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Appeals court rules in favor of Meta in antitrust case from State AGs

Meta has won an antitrust lawsuit that pitted the tech giant against dozens of state attorneys general, led by New York, who had alleged Meta had illegally maintained monopoly power in the social networking market through its acquisitions of photo-sharing app Instagram in 2012 and WhatsApp in 2014, and that it gained further power through data policies that harmed app developers.

“As the Court of Appeals rightly recognized, this case fundamentally mischaracterized the vibrant competitive ecosystem in which we operate,” a Meta spokesperson said, in a statement on the ruling. “In affirming the dismissal of this case, the court noted that this enforcement action was ‘odd’ because we compete in an industry that is experiencing ‘rapid growth and innovation with no end in sight.’ Moving forward, Meta will defend itself vigorously against the FTC’s distortion of antitrust laws and attacks on an American success story that are contrary to the interests of people and businesses who value our services,” they added.

The plaintiffs, which included the attorneys general from 48 U.S. states and territories, had first sued Meta in December 2020, but a federal court dismissed their case in 2021, as well as a parallel case by the Federal Trade Commission, which could have ultimately resulted in Meta being required to divest of Instagram and WhatsApp. The states appealed the ruling in January 2022, arguing that the district court judge had wrongly terminated their case.

U.S. District Court Judge James Boasberg had ruled that states had waited too long to challenge Meta’s acquisitions and that the policies they had cited were not illegal under antitrust law. The states, however, believed that their unprecedented delay to file “does not apply against sovereign states suing to protect the public interest, like the states here.”

The states also believed the policies could violate antitrust law, so they appealed the case.

The lower court had additionally granted the FTC leave to amend its complaint, allowing its case to proceed, as was reported last year.

In terms of the states’ case, however, the U.S. Court of Appeals for the District of Columbia Circuit has now upheld the district court’s ruling, calling the states’ lawsuit “not only odd, but old.”

The court’s opinion further explains that the suit “concerns an industry that, even on the States’ allegations, has had rapid growth and innovation with no end in sight.”

It then explains that as “sovereigns,” the states aren’t able to argue for an injunction under antitrust laws, because to be entitled to do so, they must be a “person, firm, corporation or association,” which they are not.

The court also agreed with Judge Boasberg’s, decision that the States “unduly delayed” to file their suit. Facebook, (now Meta), had first acquired Instagram and WhatsApp in 2012 and 2014, respectively, but the lawsuit wasn’t filed until Dec. 2020.

The district court had ruled that the long delays were “unreasonable and unjustified as a matter of law,” citing a four-year statute of limitations from other antitrust cases on other circuits as a guideline. The court also pointed out the acquisitions were well-publicized and went through lengthy, publicly reported FTC investigations to determine if they violated antitrust laws at the time.

The appeals court also agreed with Judge Boasberg’s opinion regarding Facebook’s Platform and its practices and policies. The States had cited snippets of Facebook policies from 2011 and 2013, which the court said were “accurate, but the messages they seek to convey are not” — meaning, they didn’t make a case for antitrust law violations.

“…we agree again with Judge Boasberg’s comprehensive and well-reasoned opinion determining that the States’ Platform-based allegations failed to state a cause of action,” the new opinion issued today states.

It also agreed that the district court was correct that the States’ “exclusive dealing” theory fails as a matter of law, as it only limited apps on Facebook but left app developers free to develop applications for Facebook competitors.

On other matters, the lateness of the lawsuit impacted the States’ ability to make its case, as it wanted injunctive relief for a policy that ended in 2018, giving Facebook platform access to companies that have long since shut down or pivoted their business.

“Injunctive relief would be unwarranted even if the States could prove their allegations,” the court noted.

Appeals court rules in favor of Meta in antitrust case from State AGs by Sarah Perez originally published on TechCrunch

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Google asks court to dismiss multiple claims in Epic Games antitrust trial

Google is hoping to speed along the resolution of its antitrust legal battle with Fortnite maker Epic Games, Match Group, and state Attorneys General. In a new filing, Google’s legal team is now asking the court to dismiss several of the plaintiffs’ arguments regarding the nature of its app store business, revenue-sharing agreements, and other app store-related projects in a partial motion for summary judgment.

According to Google, it believes the court should now have enough information on hand to make determinations on a handful of the plaintiffs’ claims before the case goes to trial, saying that these items are not in violation of antitrust law. If the court agrees with Google’s position, the trial would still move forward as other claims would still need to be argued in court.

Google specifically wants the court’s judgment on five key claims which would seemingly be pivotal to the plaintiffs’ ability to prove anticompetitive behavior.

It wants the court to dismiss the argument that Google’s Developer Distribution Agreement is illegal because it prohibits the distribution of other app stores. Google counters this by saying it doesn’t have a legal obligation to distribute to other app stores, and notes that most Android devices come preloaded with more than one app store. In addition, it points out that consumers can install additional app stores from the web browser.

“Android is the only major mobile platform that allows multiple app stores,” a Google spokesperson said in a statement. “In fact, most Android devices ship with two or more app stores preinstalled, and consumers can install others. Epic, Match Group and the state Attorneys General ignore the openness and choice Android and Google Play offer, and we look forward to making our case in court,” they added.

Another argument it wants dismissed is focused on “Project Hug,” a Google-run program that was designed to incentivize Android game developers to keep their games on the Google Play Store. The plaintiffs argued that Google quietly paid game developers millions of dollars in incentives as part of this initiative, which was later known as the “Apps and Games Velocity Program.” Epic Games alleged the program came about because Google was scared other developers would follow its lead after it exclusively released Fortnite for Android outside the Play Store through its own installer. Supposedly, Google was also worried Epic might strike up other exclusive pre-install deals with OEMs like Samsung to lower its revenue splits.

The program itself was fairly successful as Google was able to forge deals with a number of developers, including Activision Blizzard, to keep their games on the Play Store, earlier filings had stated.

Epic Games and Match look to expand their antitrust claims against Google

Google, however, argues that Project Hug was not an anticompetitive move, but has been mischaracterized by the plaintiffs. It says the program offered developers benefits and early access to Google Play users when developers released new or updated content, but did not prevent developers from creating competing app stores.

The company is also pushing back against claims over revenue-sharing agreements with wireless carriers, saying they are outside the statute of limitations. The agreements have been expired for more than four years, Google says, so should be dismissed.

In addition, Google claims the AGs and consumer class were unable to show that Google harmed competition by selling app subscriptions and in-app purchases to consumers. For that reason, consumers should not be able to recover any of these alleged overcharges, Google says.

The final claim focuses on tying — or the allegation that in order to buy one product, the buyer also had to purchase a different (or tied) product. The plaintiffs argued that Google Play and Google Play’s billing services are illegally tied together, but Google says this isn’t true. Instead, it argues Play’s billing services are not a separate product. It also notes that over 90% of the apps on Google Play are free and developers pay nothing when they are downloaded.

The new push for a partial summary judgment follows shortly after last month’s ruling that Google’s failure to preserve some of its messages for discovery requires sanctions. The plaintiffs successfully demonstrated that Google employees tended to switch off chat history on internal discussions, in an effort to destroy sensitive communications related to the case. The DoJ recently cited the same issue in its own antitrust investigation. The judge gave the plaintiffs’ lawyers until April 21 to provide an amount in legal fees they are seeking as part of the sanctions, as a start.

Google earlier asked for the trial to be delayed and was denied.

Epic Games has been asked for comment and we’ll update if one is provided.

Google asks court to dismiss multiple claims in Epic Games antitrust trial by Sarah Perez originally published on TechCrunch

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Judge rules that Twitter can expedite its trial against Elon Musk

For the first time today, representatives for Elon Musk and Twitter faced off in court. So far, Twitter has a leg up.

As Twitter sues Musk to force him to close his $44 billion acquisition, the company wanted to fast-track the trial to take place in September over four days. But the SpaceX and Tesla CEO wanted to wait until February for a ten-day trial, saying that it would be unfair to go to court so soon. Today, Judge Kathaleen McCormick ruled that the Twitter v. Musk showdown will be expedited and take place in October, rather than in February. However, the court thinks that the case should be tried over five days, which is slightly longer than Twitter’s proposal.

This isn’t quite as early as Twitter wanted to go to court, but the ruling still favors the company over its presumptive buyer.

In a filing yesterday, Twitter argued that the company is harmed each day that its dispute with Musk continues, so the case needs to be tried as soon as possible. The company also stated that Musk’s proposed schedule, slating the trial for February, was “calculated to complicate and obfuscate.”

“Millions of Twitter shares trade daily under a cloud of Musk-created doubt,” Twitter wrote. “No public company of this size has ever had to bear these uncertainties.”

At the hearing, Musk’s lawyers argued that they need more time to investigate the “firehose” of data that Twitter provided in an attempt to confirm its estimates that less than 5% of monetizable daily active users (mDAUs) are bots. Apparently, Musk’s team is running millions of searches on this data to better understand the platform’s calculations, which have appeared in SEC filings consistently since the company went public in 2013.

Though Musk’s team stays true to its assertion that Twitter is lying about how many bots are on the platform, Twitter believes that the real issue at play is the macroeconomic downturn.

“In his press release announcing the deal on April 25, 2022, Musk raised a clarion call to ‘defeat the spam bots.’ But when the market declined and the fixed-price deal became less attractive, Musk shifted his narrative, suddenly demanding ‘verification’ that spam was not a serious problem on Twitter’s platform, and claiming a burning need to conduct ‘diligence’ he had expressly forsworn,” Twitter wrote in its lawsuit against Musk.

Yet Musk’s team argued that it doesn’t make sense for the mogul to drive down Twitter’s stock price, since he is presently the company’s second-largest shareholder. However, he has publicly used his Twitter account to urge the SEC to investigate the company.

With so much drama and dispute, it might seem nonsensical for Twitter to force Musk into buying a company that he is acting quite hostile toward. Yet the fact remains that Musk’s signed offer remains far too appealing to turn down. While Twitter shares are trading around $40 at the time of publication, Musk’s offer values the company at $54.20 a share.

This story is developing…

Twitter sues Elon Musk to force him to seal the deal

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Felix Capital closes $300M fund to double down on DTC, break into fintech and make late-stage deals

To kick off 2020, one of Europe’s newer — and more successful — investment firms has closed a fresh, oversubscribed fund, one sign that VC in the region will continue to run strong in the year ahead after startups across Europe raised some $35 billion in 2019. Felix Capital, the London firm founded by Frederic Court that was one of the earlier firms to identify and invest in the trend of direct-to-consumer businesses, has raised $300 million, money that it plans to use to continue investing in creative and consumer startups and platform plays as well as begin to tap into a newer area, fintech — specifically startups that are focused on consumer finance. 

Felix up to now has focused mostly on earlier-stage investments — it now has $600 million under management and 32 companies in its portfolio in eight countries — based across both Europe and the US. Court said in an interview that a portion of this fund will now also go into later, growth rounds, both for companies that Felix has been backing for some time as well as newer faces.

As with the focus of the investments, the make-up of the fund itself has a strong European current: the majority of the LPs are European, Court noted. Although Asia is something it would like to tackle more in the future both as a market for its current portfolio and as an investment opportunity, he added, the firm has yet to invest into the region or substantially raise money from it.

Felix made its debut in 2015, founded by Court after a strong run at Advent Capital where he was involved in a number of big exits. While Court had been a strong player in enterprise software, Felix was a step-change for him into more of a primary focus on consumer startups focused on fashion, lifestyle and creative pursuits.

That has over the years included investing in companies like the breakout high-fashion marketplace Farfetch (which he started to back when still at Advent and is now public), Gwyneth Paltrow’s GOOP, the jewellery startup Mejuri, trend-watching HighSnobiety, and fitness startup Peloton (which has also IPO’d).

It’s not an altogether easygoing, vanilla list of cool stuff. Peloton and GOOP have had been mightily doused in snarky and sharky sentiments; and sometimes it even seems as if the brands themselves own and cultivate that image. As the saying goes, there’s no such thing as bad press, I guess.

Although it wasn’t something especially articulated in startup land at the time of Felix’s launch, what the firm was honing in on was a rising category of direct-to-consumer startups, essentially all in the area of e-commerce and building brands and businesses that were bypassing traditional retailers and retail channels to develop primary relationships with consumers through newer digital channels such as social media, messaging and email (alongside their own DTC websites). 

This is not all that the company has focused on, with investments into a range of platform businesses like corporate travel site TravelPerk, Amazon -backed food delivery juggernaut Deliveroo and Moonbug (a platform for children’s entertainment content), as well as increasingly later stage rounds (for example it was part of a $104 million round at TravelPerk; a $70 million round for marketplace-building service Mirakl; and $23 million for Mejuri.

Court’s track record prior to Felix, and the success of the current firm to date, are two likely reasons why this latest fund was oversubscribed, and why Court says it wants to further spread its wings into a wider range of areas and investment stages.

The interest in consumer finance is not such a large step away from these areas, when you consider that they are just the other side of the coin from e-commerce: saving money versus spending money.

“We see this as our prism of opportunity,” said Court. “Just as we had the intuition that there was a space for investors looking at [DTC]… we now think there is enough evidence that there is demand from consumers for new ways of dealing with money and personal finance.”

The firm has from the start operated with a board of advisors who also invest money through Felix while also holding down day jobs. They include the likes of executives from eBay, Facebook, and more. David Marcus –who Court backed when he built payments company Zong and eventually sold it to eBay before he went on to become a major mover and shaker at Facebook and is now has the possibly Sisyphean task of building Calibra — is on the list, but that has not translated into Felix dabbling in cryptocurrency.

“We are watching cryptocurrency, but if you take a Felix stance on the area, it’s only had one amazing brand so far, bitcoin,” said Court. “The rest, for a consumer, is very difficult to understand and access. It’s still really early, but I’ve got no doubt that there will be some things emerging, particularly around the idea of ‘invisible money.'”

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Bumble serves countersuit to Match Group, says it’s pursuing an IPO

Bumble is officially serving the papers in the suit against Tinder parent, Match Group. Bumble had said in March it was filing a suit of $400 million against Match Group for fraudulently obtaining trade secrets, following Match’s suit filed only weeks before, which had claimed patent infringement and misuse of intellectual property.

Match’s original lawsuit said that Bumble had copied “Tinder’s world-changing, card-swipe-based, mutual opt-in premise,” and accused Tinder -turned-Bumble employees Chris Gulczynski and Sarah Mick of copying elements of the design.

Bumble was also founded by CEO Whitney Wolfe, who was also a co-founder at Tinder and had previously sued Tinder for sexual harassment.

Following Match’s suit, Bumble responded then filed a separate action that raised new allegations against Match Group. It said that when Bumble and Match Group were in acquisition talks, Match filed its suit to make Bumble look less attractive to other suitors. Bumble also said that Match Group fraudulently requested for Bumble to provide “confidential and trade secret information” which Match Group said they “needed to provide a higher offer for Bumble,” the suit alleged.

Bumble’s suit also said that no subsequent offer came, and Match Group instead requested and obtained this information solely for “the financial benefit of its dating app businesses.”

And it said that Match Group “published false or disparaging information about Bumble, including statements in the press falsely claiming that Bumble infringed Match’s intellectual property, as well as false statements in the Lawsuit.”

Bumble and Match Group had tried to come to some sort of settlement over the months since the lawsuits were filed, in hopes of finding another solution outside of having to take their claims to court. But with court papers now being served, it appears that’s not going to be the case.

Match Group has had Bumble on its radar as one of its top competitors and a threat to its dating app business led by Tinder. It has tried to acquire Bumble twice, and has been turned down. Last year, for example, Match was in discussions with Bumble over a deal that then valued it at over $1 billion.

In the months since, Bumble has grown significantly as its business continues to expand outside the U.S. The company is now available in English-language countries like Canada, Australia, and the U.K., and is investing in expansions into Germany and Mexico. Latin America andSouth America are also on the roadmap for 2019, and Asia is in the works, as well.

In addition, Bumble has now upped its revenue run rate to $200 million per year. That doesn’t mean Bumble is making $200 million in 2018, only that it has exceeded its original expectations of $150 million in revenue for the year.

The revenues come entirely from Bumble’s in-app subscription business – the app doesn’t run ads.

The app also recently passed 40 million users, Wolfe recently noted on stage at TechCrunch Disrupt SF 2018 alongside news of Bumble’s new “snooze” feature that allows users to take a time-out from the app. She also spoke of Bumble’s plans to invest in its non-dating businesses, grow its real-world footprint through an expansion of its “Hive” locations, and introduce advertising.

In terms of how this suit will impact Bumble, Wolfe said, “we’re focused on our growth. We’re focused on ending misogyny, and we’re actively pursuing an IPO.”

 

 

 

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Product Managers Prepare To Do Battle Over Golf Balls

The world of golf balls turns out to contain a great deal of combat

The world of golf balls turns out to contain a great deal of combat
Image Credit: likeaduck

When you think about the game of golf, what do you think about? If you are like me, you probably picture Tiger Woods hitting a golf ball, those very pretty greens that everyone plays on, or maybe even a nice set of golf clubs. However, it turns out that the world of golf contains some major product battles that have nothing to do with any of these things. It turns out that to product managers, golf is really all about golf balls.

A Story About Dimples

So what do you really know about golf balls? If you’ve ever had a chance to take a look at a golf ball, then you probably noticed that they have dents in them that are called “dimples”. These dimples are put into the ball in order to help it travel farther and more accurately. There are a number of different companies that manufacturer golf balls using the same basic product development definition. The market leader is a company called Titleist. They are the biggest manufacturer and their premier product is the ProVI.

The world used to be simple. Titleist sold their golf balls and they told the word that they were offering the “number one ball in golf”. There were other golf ball manufacturers, but nobody was as big as Titleist. However, then the retail giant Costco started to offer their own branded version of golf balls under its Kirkland Signature brand. This would have been just fine if it were not for the fact that the Costco golf ball got a favorable review in a popular golf magazine against the Titleist ProVI. For Costco product managers, this would be something to put on your product manager resume.

The reason that this is such a big deal has a lot to do with price. The Costco balls sell for $29.99 for 24 balls. This comes out to be $1.25 per ball. In the world of golf balls, this is a pretty cheap price. Meanwhile, the Titleist ProVI sells for $4.00 per ball. As you can see, if golfers believe that the Costco ball is as good or even better than the more expensive Titleist ball, then they are going to go out and buy the Costco balls. This is exactly what they did – Costco very quickly sold out of their golf balls.

How Product Managers Protect Their Golf Ball Products

So what do you think the product managers at Titleist did? Their market share was under assault by a large retailer who could sell their product for less than half of what Titleist was selling their product for. It turns out that the world of golf balls is ruled by patents. The joke in the industry is that every time another divot is added to a golf ball, a new patent is filed for. Titleist has a large collection of patents. What their product managers did was to go to court and claim that the Costco ball violated 11 of their patents.

The Titleist product managers did not stop there, they also filed a claim against the Costco product managers that said that they had engaged in false advertising. This was based on a statement that Costco had made in which they say that their Kirkland signature golf balls “…meet or exceed the quality standards of leading national brands.”

The Costco product managers have fired back by filing their own lawsuit. They are asking the courts to defend their business practices. They did this because of a “threatening letter” that they had received from the Titleist product managers. Costco felt that they had to do this because Titleist is named in over 2,577 patents that relate to golf balls.

What All Of This Means For You

The world of golf is filled with competitors who like to face off against each other on the fairways. However, it turns out that behind the scenes there is another battle going on. The world of golf balls is ruled by one company, Titleist, and they don’t like it when someone tries to invade their turf.

The very large retailer Costco has introduced their own brand of golf balls. These golf balls sell for less than half the cost of the top end Titleist golf ball. A major golfing magazine compared the two balls and the Costco ball came out on top. When this happened, there are a stampede by golfers to go to Costco to buy these balls. Titleist was not happy about this and so they have filed a lawsuit saying that Costco has violated some of their over 2,500 golf ball patents. Costco has reacted by filing their own court order to get the court system to approve their business practices.

Clearly within the world of golf balls there is a battle going on between two warring sets of product managers. Costco has created a product that threatens the market position of the Titleist balls and so the company’s product managers have taken a look at their product manager job description and decided to try to use the court system to make the Costco balls go away. Costco is going to try to use the court system to get approval for the way that they sell their balls. We’ll have to see how this all works out in order to see if anyone can get a hole in one.

– Dr. Jim Anderson
Blue Elephant Consulting –
Your Source For Real World Product Management Skills™

Question For You: Do you think that Costco was right to file a court order to get their business process approved?

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What We’ll Be Talking About Next Time

As a product manager, you want to be able to get your product out in front of as many potential customers as possible. However, this is something that sometimes your company can’t accomplish all by themselves. When you realize this, you often start to look for a partner – somebody who can help change your product development definition and introduce you to more potential customers. This is a great idea, but these joint marketing relationships don’t always work out…

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