Tech Startup’s Antitrust Claims Against Professional Networking Site Don’t Get The Job Done
09/29/2020On September 9, 2020, Judge Edward Chen of the United States District Court for the Northern District of California dismissed antitrust claims brought against LinkedIn by a tech startup that alleged LinkedIn exploited its monopoly power to deny the startup access to essential information it uses in providing analytics services. hiQ Labs, Inc. v. LinkedIn Corp., No. 17-cv-03301-EMC (N.D. Cal. Sept. 9, 2020).
Plaintiff hiQ Labs is a “people analytics services” provider that aggregates and analyzes publicly available professional data to provide information to employers regarding their employees. Defendant LinkedIn is the world’s largest professional social network and publishes users’ employment information on its website. In 2017, after developing its own competing people-analytics services, LinkedIn denied plaintiff access to the public portion of its website, which plaintiff had relied on as a significant source of data for its collection and analysis process.
Subsequently, plaintiff brought suit against LinkedIn, alleging among other claims that LinkedIn entered into contracts with its members that unreasonably restrained trade in violation of Sherman Act § 1, and that LinkedIn exploited monopoly power in the markets for professional social networking platforms and people-analytics services in violation of Sherman Act § 2. LinkedIn moved to dismiss the antitrust claims under the Noerr-Pennington doctrine and for failure to allege antitrust injury, a properly defined market, and anticompetitive conduct.
The Court began its analysis by addressing LinkedIn’s argument based on the Noerr-Pennington doctrine, which it described as the principle that “those who petition any department of the government for redress are immune from statutory liability for their petitioning conduct.” Citing cease-and-desist letters it sent to plaintiff as qualifying “petitioning activity,” LinkedIn argued it was immune to plaintiff’s antitrust claims because those claims were derived from LinkedIn’s demand letters, which “ostensibly ‘cut off’ hiQ’s access to LinkedIn’s website.” The Court disagreed, holding that the doctrine did not bar plaintiff’s antitrust claims because the cease-and-desist letters coincided with LinkedIn’s allegedly anticompetitive conduct in blocking plaintiff’s access to its website.
Next, the Court analyzed whether plaintiff failed to adequately allege a relevant market for people-analytics services. Judge Chen concluded that the parameters of the market, as alleged in the complaint, were too vague because plaintiff had not adequately taken account of potential substitute products and services, such as analytics based on an employer’s internally maintained data or based on publicly available information outside of LinkedIn’s website.
Finally, the Court found that plaintiff’s remaining theories of anticompetitive conduct related to lock-in, tying, vertically-arranged boycotts, raising rivals’ costs, and leveraging were implausible, noting that the pleadings did not explain how defendant coerced employers or its member users to boycott hiQ’s people-analytics services or other companies’ comparable offerings. Judge Chen dismissed all of plaintiff’s antitrust claims but granted leave to file an amended complaint.