SearchBiz Legal Edition: Varney Uses The “M Word,” More AdWords Litigation, Yahoo Lawyer Files Complaint — Against Yahoo

If Christine A. Varney is confirmed as the head of anti-trust for the US Justice Department it may signal tough times ahead for Big G. Bloomberg discusses public remarks that Obama nominee Varney made before the American Antitrust Institute about Google in a June, 2008 speech:

The U.S. economy will “continually see a problem — potentially with Google” because it already “has acquired a monopoly in Internet online advertising,” she said.

Reportedly she believes that Google “lawfully” obtained its monopoly.

While one might make a plausible argument that Google’s search dominance rises to that level; it’s not the case in other areas of online advertising. Varney doesn’t seem to distinguish between search and these other areas. This question of whether Google is a “monopoly” when “the competition is a click away” is a subtle and complex one, though many Google critics might argue there’s nothing subtle or complex about it.

In that same June discussion, according to Bloomberg, Varney said “there will be companies that will begin to allege that Google is discriminating” against them by “not allowing their products to interoperate with Google’s products.”

One of those companies is TradeComet.com LLC, which now claims that Google mainpulated AdWords pricing to prevent it from gaining exposure for a competitive product the company was trying to market, SourceTool.com. In a press release the CEO describes what happened as follows:

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.”

The Wall Street Journal also has some additional background, including the fact that the company is using Microsoft’s outside attorneys, Cadwalader, Wickersham & Taft, to prosecute the litigation — although Microsoft and the attorneys deny Redmond is involved in any way.

While similar suits in the past have failed against Google, the search engine’s market share is larger today and there’s a new environment that might give this litigation somewhat more potential than in the past when Google was a smaller player. Still, absent specific evidence that supports the charge that Google was manipulating AdWords pricing to harm SourceTool, it’s unlikely this ligitation can succeed.

The press release, however, suggests opportunism on the part of both the company and the law firm: marketing by lawsuit.

On the patent front, Google has decided that it’s going to take a more aggressive approach to intellectual property lawsuits, which are filed all the time against the search engine. According to Bloomberg it has drawn something of a line in the sand and will be fighting patent suits rather than settling them. There’s an entire industry consisting of firms often called “patent trolls” that buy patents from individuals or small companies and then seek to obtain settlements or licensing fees from larger companies with more established businesses.

Now a legal victory for Google involving StreetView. One of the privacy/trespass cases filed against the company by a couple with the surname “Boring” has been dismissed. The couple claimed a number of laws were violated and that they sustained damages when Google’s StreetView van/car came up their private driveway and posted the resulting images on Google Maps. Fatally for their lawsuit, apparently, the couple never asked Google to remove the pictures.

According to Eric Goldman’s report on the court’s decision:

The court says that the plaintiffs did not allege facts supporting that the intrusion was substantial and highly offensive. To reinforce the point that perhaps the plaintiffs didn’t experience much harm, the court points out that the plaintiffs didn’t take advantage of Google’s opt out procedure, plus they drew public attention to themselves by suing and by not redacting or suppressing their contact info in the court filings.

Meanwhile, in Sunnyvale, Yahoo is defending a claim (not yet a lawsuit) before the US EEOC by a former in-house attorney that Yahoo discriminated against her after she returned from maternity leave (she’s also African American). A long article on Law.com goes into some of the claims and details. Yahoo claims substandard performance and she claims that her race and/or status as a mother were responsible for discriminatory treatment.

I’m not commenting on the merits of this particular case but speaking as someone who practiced employment discrimination law for several years, I can say that employment claims are challenging because plaintiffs often feel that they’ve been singled out but there are also frequently performance issues involved. It’s rarely true that plaintiffs’ claims have absolutely no merit or that the only explanation for the termination or discriminatory treatment is the plaintiff’s status.

If the plaintiff can show any evidence of discrimination such cases tend to settle.

As the recession drags on we can probably expect more lawsuits, as people look to the courts for (lost) revenue or income that they can’t gain directly from the market.