of New York.........................................................................- 27 Trader Joe's Co. v. Progressive Campaigns, Inc., 73 Cal. App. 4th 425, 86 Cal. Rptr. 2d 442 (1999).................................................................................................................................- 29 U.S. Anchor Mfg., Inc. v. Rule Industries, Inc., 7 F.3d 986 (11th Cir. 1993), cert. denied, 512 U.S. 1221 (1994)................................................................................................................- 13 U.S. v. Grinnell Corp, 384 U.S. 563, 570-71, 86 S. Ct. 1698, 16 L. Ed. 2d 1778 (1966) ........- 15 United States v. American Airlines, 743 F.2d 1114 (5th Cir. 1984).........................................- 13 OPPOSITION TO DEFENDANT'S MOTION TO DISMISS SECOND AMENDED COMPLAINT Case No. C 06-2057 JF vii Case 5:06-cv-02057-JF Document 56 Filed 10/13/2006 Page 8 of 43 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 United States v. American Library Association, Inc., 539 U.S. 194, 205-06, 123 S. Ct. 2297, 56 L. Ed. 2d 221 (2003)............................................................................................................- 26 United States v. Colgate & Co., 250 U.S. 300, 307, 29 S. Ct. 465, 63 L. Ed. 992 (1919) .......- 15 United States v. E.I. duPont de Nemours & Co., 351 U.S. 377, 391, 76 S. Ct. 994,100 L. Ed. 1264, (1956)..............................................................................................................................- 15 United States v. Microsoft Corp., 87 F. Supp. 2d 30, 41 (D.D.C. 2000)..................................- 14 Va. Pharmacy Bd. v. Va. Consumer Council (1976) 425 U.S. 748, 765, 96 S. Ct. 1817, 48 L. Ed. 2d 346 (1976)............................................................................................................- 12 Verizon Communications Inc., Petitioner v. Law Offices of Curtis V. Trinko, LLP, 540 U.S. 398, 409, 124 S. Ct. 872, 157 L. Ed. 2d 823 (2004)..................................................- 15 STATUTES 15 U.S.C. 1125(a) ..................................................................................................................- 19 47 U.S.C. 230(a)(3) ...................................................................................................... -23-, - 25 California Business and Professions Code ("B&PC") 17200 et seq. ..................................- 19 - OTHER AUTHORITIES 2A Phillip A. Areeda et al., Antitrust Law 530a (rev. ed. 1995) .............................................- 5 Gey, Steven G., "Reopening the Public Forum From Sidewalks to Cyberspace," 58 Ohio St. L. J. 1539, 1619 (1998) .........................................................................................- 25 Roget's New MillenniumTM Thesaurus, First Edition (v 1.3.1) Copyright 2006 by Lexico Publishing Group, LLC. ...........................................................................................- 34 - OPPOSITION TO DEFENDANT'S MOTION TO DISMISS SECOND AMENDED COMPLAINT Case No. C 06-2057 JF viii Case 5:06-cv-02057-JF Document 56 Filed 10/13/2006 Page 9 of 43 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 I. INTRODUCTION Google, Inc. ("Google") crafted and harnessed a worldwide message to gain unbending loyalty among users and audiences. Based on Google's promises in SEC filings and elsewhere, advertisers, customers, and users trust Google's search results and PageRankTM to be objective and free of human tampering. Regretfully, the stark gap between Google's promises and its practices has harmed multitudes of competitors and customers with websites, including KinderStart.com LLC ("KinderStart"). Many of them have built businesses and operations around Google based on its universal invitation to derive traffic and revenue. To immunize its suppressive, anticompetitive and unfair actions, Google requires a skewed interpretation of law. Commanding at least 65% of key markets and armed with market power, Google has blocked and destroyed competition. Google's latest court filings veer away from the function of a motion to dismiss under Federal Rules of Civil Procedure ("Fed.R.Civ.P.") 12(b) (the "12(b) Motion"). Rather than fairly and fully test the claimed facts against the law, Google overlooks key assertions required in the court's calculus in the Second Amended Complaint ("SAC"). It tenuously disputes some of the more serious allegations,1 but completely ignores content that permits this case to go forward. Google's conduct and so-called "expression" are not beyond legal restraint because the SAC points in the reverse direction. The 12(b) Motion should be denied. II. ARGUMENT IN OPPOSITION TO THE MOTION For a 12(b)(6) motion, the Ninth Circuit explains, "the issue is not whether a plaintiff will ultimately prevail but whether the claimant is entitled to offer evidence to support the claims. Indeed it may appear on the face of the pleadings that a recovery is very remote and unlikely but that is not the test." Jackson v. Carey, 353 F.3d 750, 755 (9th Cir. 2003) (quoting Scheuer v. Rhodes, 416 U.S. 232, 236, 94 S. Ct. 1683, 40 L. Ed. 2d 90 (1974)). Google emptied out handpicked, stale threads within the history of the lead Plaintiff's Website, www.kinderstart.com to suggest, not so subtly, that Google somehow identified, albeit 18 months after the fact, reasons for punishing KinderStart's site. Declaration of Matt Cutts in Support of Defendant's Special Motion to Strike ("Cutts Decl."). His declaration, untested for veracity in any sense, reflects a preemptive step to merely impugn the site. Plaintiff submits a declaration regarding www.kinderstart.com in opposition to the special motion to strike. OPPOSITION TO DEFENDANT'S MOTION TO Case No. C 06-2057 JF DISMISS SECOND AMENDED COMPLAINT 1 -1- Case 5:06-cv-02057-JF Document 56 Filed 10/13/2006 Page 10 of 43 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 A. The First Amendment Claim Ignores Speakers' and Listeners' Rights. For Google, the First Amendment is not merely the right to say something about an issue or person. Google's wants to validate, above all else, the dismissal of Web content previously open for view in a public forum. However, Google here tries to safely escape responsibility by labeling the totality of its behavior as an opinion.2 Going this far brings two inescapable consequences. First, website publication would be a blanket license to censor and defame. Even if Google had political, religious, malicious, unfair or anticompetitive agendas, self-restraint would be the sole protection. Second, free speech law would exonerate PageRank as commercial speech, even if opinions were based on provably false facts. This type of speech historically has a less protection, particularly where a competitor's goodwill is at stake. Board of Trustees, State Univ. of N. Y. v. Fox, 492 U.S. 469, 475, 109 S. Ct. 3028, 106 L. Ed. 2d 388 (1989). Google is the standards-setting body to value Websites, even with PageRanks as low as `0' ("0-PRs"). Under Google's regime, statements labeled as "opinions" would never be actionable.3 Google cites Partington v. Bugliosi, 56 F.3d 1147 (9th Cir. 1995) for the proposition that the expression of a subjective view, rather than "objectively verifiable facts," has First Amendment protection. The court's position, however, was not so simplistic. Aside from the invalidity of 0-PRs in the first place,4 Google is actually rendering opinions that have a factual (and indeed mathematical) basis. The Partington court wrote: "Thus, we join other courts of appeals in concluding when an author outlines the facts available to him, thus making it clear that the challenged statements represent his own interpretation of those facts and leaving the reader free to draw his own conclusions, those statements are generally protected by the First 2 Google wants respite with the First Amendment, but ignores something more fundamental here. The law and the court cannot and should not simply accept Google's own labels or even the parties' stipulation of what is subjective, objective or a fact-based opinion statement. 3 Google did just that in the June 30, 2006 hearing. Google argued that search results and PageRank were "subjective." In so doing, however, Google at the very least contradicted its SEC filings and Website content that search results and listings are objective. A more alarming reality would be that the representations are false because search results and PageRank are, in actuality, subjective. 4 In Section II.G infra, Plaintiffs explain how even 0-PRs, in and of themselves, are literally false statements of fact. For purposes of articulating the scope of First Amendment protection here, Plaintiffs assume that Google's expressions are opinions with presumably factual foundation. OPPOSITION TO DEFENDANT'S MOTION TO Case No. C 06-2057 JF DISMISS SECOND AMENDED COMPLAINT -2- Case 5:06-cv-02057-JF Document 56 Filed 10/13/2006 Page 11 of 43 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Amendment. Id. at 1156-57 (emphasis added). The First Amendment should not shield 0-PRs because the algorithms are hidden from view. Without facts to draw upon to interpret a 0-PR, the user may reasonably conclude, perhaps incorrectly, that the site is completely worthless. B. 1. The Communications Decency Act is No Bar to This Action. Google's Conduct Does Not Qualify for CDA Immunity. The Communications Decency Act (the "CDA") does not, by definition, preempt federal antitrust, false advertising or First Amendment law. A provider of an interactive computer service gets immunity only for carrying content of a third party or for removing content from access or availability. 47 U.S.C. 230. Nevertheless, Google demands blanket immunity covering all six alleged counts. The CDA dispels liability only arising under conflicting state or local law. Accordingly, Google's defense is facially invalid as to First Amendment, Sherman Act and Lanham Act claims.5 An actor is still subject to Lanham Act proscriptions against false advertising. Parker v. Google Inc., 422 F. Supp. 2d 492, 501-02 (E.D. Pa. 2006). An interactive computer service remains subject to the First Amendment if it is a state actor. Green v. America Online, 318 F.3d 465, 472 (3rd Cir. 2003) (CDA led to dismissal of only state tort claims). Further, no court would rule that the CDA immunizes an actor from the Sherman Act because that is contrary to the plain language to the CDA's provisions. The Ninth Circuit applies the CDA to editorializing content taken from another source. Batzel v. Smith, 333 F.3d 1018, 1031 (9th Cir. 2003), cert. denied, 541 U.S. 1085 (2004) ("a central purpose of the Act was to protect from liability service providers and users who take some affirmative steps to edit the material posted"). Since wholesale Blockage (defined in SAC 11) of sites takes Google far beyond the role of editor, immunity simply does not apply. Google admits that there are a hundred "good" sites that should not be Blocked. SAC 158. Blockage is not editing but censorship many sites are never found again. Moreover, Google cannot meet the express statutory standard for immunity. Section 230(c)(2)(A) protects an interactive computer service (ICS) for "any action taken in good faith to restrict access to or 5 Section 230 states "no cause of action may be brought and no liability may be imposed under any State or local law that is inconsistent with this section." 47 U.S.C. 230(e)(3). OPPOSITION TO DEFENDANT'S MOTION TO Case No. C 06-2057 JF DISMISS SECOND AMENDED COMPLAINT -3- Case 5:06-cv-02057-JF Document 56 Filed 10/13/2006 Page 12 of 43 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 availability of material" that the provider considers to objectionable (emphasis added). Google lacks good faith when using punishment and retaliation. SAC 58, 60(g), 186. Even if its own PageRank system that imposed 0-PRs was considered editorializing, the specter of defamation based on Google's own content puts the CDA out of reach. Google repeatedly cites allegations about the reasons for Blockage and PageRank Deflation (MTD at 8), but they are qualified as "purported" reasons exercised in "absolute and internal discretion." SAC 144. Google knowingly punishes thousands of Websites and Webpages that do not in actuality have Inferior Page Quality." SAC 145. Devoid of good faith, Google is undeserving of CDA immunity. 2. Google Has No Refuge for Authoring its Own False Statements. PageRanks of `0' pose a greater problem for Google's view of CDA immunity because Google alone created and developed this offending content. See Batzel, supra; Ben Ezra, Weinstein, & Co. v. America Online, Inc., 206 F.3d 980, 984-85 n.4 (10th Cir. 2000) (AOL conceded and the court acknowledged that 230 does not immunize an interactive computer service or an information content provider that develops the information). Google alone, and no other party, licenses, develops and uses PageRank and publishes 0-PRs against target sites. SAC 6, 274. Nowhere is Google charged with defamation for publishing third party content. Google chose to invent a `0' floor for PageRank as its own statements.6 SAC 279-82. Clearly, the CDA does not cover defamatory statements of the ICS itself. C. 1. Attempted Monopolization is Fully and Properly Pled. The Relevant Market Covers Search and Search-Led Advertising. Google's monopoly position arises in two separate but related relevant markets -- the Search Market and the Search Ad Market. SAC 34, 38. The markets are related because the traffic from widespread use of search engines and directories stimulates page views and advertisements paid for and sponsored by Websites. SAC 9-10, 65. Similar to broadcast media The closest case where the CDA might possibly afford Google immunity for defamation based on PageRank Deflation under California law is Gentry v. EBay, Inc., 99 Cal. App. 4th 814, 834, 121 Cal. Rptr. 2d 703 (2002). EBay's Feedback Forum and "Power Sellers" designation were simply collections of other statements, reviews and ratings provided by third party users of the e-commerce site. Gentry's negligence claim against EBay was barred by the CDA for that reason. OPPOSITION TO DEFENDANT'S MOTION TO Case No. C 06-2057 JF DISMISS SECOND AMENDED COMPLAINT 6 -4- Case 5:06-cv-02057-JF Document 56 Filed 10/13/2006 Page 13 of 43 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 or newspapers, advertisers will not participate unless readership or viewership is secured. SAC 53. Search advertisers buy ads on the search engine's site knowing there is specific behavior and intent behind a search user. SAC 57. An Eleventh Circuit case offers guidance here. In Spanish Broad. Sys. of Fla. v. Clear Channel Communications., 376 F.3d 1065, 1071 n.2 (11th Cir. 2004), the court used advertising revenue for a media firm to test for market share of a monopolist, not its readership or viewership. Google has at least 75% of U.S. revenues in the Search Ad Market. SAC 39. The Ninth Circuit deems a 65% market share sufficient to infer market power for a monopolist. Hunt-Wesson Foods, Inc. v. Ragu Foods Inc., 627 F.2d 919, 925 (9th Cir. 1980), cert. denied, 450 U.S. 921 (1980). As the Class representative, KinderStart is a search engine and directory and competes against Google in the Search Market (SAC 30, 33), and places on its own sponsored link advertisements as Google does (SAC 32). KinderStart and Class I Plaintiffs are in the same market as Google for search services. Like Google, Class II Plaintiffs earn revenue with sponsored links on their respective Websites. SAC 65. KinderStart, with other Class II members, are also customers of Web advertising placement services offered by Google. SAC 32, 175. Thus, KinderStart can represent the Class and Subclasses. SAC 187-95. Google for the first time questions the outer boundaries of the relevant markets as alleged by Plaintiffs.7 The Ninth Circuit in Image Tech. Servs. v. Eastman Kodak Co., 125 F.3d 1195, 1204 (9th Cir. 1997), cert. denied, 523 U.S. 1094 (1998), stated in quoting Brown Shoe Co. v. United States, 370 U.S. 294, 325, 82 S. Ct. 1502, 8 L. Ed. 2d 510 (1962), "the outer boundaries of a product market are determined by the reasonable interchangeability of use or the crosselasticity of demand between the product itself and substitutes for it." A market is "an arena within which significant substitution in consumption or production occurs." 2A Phillip A. Areeda et al., Antitrust Law 530a (rev. ed. 1995) . As a general rule, courts are reluctant to This factual issue requires expert economic analysis and jury resolution. Menasha Corp. v. News Am. Mktg. In-Store, Inc., 354 F.3d 661 (7th Cir. 2004) (requiring economic evidence to prove the existence of a distinct market). The boundary of the relevant market is generally a factual issue requiring evidence to be presented to the jury. See e.g., M.A.P. Oil Co. v. Texaco, Inc., 691 F.2d 1303, 1306 (9th Cir. 1982). OPPOSITION TO DEFENDANT'S MOTION TO DISMISS SECOND AMENDED COMPLAINT 7 Case No. C 06-2057 JF -5- Case 5:06-cv-02057-JF Document 56 Filed 10/13/2006 Page 14 of 43 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 dismiss a complaint on the grounds that the relevant market is not yet fully described. See e.g., Community Publishers v. DR Partners, 139 F.3d 1180, 1183-84 (8th Cir. 1998) (finding relevant market required expert analysis but lower court could recognized the bifurcation of readers and advertisers for the newspaper industry). Further, legitimate inferences may be drawn from specific facts to support a narrow market for antitrust purposes. Todd v. Exxon Corp., 275 F.3d 191, 203 (2001). In the Ninth Circuit, it is a fact issue to on how customers see differences in the channel and make substitutions. Lucas Auto. Eng'g, Inc. v. Bridgestone/Firestone, Inc., 275 F.3d 762, 768 (9th Cir. 2001). Here, legitimate inferences on the alleged facts suggest an advertiser cannot find any real substitutes for search ads going to search users. Advertisers "target and reach Internet browsers and users of search engines." SAC 38. Advertisers count on quick, targeted mass visibility to search users entering specific key words to view sponsored links surrounding their search results. SAC 3, 8. In the search advertising market, competitors in this market focus on building advertising revenue based on visitors reading specific search results. SAC 53. Yellow pages advertising is a natural paradigm for the Search Ad Market as a distinct and relevant market. In Great Western Directories, Inc. v. Southwestern Bell Telephone Company, 63 F.3d 1378 (5th Cir. 1995), cert. denied, 518 U.S. 1048 (1996), there was no dispute that the relevant market was yellow page ads to reach audiences looking up businesses by category. According to the Ninth Circuit,"[u]se of a `search engine' can turn up hundreds of web sites, and there is nothing equivalent to a phone book or directory assistance on the Internet." Panavision International, L.P. v. Dennis Toeppen, Network Solutions, Inc., 141 F. 3d 1316, 1327 (9th Cir. 1998). Google is valued by advertisers because search engines help browsers to find Websites, persons and businesses. SAC 35, 125. Online advertisers share this belief as 90% of them turn to Google. SAC 45. America Online, Inc. v. GreatDeals.Net, 49 F. Supp. 2d 851, 857 (E.D. Va. 1999) does not bind this court. There plaintiff tried to unduly narrow the market to the defendant's specific own database of subscribers with AOL email addresses.8 The court simply stated that e-mail is 8 Each key case cited by the GreatDeals.Net court rejected relevant market definitions covering OPPOSITION TO DEFENDANT'S MOTION TO Case No. C 06-2057 JF DISMISS SECOND AMENDED COMPLAINT -6- Case 5:06-cv-02057-JF Document 56 Filed 10/13/2006 Page 15 of 43 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 another way to reach the universe of customers, but offered no reasoning or precedent. Search advertisements are far different because it is not blind, undirected mass mailing but targeted and dynamic. The impact of search engines for advertisers means reaching browsers looking for businesses and information on the Web. Interchangeability means the "practicable ability to switch from one product or service to another." Id. at 858. The relevant market is not Google's own network or products but a one covering all search led advertising companies.9 2. All Elements are Fully Pled Against Google. A defendant attempts monopolization if four elements are present: (1) predatory or anticompetitive conduct; (2) specific intent to monopolize; (3) a dangerous probability of achievement of monopoly power in the relevant market; and (4) causal antitrust injury. Forsyth v. Humana, Inc., 114 F.3d 1467, 1477 (9th Cir. 1997), cert. denied, 522 U.S. 996, 118 S. Ct. 559, 139 L. Ed. 2d 401 (1997). In the Ninth Circuit, a single genus of anticompetitive conduct suffices for Section 2 liability. Ross-Simmons Hardwood Lumber Company, Inc. v. Weyerhaeuser Company, 41 F.3d 1030, 1041 n. 38 (9th Cir. 2005), cert. granted on other grounds, 2006 U.S. LEXIS 4908 (U.S., Jun. 26, 2006). The key is the composite or synergistic impact of all the elements upon competition. City of Anaheim v. S. Cal. Edison Co., 955 F.2d 1373, 1376 (9th Cir. 1992).10 The the antitrust defendant's own network or products. Queen City Pizza, Inc. v. Domino's Pizza, Inc., 124 F.3d 430, 436 (3d Cir. 1997), cert. denied, 118 S. Ct. 1385 (1998) (supplies of Domino's own ingredients by contract); Rohlfing v. Manor Care, Inc., 172 F.R.D. 330, 345 (N.D. Ill. 1997) (services offered within defendant's own network) Deep South Pepsi-Cola Bottling Co. v. Pepsico, Inc., 1989 U.S. Dist. LEXIS 4639, No. 88 CIV 6243, 1989 WL 48400, at 8-9 (S.D.N.Y. May 2, 1989) (distribution of its own product); Shaw v. Rolex Watch, U.S.A., Inc., 673 F. Supp. 674, 678-79 (S.D.N.Y. 1987) (relevant market not just company's own trademarked product). Plaintiffs do not so narrowly restrict the market to a single network. 9 The connection between search, advertising, and consumer purchases is very well recognized, even with a study by ComScore Networks and Google. "The Yahoo and Google studies are part of an effort by the search giants to prove the medium's worth beyond directly measured Internet sales. `This research helps quantify exactly how influential search is for the overall buying process,' said John McAteer, head of retail at Google, in a statement." The leading authority on antitrust law stated: "In a monopolization case conduct must always be analyzed `as a whole.' A monopolist bent on preserving its dominant position is likely to engage in repeated and varied exclusionary practices. Each one viewed in isolation might be viewed as de minimus or as an error in judgment, but the pattern gives increased plausibility to the claim." Areeda and Hovenkamp, Antitrust Law, 310c, p. 147. OPPOSITION TO DEFENDANT'S MOTION TO DISMISS SECOND AMENDED COMPLAINT 10 Case No. C 06-2057 JF -7- Case 5:06-cv-02057-JF Document 56 Filed 10/13/2006 Page 16 of 43 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Supreme Court has weighed in as well: "[P]laintiffs should be given the full benefit of their proof [and inference] without tightly compartmentalizing the various factual components and wiping the slate clean after scrutiny of each." Continental Ore v. Union Carbide & Carbon Corp., 370 U.S. 690, 699 (1961). Google chooses to serially test and reject each alleged anticompetitive act or practice, but this is the approach not of this circuit but a different circuit. United States v. Microsoft Corp., 253 F.3d 34, 78 (D.C. Cir. 2001). Plaintiffs allege Google uses at least six different but related types of anticompetitive tactics and tools in the Search Market and the Search Ad Market. PageRank Deflation and Blockage. Competition suffers from massive widespread PageRank Deflation driving PageRanks all the way down to `0' to retaliate against smaller competitors. SAC 58. Somehow, Google reframes the complaint as a competitor's request for traffic from Google. It is not the absence of aid that is anticompetitive but the intentional, punitive and retaliatory use of these devices to exclude and destroy competition in search and search advertising. In a key Section 2 case, the Ninth Circuit found that a 12(b)(6) motion was improperly denied, given that anticompetitive acts were carried out with specific intent to eliminate competitors by a firm that already had market power. Hunt-Wesson Foods, Inc., 627 F.2d at 926. Google's attempt at a monopoly is far more dangerous to competition because it is alleged to already have market power - 75% of industry revenues for search advertising. With that, it repeatedly uses, interprets, and violates basic application of webmaster guidelines "as a pretext to inflict Blockage upon Websites of the Class." SAC 162. Google executes permanent Website removal from its index, leaving such sites with no reasonable means to regain this visibility. SAC 165. Google "harbors and evinces specific intent to destroy competition" in the relevant markets. SAC 208. False Statements are Anticompetitive. False advertising about the true nature of the Engine, Search Results and PageRanks directly hurts both users and advertisers. SAC 61, 70, 73. All this leads to a harmful loss of goodwill and diversion of revenues of Class members. SAC 72, 75-77, 82. Accordingly, this strain of advertising adversely impacts competition in OPPOSITION TO DEFENDANT'S MOTION TO DISMISS SECOND AMENDED COMPLAINT Case No. C 06-2057 JF -8- Case 5:06-cv-02057-JF Document 56 Filed 10/13/2006 Page 17 of 43 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 the relevant markets here because Google's statements are alleged to satisfy the six elements as: (1) clearly false; (2) clearly material; (3) clearly likely to induce unreasonable reliance; (4) made to unsophisticated parties; (5) continued for long periods of time; and (6) not readily cured by rivals. American Professional Testing Service v. Harcourt Brace Jovanovich Legal and Prof'l Publications, 108 F.3d 1147, 1152 (9th Cir. 1997). Plaintiffs properly and fully plead all six elements: (1) clearly false Search Results are supposedly objective, but Google admits to subjectivity, and manipulation and sale of top listings in Search Results occurs (SAC 130-31); (2) clearly material objectivity means to advertisers that they can target users who can repeatedly trust and return to the Engine for use and information (SAC 71); (3) clearly likely to induce unreasonable reliance users trust computer programs to be consistent in processing and results, but 0-PRs suggests a very serious problem (SAC 146); (4) unsophisticated users users do not understand computer algorithms or search methodology, and even experts hold the same trust in Google (SAC 70(b) ); (5) false dissemination and advertising for a long period 0-PRs emerged in or around 2001 (SAC 144); (6) not readily cured by rivals competitors not likely to challenge PageRank or the Engine because it is dominant and has massive support (SAC 93-94), all wrapped under an exclusive license and claimed trade secrets. (SAC 51) False or Misleading Statements to the SEC are Anticompetitive. The U.S. Supreme Court stated: "Misrepresentations, condoned in the political arena, are not immunized when used in the adjudicatory process." California Motor Transport Co. v. Trucking Unlimited, 404 U.S. 508, 513, 92 S. Ct. 609, 30 L. Ed. 2d 642 (1972). The Ninth Circuit declared in Clipper Express v. Rocky Mountain Motor Tariff Bureau, Inc., 690 F.2d 1240, 1261 (9th Cir. 1982), overruled on other grounds, Mayle v. Felix, 545 U.S. 644 (2005), that "the fraudulent furnishing of false information to an agency in connection with an adjudicatory proceeding can be the basis for antitrust liability, if the requisite predatory intent is present and the other elements of an antitrust claim are proven." Plaintiffs alleged false or misleading statements about the Engine as described in SEC filings. SAC 59. There is a special and egregious anticompetitive harm wrought when false, but publicly sworn statements go before a federal agency. Taken together with generous website claims of objectivity, Google moves users away from competing engines OPPOSITION TO DEFENDANT'S MOTION TO DISMISS SECOND AMENDED COMPLAINT Case No. C 06-2057 JF -9- Case 5:06-cv-02057-JF Document 56 Filed 10/13/2006 Page 18 of 43 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 and advertisers and toward Google. SAC 138. By neglecting to address this conduct, Google acknowledges the potential for anticompetitive harm. Cutting Traffic and Revenue Derived from AdSense is Anticompetitive. Arbitrary and retaliatory reductions in Website traffic through Blocking, PageRank Deflation, or unjustified AdSense termination all cause elimination or reduction of AdSense partner revenues that destroys their businesses (SAC 62(a,e)). At least a thousand Websites had their AdSense revenues terminated or depressed by Defendant (SAC 177). Redirecting Certain Site Traffic by Degrading Content is Anticompetitive. Google willfully (1) redirects what it presumes as spam to major competitors' search engines so that users migrate to the Engine and (2) gain through such tactics large boosts in click-through revenue through AdSense. SAC 63. This denigration of content quality serves to shift users, traffic and revenue unfairly to Google. However, by failing to address this, the MTD concedes this tactic as anticompetitive on its own merit. Exorbitant, Massive Price Minimums Show Power to Control Prices. Google's latest tactic, Landing Page Quality (SAC 64 (a-b)), unfairly extracts prohibitively high prices with minimum floor bids on AdWords.11 Websites buy AdWords within the Google network to promote their goods and services. As a result, customers in the Search Ad Market discontinue marketing their content, business and services. SAC 64. Google defends monopoly prices as being healthy for competition, but the loss of discounts or lower prices to the end user damages competition. American Ad Mgmt. v. GTE Corp., 92 F.3d 781, 789 (9th Cir. 1996). Furthermore, this demonstrates Google's forceful exercise of its power to control prices to its customers in the Search Ad Market. SAC 209, 209(h). Market power is being leveraged, and supplies the requisite anticompetitive element. 3. 11 Antitrust Injury Pervades the Relevant Market. Google suggests that each alleged anticompetitive harm must be directly felt by KinderStart itself so as to somehow challenge its standing on this one issue. However, the plaintiff "must allege and provide harm, not just to a single competitor but to the competitive process, i.e. competition itself." NYNEX Corp. v. Discon Inc., 525 U.S. 128, 134, 119 S. Ct. 493, 142 L. Ed. 2d 510 (1998). Massive AdWords price increases hurts competition in search ads. AdWords users are Website advertisers who pay Google to gain traffic and visibility that Google depends on. OPPOSITION TO DEFENDANT'S MOTION TO Case No. C 06-2057 JF DISMISS SECOND AMENDED COMPLAINT - 10 - Case 5:06-cv-02057-JF Document 56 Filed 10/13/2006 Page 19 of 43 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 12 Google causes antitrust harm in the two related markets -- search engines and search advertising. Economic efficiency is not merely preserving the total quantity of Internet advertisements or Website page views. However, it is reasonable to infer that when one site loses 70% of its monthly page views (about 7,000,000 views lost), Internet sites and information are not captured by an entire group of users. SAC 31, 174. Furthermore, Web advertising sites have surrendered their business and gotten destroyed (SAC 229). This obviously means a bulk of advertisements are never created, presented or viewed. Google harms KinderStart and the Classes as both competitors and customers. The Ninth Circuit recognizes this. In Glen Holly Entertainment, Inc. v. Tektronix, Inc., 343 F.3d 1000, 1010 (9th Cir. 2002), the plaintiff "alleged enough to establish factually that it [was] both a customer and a competitor in a slightly different market." The court reversed the district court's finding that there was no injury to the plaintiff as a distributor, even though it also directly purchased and leased the defendant's equipment. To explain injury in two related markets, the Ninth Circuit turned to the Supreme Court in Apex Hosiery Co. v. Leader, 310 U.S. 469, 493, 60 S. Ct. 982, 84 L. Ed. 1311 (1940): The end sought [by the Sherman Act's prohibition against unreasonable restraints of trade] was the prevention of restraints to free competition in business and commercial transactions which tended to restrict production, raise prices or otherwise control the market to the detriment of purchasers or consumers of goods and services, all of which had come to be regarded as a special form of public injury. Glen Holly, 343 F.3d at 1009-10 (emphasis added by the Ninth Circuit). KinderStart and other search engines are in the Search Market with Google, but also are customers and consumers of advertising services of Google in the Search Ad Market. Plaintiffs allege harm in their distinct roles as customer (SAC 213) and as competitors (SAC 214). Under the former allegation, customers in the AdSense program (SAC 189) suffer antitrust injury in the market.12 First as to competition, antitrust injury afflicts the related Search Market. Both existing Google admits to this that "AdSense participants are customers, not competitors, of Google." MTD at 31, n.17. OPPOSITION TO DEFENDANT'S MOTION TO Case No. C 06-2057 JF DISMISS SECOND AMENDED COMPLAINT - 11 - Case 5:06-cv-02057-JF Document 56 Filed 10/13/2006 Page 20 of 43 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 and new search engines suffer from entry barriers created and caused by Google alone with Blockage and retaliatory PageRank Deflation. SAC 50-51. PageRank is harmful not only because it is Google's proprietary system for guiding decisions of advertisers and customers, but it also summarily degrades new entrants. The Ninth Circuit accepted a lower court's finding that a monopolist's control of a proprietary supply grading system was an anticompetitive barrier. Ross-Simmons, 411 F.3d at 1044. Facing delays and probations in getting indexed, nascent ventures cannot generate new traffic to become viable alternatives to the Engine. SAC 15456. All these devices used by Google harms not just specific companies but competition as a whole. As Class member Websites get Blocked without warning and notice, they cannot begin to know when and how to secure alternatives to sustaining site traffic and appeal. SAC 155, 158. This obviously undercuts the output, volume, opportunity, flow and use of advertising. In all, competition in search and search advertising for indigenous traffic and native content is stifled. Second, when AdSense participants are considered as consumers in the Search Ad Market, the antitrust injury is clearly pled. AdSense revenue is suddenly either curtailed indirectly or terminated directly. AdSense payments to customers cease, and valuable site space is left with stale AdSense copy. SAC 62(e). This obviously harms consumers who, on their websites, would otherwise lodge different ads or fresh native content in such space. Third, the ultimate consumer as Web browser suffers injury from Blockage, PageRank Deflation, and other alleged methods of depressing traffic and revenue to a site. Google's conduct "harms consumers by denying access to key commercial information about alternative and additional products, services and resources offered for purchase, and/or use by competing sources and Websites." SAC 230. Consumers clearly depend on search engines to locate a business or other destination. Once that site stops appearing on search results or disappears from Google's index, users lack any clue as to what befell that business or source of previously viewed information. Therefore, consumers lose key access to content about products and services. This damages the economy of free commerce.13 13 Google further argues that no antitrust claim lies because as a media firm it circulates OPPOSITION TO DEFENDANT'S MOTION TO Case No. C 06-2057 JF DISMISS SECOND AMENDED COMPLAINT - 12 - Case 5:06-cv-02057-JF Document 56 Filed 10/13/2006 Page 21 of 43 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Finally, attempted monopolization does not require success in destroying competition. See, e.g., United States v. American Airlines, 743 F.2d 1114 (5th Cir. 1984) (air carrier's solicitation of chief competitor to raise prices was attempted joint monopolization even though offer was rejected). It is enough that Google sought and has market power to destroy competition. 4. Google Harbors the Requisite Intent to Monopolize. Google unquestionably demonstrates intent with its conduct alone. The Supreme Court in Aspen Skiing Co. v. Aspen Highlands Skiing Corp., 472 U.S. 585, 608 n.39, 105 S. Ct. 2847, 86 L. Ed. 2d 467 (1985) stated: Proof of specific intent to engage in predation may be in the form of statements made by officers or agents of the company, evidence that the conduct was used threateningly and did not continue when a rival capitulated, or evidence that the conduct was not related to any apparent efficiency. These matters are not so difficult of proof as to render the test overly hard to meet." (quoting R. Bork, The Antitrust Paradox 160 (1978) (emphasis added). Here, Google's practice of Blocking, PageRank Deflation and other conduct are devoid of business or economic justification. SAC 62(c), 172. There must be harm not to just specific companies but to the overall market. The specific type of harms emanating from within Google are pled in great detail. SAC 62(e), 209, 213, 229, 235-36. Discovery is expected to elicit further proof of anticompetitive intent. The last element, a dangerous probability of success, is sufficiently pled as well. Market share is the governing factor, where generally 50% is sufficient. U.S. Anchor Mfg., Inc. v. Rule Industries, Inc., 7 F.3d 986 (11th Cir. 1993), cert. denied, 512 U.S. 1221 (1994). The Ninth Circuit in Rebel Oil Co. v. Atlantic Richfield Co., 51 F.3d 1421, 1438 (9th Cir. 1995), cert. consumer information over the Internet of vital and even constitutional concern. In the case it cites, Paradise Hills Associates v. Procel, 235 Cal. App. 3d 1528, 1545 (1991), the California court relies heavily upon the Supreme Court in Va. Pharmacy Bd. v. Va. Consumer Council (1976) 425 U.S. 748, 765, 96 S. Ct. 1817, 48 L. Ed. 2d 346 (1976), , ("So long as we preserve a predominantly free enterprise economy, the allocation of our resources in large measure will be made through numerous private economic decisions. It is a matter of public interest that those decisions, in the aggregate, be intelligent and well informed. To this end, the free flow of commercial information is indispensable. [Citations omitted.]"). Blockage of Websites intentionally and deeply interrupts and hurts this flow of consumer information. OPPOSITION TO DEFENDANT'S MOTION TO Case No. C 06-2057 JF DISMISS SECOND AMENDED COMPLAINT - 13 - Case 5:06-cv-02057-JF Document 56 Filed 10/13/2006 Page 22 of 43 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 denied, 117 S. Ct. 515 (1995), held that "market share of 44 percent is sufficient as a matter of law to support a finding of market power, if entry barriers are high and competitors are unable to expand their output in response to supracompetitive pricing." Google has 60% of the Search Market (SAC 37), and 75% of the Search Ad Market (SAC 39). Even if these alleged market shares are deemed insufficient, Plaintiffs allege seven separate barriers to entry, some of which have been created or at least reinforced by Google alone. SAC 50-57. Accepted as true, these market barriers seriously deter or handicap a gainful entry into the market. 5. Google's Patent and Copyrights Cannot Shield Liability. Assertion of patent invalidity is not a requirement to plead anticompetitive conduct that violates federal antitrust or state unfair trade laws. In re K-Dur Antitrust Litig., 338 F. Supp. 2d 517, 531-32 (D. N.J. 2004) (plaintiff successfully pled Sherman section 1 violation without alleging patent invalidity); Ciprofloxacin Hydrochloride Antitrust Litig., 166 F. Supp. 2d 740, 749 (E.D.N.Y. 2001) (plaintiff allowed to pursue state unfair trade claims). Here, Google enjoys unfettered use of the PageRank patent from Stanford University until 2011. SAC 51. Plaintiffs do not allege that this patent suffers from invalidity. However, by promoting it as an accurate value of a Website while practicing PageRank Deflation, this is anticompetitive use of the patent against competition. SAC 79, 144, 209. In addition, Google's assertion of copyrights over Search Results create no immunity from Section 2 liability.14 Microsoft argued that its copyrights were valid exercises of its rights, but the judge denied this as a defense against Section 2 liability. See United States v. Microsoft Corp., 87 F. Supp. 2d 30, 41 (D.D.C. 2000) ("a copyright holder is not by reason thereof entitled to employ the perquisites in ways that directly threaten competition [citations omitted]), affirmed, 253 F.3d 34 (D.C. Cir. 2001), cert. denied, 534 U.S. 952 (2001). D. Monopolization, as Pled, Stands Against Google. In the Ninth Circuit, monopolization has three elements: (1) possession of monopoly power in the relevant market; (2) willful acquisition or maintenance of that power; and (3) causal 14 Google asserted copyright claims based on Search Results under its Special Motion to Strike under CCP 425.16 on file May 2, 2006, Docket #12-1, pp. 12-13. OPPOSITION TO DEFENDANT'S MOTION TO Case No. C 06-2057 JF DISMISS SECOND AMENDED COMPLAINT - 14 - Case 5:06-cv-02057-JF Document 56 Filed 10/13/2006 Page 23 of 43 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 antitrust injury. Pacific Express, Inc. v. United Airlines, Inc., 959 F.2d 814, 817 (9th Cir. 1992), cert. denied, 506 U.S. 1034, 113 S. Ct. 814, 121 L. Ed. 2d 686 (1992), 113 S. Ct. 814, . The Supreme Court declared that monopoly power exists if the firm has "the power to control prices or exclude competition." United States v. E.I. duPont de Nemours & Co., 351 U.S. 377, 391, 76 S. Ct. 994, 100 L. Ed. 1264 (1956), . A monopolist's market power emerges not as a consequence of a "superior product, business acumen or historical accident" U.S. v. Grinnell Corp, 384 U.S. 563, 570-71, 86 S. Ct. 1698, 16 L. Ed. 2d 1778 (1966). Market share is the most relevant factor. Microsoft Corp., 253 F.3d at 56-57. Google demonstrates both the power to control prices and to exclude competition. Price control does not require the monopolist to change prices. Re/Max Int'l, Inc. v. Realty One, Inc., 173 F.3d 995, 1020 (6th Cir. 1999), cert. denied, 535 U.S. 987 (2002) (no dismissal of Section 2 claim where prices remain the same but new competition never surfaces). For prices in the Search Ad Market, Landing Page Quality ratings for Websites have set extremely high bars as floors for bidding on AdWords links. SAC 64. Defendant controls output as search traffic falls to Class members' Websites choked off by Blockage. SAC 155. Competition is harmed and excluded among Websites that place and host Google sponsored links. The drop-off of AdWords by lesser sites means Class members with AdSense can lose demand and eventually cease operations. 1. Google Has Refused to Deal with Multitudes of Websites. The Supreme Court and the Ninth Circuit lay a clear path to Section 2 liability against Google on the alleged facts. The Supreme Court announced the general rule is that companies have freedom to deal and have no duty to aid competitors. United States v. Colgate & Co., 250 U.S. 300, 307, 29 S. Ct. 465, 63 L. Ed. 992 (1919), , . The exception to this rule was announced in Aspen Skiing, where termination of a voluntary course of dealing does violate Section 2. In Verizon Communications Inc., Petitioner v. Law Offices of Curtis V. Trinko, LLP ("Trinko"), 540 U.S. 398, 409, 124 S. Ct. 872, 157 L. Ed. 2d 823 (2004), the Court observed: "Aspen Skiing is at or near the outer boundary of 2 liability." This statement by itself, however, is no safe harbor for Google here. The Trinko Court found three factors leading to liability in Aspen Skiing: (1) The parties OPPOSITION TO DEFENDANT'S MOTION TO DISMISS SECOND AMENDED COMPLAINT Case No. C 06-2057 JF - 15 - Case 5:06-cv-02057-JF Document 56 Filed 10/13/2006 Page 24 of 43 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 there engaged in a continuing cooperative arrangement that was profitable for both; (2) by refusing to continue joint marketing arrangements, Aspen Skiing gave away a block of its customers and short-term profits to hurt its competitor; and (3) Aspen Skiing offered no "normal business purpose" for its conduct. Trinko, 540 U.S. at 409. Google's reliance upon Trinko ignores two of these factors. First, the parties in the regulated telecommunications market were already forced to deal because competition protected by the Telecommunications Act as administered by the FCC.15 Second, Verizon as the alleged monopolist in Trinko, did

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