On Wednesday, Northern District of California Judge Edward M. Chen dismissed hiQ Labs, Inc.’s federal antitrust claims against LinkedIn Corporation, finding “each theory of anticompetitive conduct implausible.” This week’s opinion is the latest event in the companies’ hotly contested suit, which has a rich factual and procedural history dating to 2017.
LinkedIn “is the world’s largest professional social network, with over 660 million members,” where users can post professional information about themselves to a publicly available LinkedIn profile, the order recited. The plaintiff, hiQ is a “people analytics” company that aims to “provid(e) employers in-depth, predictive insights into their workforce,” the opinion explained.
hiQ saw an opportunity in publicly available LinkedIn profiles and began “scraping” profile data for its analytics services, in turn, reducing “hard costs and transaction costs” for its employer-customers, the order said. Reportedly, LinkedIn developed a rival analytics platform and consequently sent hiQ a cease-and-desist letter asking it to stop scraping its data, before denying it LinkedIn access wholesale in May 2017.
hiQ then sued LinkedIn for violations of the Computer Fraud and Abuse Act and other laws, arguing that it had been illegally denied access to publicly available information. hiQ asked for and was granted a preliminary injunction that prohibited LinkedIn from blocking its access. The Ninth Circuit Court of Appeals upheld the decision in an appellate challenge, prompting LinkedIn to file a petition for a writ of certiorari this January. The writ is currently pending.
The present order disposes of most of hiQ’s February-filed antitrust claims. The first claim alleges monopolization in violation of § 2 of the Sherman Act. Specifically, the plaintiff claims that LinkedIn obtained and maintains monopoly power in the markets for “professional social networking platforms and people analytics services” by “leveraging, lock-in, raising rivals’ costs, tying, unilateral refusal to deal, denial of essential facilities, and vertically-arranged boycotts.”
The second claim is for attempted monopolization on the same bases, and the third for unreasonable restraint of trade through tying agreements and vertically-arranged boycotts in violation of § 1 of the Sherman Act.
The court first held that despite LinkedIn’s arguments, neither the Noerr-Pennington doctrine nor the California litigation privilege shielded it from hiQ’s antitrust and interference claims. The court then addressed hiQ’s product market definition, which it found vague. The court wrote, “the problem for hiQ is that it has not yet shown that it is plausible that the relevant market should be defined as that which uses only LinkedIn data.”
As to the plaintiff’s § 2 refusal to deal claim, the court held that hiQ failed to meet the requirements of the Aspen Skiing exception to rule that competitors have no duty to deal unilaterally with one another. For example, the court concluded that hiQ’s allegations ostensibly demonstrating that LinkedIn acted against its own interest in order to harm hiQ were “far from obvious or even intuitive.”
hiQ also made a derivative refusal to deal claim, arguing that because LinkedIn is an “essential facility,” in total control of the downstream market, it has the power to eliminate competition in that market and did so. The court noted that this argument suffered from a threshold defect because of hiQ’s aforementioned failure to allege a properly defined product market.
The court determined that the rest of the monopolization and attempted monopolization theories were flawed and rejected them. Similarly, it held that the restraint on trade claims were unviable, writing, for example, that hiQ’s tying claim “makes no sense.” The court granted hiQ four weeks to amend its unilateral refusal to deal and the essential facilities doctrine theories, but dismissed the rest as “futile.”
hiQ is represented by Farella Braun + Martel, Quinn Emanuel Urquhart & Sullivan, O’Melveny & Myers, and professor Laurence Tribe of Harvard Law School. LinkedIn is represented by Munger, Tolles and Olson.