TradeComet.com v. Google (UPDATED: With Complaint)

Josh Wright —  18 February 2009

Anybody want to share a copy of the complaint?  (Email: jwrightg at gmu dot edu).

UPDATE: Here’s a copy of the TradeComet Complaint.

Thanks to an anonymous reader.

Some brief comments on the highlights of the Complaint.  Per Thom’s comment below, it looks like the thrust of the complaint is not the price hike which would be ruled out by Trinko, but exclusive search syndication arrangements allegedly entered into by Google with highly trafficked websites like AOL which deprive rivals of the opportunity to compete for minimum efficient scale.  There is other allegedly exclusionary conduct specified in the complaint, e.g. the use of “default defenders” which restrict the ability of users to switch their default search engine using Google’s toolbar (sound familiar?).   Some allegations involve the use of Google’s Landing Page Quality metric to give preferential (or disfavored) treatment to friends (or foes).  In paragraph 110, the Complaint hints at a unilateral refusal to deal theory built upon the termination of a previously profitable course of business involving TradeComet.

Here’s the press release:

TradeComet.com LLC filed in the United States District Court for the Southern District of New York, a complaint asserting Google violates antitrust laws by eliminating competition and choice. TradeComet was forced to file the lawsuit when Google refused to stop engaging in predatory conduct to block search traffic by imposing massive, unjustified price increases. Google’s anticompetitive conduct eliminated TradeComet as a competitor. Cadwalader, Wickersham & Taft, LLP, one of the world’s leading international law firms, will represent TradeComet.com.

SourceTool.com, a subsidiary of TradeComet.com, operated a thriving global business-to-business (B2B) search engine enabling buyers of industrial products to easily connect with suppliers. SourceTool.com focused on a specialized type of industrial search, which it positioned as a competitor to Google’s general purpose search engine. Due to SourceTool’s utility for buyers, sellers and advertisers, the site took off—within months reaching 650,000 visits per day. SourceTool.com also was named a ‘2006 Rising Star of Specialized Search’ by InfoCommerce and the ‘Second Fastest Growing Internet Site in the World’ by Comscore.

Google initially embraced its relationship with SourceTool.com, naming them Google’s ‘Site of the Week’; SourceTool.com was reinvesting approximately 80 percent of its revenue by purchasing $500,000 per month or more in Google keywords.

In its complaint, TradeComet.com provides details of how Google subsequently identified SourceTool.com as a competitive threat and then engaged in illegal conduct to diminish and ultimately extinguish SourceTool.com’s platform.

“SourceTool.com offered a valuable service and TradeComet.com had a thriving business before Google decided to eliminate them as a competitor,” said Rick Rule, Chair of Antitrust for Cadwalader, Wickersham & Taft, LLP, and former head of the United States Justice Department Antitrust Division. “We believe this complaint has strong merit and represents a serious antitrust violation.”

“With no notice, Google changed from cheerleader to tyrant when it realized we were a competitive threat,” said Dan Savage, founder and CEO of SourceTool.com and TradeComet.com. “For example, Google raised my prices by 10,000 percent, which strangled our business, virtually overnight. Citing an ambiguous quality score determined by a secretive algorithm to justify the price increase, Google refused to consider reductions even after SourceTool.com invested the company’s savings to make the changes that Google said would rectify the supposed problems. As a result of Google flexing its monopolistic muscle, SourceTool.com currently averages about one percent of the traffic it previously had and is no longer a competitively viable business.”

TradeComet.com aims to recover damages caused when Google’s anticompetitive conduct eliminated SourceTool.com’s primary source of search traffic.

3 responses to TradeComet.com v. Google (UPDATED: With Complaint)

  1. 

    Given the information above, it looks more like refusal to deal.

    The same as Thom, it is interesting to see what’s really going on in this case.

  2. 

    TradeComet had better have more than this press release suggests. Where’s the unreasonably exclusionary conduct? Raising the price you charge to a competitor? It seems Trinko would foreclose that theory. Inducing TradeComet to expend resources to make changes and then not reducing price as promised? That sounds like a breach of contract, at worst. Would that count as unreasonably exclusionary conduct so as to warrant imposition of treble damages in antitrust? I look forward to reading the complaint.

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