Google’s plan to dodge day in court over ‘killing’ Aussie start-up It is six years since an arbitrary ruling by Google killed a $200m Melbourne start-up.
Now, its founder’s costly crusade for justice hangs on a US judge’s ruling. By Paul Smith Technology Editor, March 7, 2024 https://www.afr.com/technology/google-s-plan-to-dodge-day-in-court-over-killing-aussie-start-up-20240228-p5f8f4 Last Saturday morning, just as Melbourne-based tech entrepreneur and investor Matt Berriman would have been preparing for a trans-Pacific flight to attend a make-or-break court ruling in his six-year fight over Google’s role in killing start-up Unlockd, an email notification from the US court landed. There would be no hearing. Judge Haywood Gilliam, of the US District Court for the Northern District of California, had been due to rule on Thursday (US time) whether Berriman gets to have his day in court to accuse Google of anticompetitive conduct. But the hearing was scrapped at the last minute in favour of a written judgment. Unlockd founder Matt Berriman has battled for almost six years to try to make Google publicly explain why it killed his company. As he unpacked his suitcase, Berriman could have been forgiven for thinking the US justice system was deliberately messing with him. As it stands, his plight in simply getting to plead his case stands as a warning to other small companies of just how expensive and hopeless it can be trying to challenge a US tech giant. Berriman has been seeking compensation since his company went into administration in mid-2018, after Google cut off its revenue streams. Having previously encouraged Unlockd’s mobile advertising app to use its premium ad exchanges, Google suddenly decided its use of a phone’s unlock screen was against its terms of service and banned it from its platforms. Unlockd had been poised to go public in a $200 million IPO. Google’s distaste for Unlockd’s idea didn’t last long, as it invested the lion’s share in a $US145 million ($220 million) funding round, to become the biggest shareholder in Indian start-up Glance. Glance delivers personalised content on the lock screen of Android smartphones, just like Unlockd. Berriman has long contended that Google concocted a reason to snuff out a heavily backed start-up that was disrupting one of the few areas of digital advertising it didn’t own. With Unlockd out of the way, it was able to buy a big chunk of a less developed rival. US justice After aborted work with Australia’s competition watchdog to mount a case, Berriman turned to the US legal system in 2021, where big tech’s abuse of market power has become a widely discussed issue. On the surface it looks like Google has plenty of questions to answer, but it is so far seemingly convincing Judge Gilliam that it needn’t bother. It is a well-known tactic among big companies to discourage smaller players from standing up to them by dragging out proceedings so that it becomes prohibitively expensive, and the Californian court is a forum for Google to do that. Rather than explain its actions, Google filed a motion to dismiss the case entirely. It argues that Unlockd’s accusation of antitrust violations have no merit. It claims Berriman can only prove that Google’s actions hurt Unlockd, not that it had broader implications for competition, advertisers and consumers in the digital advertising market. The motion to dismiss initially looked like a stalling tactic, and succeeded. It was first due to be ruled on in September 2022, before the court said its schedule was too full and put it back to early 2023. Early 2023 actually turned out to mean September 2023 – another year of lawyers’ fees for Berriman – when Judge Gilliam agreed with Google, and threw Unlockd’s case out. Thursday’s ruling was to have been Berriman’s appeal, a last plea to make Google explain its actions. He declined to talk to The Australian Financial Review about the case, pending the judge’s ruling. The case has implications far beyond one failed Australian start-up, and highlights the precarious positions entrepreneurs face when their means of distribution and monetisation can be ended by a dominant platform, which has little incentive to justify its decisions. Similarly to the media companies waiting for the Albanese government to make its move and force Meta to negotiate with them, the case shows the need for strong independent legal oversight to make sure big tech platforms do the right thing. They may have colonised the digital world, but it is crushingly hard to deal with them if they decide to slam a virtual door in your face. Transparency needed Should the judge agree that Unlockd deserves to have its case heard in court – rather than dismissed out of hand – it will kick off a process of discovery, in which Google will have to hand over internal communication related to the case. This would show how executives ranging from Alphabet chief executive Sundar Pichai, down to then-local boss Jason Pellegrino (now CEO of Domain, which counts this masthead’s parent, Nine, as a major shareholder) came to the decision to ban Unlockd, and then ignore its pleas for reinstatement. Earlier Unlockd court submissions from 2021 said Pellegrino declined to personally address Unlockd’s concerns about its sudden ban because he was due to go on holiday. Investors, including business figures Lachlan Murdoch, Peter Gammell, Margaret Jackson, Sam Mostyn and Catch of the Day founders Hezi and Gabby Leibovich, have largely stood behind Berriman’s determination to seek answers and compensation, but it has also required the entrepreneur to take on additional investors to back his costly quest. It may turn out that Google did nothing legally wrong, but it would be an unusual call in the current climate for a court to in effect allow a tech giant not to explain itself. This week The New York Times reported that Google has been settling cases left, right and centre to clear the decks for much bigger battles with the US Department of Justice. This includes a lawsuit, expected to go to trial in September, where Google is accused (and denies) corrupting legitimate competition in the ad tech industry. The decision on Unlockd’s trial proceeding also comes as Google’s only equivalent peer in the app store space, Apple, has just received a mighty €1.8 billion ($3 billion) whack from European Union regulators for unfairly thwarting competition among music streaming rivals. The cases have their differences, of course, but revolve around the same principle: how much power a company that creates its own digital kingdom should be able to exercise without external legal scrutiny. In Unlockd’s case, Google handed down a death sentence, and almost six years later it still hasn’t properly justified why. It has been a year since Unlockd co-founder Matt Berriman had to admit defeat and close down his company after falling foul of Google. Paul Smith edits the technology coverage and has been a leading writer on the sector for 20 years. He covers big tech, business use of tech, the fast-growing Australian tech industry and start-ups, telecommunications and national innovation policy. Connect with Paul on Twitter. Email Paul at [email protected] _______________________________________________ Link mailing list [email protected] https://mailman.anu.edu.au/mailman/listinfo/link
