On Thursday, three LinkedIn users who pay for its premium subscription service filed suit against the company alleging that it exacts supracompetitive prices from users and sells their data out from under them. The putative Northern District of California class action asserts that LinkedIn Corporation, acquired by Microsoft Corporation in 2016, maintains its monopoly through various anticompetitive means that entrench its own position while keeping competitors at bay.
The plaintiffs, three users from Georgia, Texas, and Arizona, detail those tactics in the 118-page complaint, starting with LinkedIn’s “rapid race to capture network and lock-in effects by scaling at any cost,” now resulting in a user base of over 750 million worldwide. The filing alleges that by 2015, the professional social network was well on its way to developing insulation from competition through what the complaint calls “Data, Machine Learning, and Inference Barrier to Entry (DMIBE).”
In particular, the complaint alleges four main ways LinkedIn violates the federal antitrust laws. First, it says that the company non-optionally sells premium subscription users’ data to partners, which reduces consumer choice, inflates prices, and stifles competition and market entry. Next, the company purportedly “deploy[s] sophisticated technological countermeasures specifically designed by LinkedIn to prevent users’ public data from being accessed by potential or actual competitors, thereby maintaining and fortifying the DMIBE and hindering potential entry at scale.”
The complaint also accuses LinkedIn of integrating its users’ data with powerful AI, machine-learning data, and expensive infrastructure, especially after the acquisition when it relied on Microsoft’s Azure cloud servers and arrays of Graphical Processing Units (GPUs)— elite infrastructure owned by only a handful of the world’s largest companies. In order to challenge LinkedIn, a new entrant “would therefore not only need to obtain the data (quantity and type) required to train machine learning models, it would need voluminous (and continuous) access to expensive arrays of GPUs or TPUs to train those models,” the filing says.
Finally, the lawsuit accuses LinkedIn of entering into an illicit agreement with Facebook, “its most obvious natural competitor,” in the 2010s to divide the market and more recently to contemplate data access. Consequently, LinkedIn has “maintained its monopoly in professional social networking without the threat of entry by Facebook, and Facebook has fortified its dominance and control over personal social networking, perhaps through data assistance from LinkedIn,” the plaintiffs argue.
Notably, the allegations come just a day after a federal court ruled that the Federal Trade Commission’s case against Facebook, a bid to break the company up, survived dismissal.
In the case against LinkedIn, the plaintiffs seek injunctive relief that would permit premium subscribers to opt-out of LinkedIn’s sale of their data, as well as equitable relief that would “halt and unwind the unprecedented and anticompetitive integration of LinkedIn’s professional data, machine learning, and AI infrastructure with Microsoft’s powerful cloud computing hardware.” The litigants also seek treble damages. They are represented by Bathee Dunne LLP.