Case 5:20-Cv-08570-LHK Document 86 Filed 04/22/21 Page 1 of 132
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Case 5:20-cv-08570-LHK Document 86 Filed 04/22/21 Page 1 of 132 BATHAEE DUNNE LLP SCOTT + SCOTT ATTORNEYS AT LAW LLP 1 Yavar Bathaee (CA 282388) Kristen M. Anderson (CA 246108) 2 [email protected] [email protected] Edward M. Grauman (p.h.v. forthcoming) 230 Park Avenue, 17th Floor 3 [email protected] New York, NY 10169 Andrew C. Wolinsky (p.h.v. forthcoming) Tel.: (212) 223-6444 4 [email protected] 445 Park Avenue, 9th Floor Christopher M. Burke (CA 214799) 5 New York, NY 10022 [email protected] 6 Tel.: (332) 205-7668 David H. Goldberger (CA 225869) [email protected] 7 Brian J. Dunne (CA 275689) Kate Lv (CA 302704) [email protected] [email protected] 8 633 West Fifth Street, 26th Floor 600 W. Broadway, Suite 3300 Los Angeles, CA 90071 San Diego, CA 92101 9 Tel.: (213) 462-2772 Tel.: (619) 233-4565 10 Interim Co-Lead Counsel for the Patrick J. McGahan (p.h.v. forthcoming) 11 Advertiser Class [email protected] Michael P. Srodoski (p.h.v. forthcoming) 12 [email protected] 13 156 South Main Street, P.O. Box 192 Colchester, CT 06415 14 Tel.: (860) 537-5537 15 (Additional counsel on signature page) 16 UNITED STATES DISTRICT COURT 17 NORTHERN DISTRICT OF CALIFORNIA 18 SAN JOSE DIVISION 19 MAXIMILIAN KLEIN, et al., on behalf of themselves Case No. 20-CV-08570-LHK 20 and all others similarly situated, The Hon. Lucy H. Koh 21 Plaintiffs, CONSOLIDATED ADVERTISER CLASS 22 v. ACTION COMPLAINT 23 FACEBOOK, INC., 24 DEMAND FOR JURY TRIAL Defendant. 25 26 27 28 Consolidated Advertiser Class Action Complaint – Case No. 20-CV-08570-LHK Case 5:20-cv-08570-LHK Document 86 Filed 04/22/21 Page 2 of 132 1 TABLE OF CONTENTS 2 INTRODUCTION ...................................................................................................................................... 1 3 PARTIES .................................................................................................................................................... 6 I. PLAINTIFFS .................................................................................................................................. 6 4 II. DEFENDANT................................................................................................................................. 8 5 JURISDICTION AND VENUE ............................................................................................................... 10 6 INTRADISTRICT ASSIGNMENT.......................................................................................................... 11 7 FACTS ...................................................................................................................................................... 11 I. FACEBOOK EMERGES AS THE DOMINANT SOCIAL NETWORK ................................... 11 8 A. The Last Social Network Standing ................................................................................... 11 9 B. A New Market of Its Own Creation .................................................................................. 13 10 C. The Data Targeting Barrier to Entry ................................................................................. 15 11 D. Google’s Failed Entry into the Social Advertising Market .............................................. 17 12 II. A THREAT TO FACEBOOK’S MONOPOLY: THE RISE OF SMARTPHONES AND MOBILE APPS ............................................................................................................................. 20 13 A. The Mobile App Revolution ............................................................................................. 20 14 B. Facebook Recognizes the Looming Threat Presented by Mobile Applications ............... 23 15 C. The Facebook Platform ..................................................................................................... 25 D. The Profitable Open Graph Platform and Mobile Install Business .................................. 28 16 III. FACEBOOK WEAPONIZES ITS PLATFORM TO DESTROY COMPETITION ................... 30 17 A. Facebook Makes Plans to Remove Vital Platform Functionality and Refuses to Sell 18 Social Data to Competing Application Developers .......................................................... 30 19 B. Facebook’s Social-Data Heist ........................................................................................... 32 C. Facebook Targets Its Competitors for Reciprocity or Denial of API Access ................... 37 20 D. The Decision to Remove Developer Access to the Friends, News Feed and Other 21 Crucial APIs Lacked Any Legitimate Justification .......................................................... 41 22 E. Facebook Prepares to Announce Removal of the APIs .................................................... 45 F. The Announcement at F8 .................................................................................................. 49 23 IV. THE WHITELIST AND DATA SHARING AGREEMENTS .................................................... 51 24 V. GAMES AND CANVAS-BASED APPS ARE EXEMPTED FROM FACEBOOK’S 2015 25 ATTACK ON DEVELOPERS ..................................................................................................... 53 VI. THE SURVEILLANCE AND ACQUISITION OF COMPETITIVE THREATS ...................... 55 26 A. Facebook Relies on Onavo’s Surveillance of Facebook’s Competitors, and Acquires 27 and Uses Onavo’s Assets .................................................................................................. 55 28 i Consolidated Advertiser Class Action Complaint – Case No. 20-CV-08570-LHK Case 5:20-cv-08570-LHK Document 86 Filed 04/22/21 Page 3 of 132 B. Facebook Identifies Instagram as a Threat and Acquires the Company ........................... 60 1 C. Facebook Acquires WhatsApp ......................................................................................... 67 2 VII. THE THREAT BEYOND FACEBOOK’S WALLED GARDEN ............................................... 73 3 A. Facebook Audience Network ............................................................................................ 73 4 B. Facebook Acquires Atlas .................................................................................................. 76 5 C. Facebook Positions Itself Against Google by Combining Atlas, Audience Network, and Other Technology....................................................................................................... 79 6 D. Shadow Profiles and Identifying Users Outside of Facebook’s Apps .............................. 81 7 VIII. FACEBOOK AND GOOGLE AGREE NOT TO COMPETE AND TO FORTIFY THE FACEBOOK-DOMINATED SOCIAL ADVERTISING MARKET .......................................... 82 8 A. Google’s Dominance Over Ad Exchanges and Ad Servers and the Looming Facebook 9 Threat ................................................................................................................................ 83 10 B. Google’s AI Dominance ................................................................................................... 85 C. The Rise of Header Bidding and Facebook’s Threat to Compete with Google ............... 87 11 D. Google Agrees to Help Facebook Identify Facebook’s Own Users Outside of Its 12 Walled Garden, and Facebook Backs Off of Programmatic and Exchange-Trade Advertising ........................................................................................................................ 88 13 IX. THE RELEVANT MARKET ....................................................................................................... 90 14 A. The Social Advertising Market ......................................................................................... 90 15 B. Barriers to Entry ................................................................................................................ 98 16 C. Relevant Geographic Market .......................................................................................... 100 17 X. HARM TO COMPETITION AND ANTITRUST INJURY ...................................................... 101 CONCEALMENT AND TOLLING ...................................................................................................... 105 18 A. Facebook Made False Statements About the Availability of the API Functionality and 19 Omitted from Those Statements that Facebook Had Internally Decided to Remove the APIs................................................................................................................................. 106 20 B. Facebook and Its Employees Maintained a Code of Silence about the Scheme in the 21 Face of a Duty to Speak .................................................................................................. 110 22 C. Facebook Lied to Developers and the Public About the Reasons for the Purported Removal, Offering False, Misleading, and Pretextual Reasons Instead of the Truth ..... 111 23 D. Facebook Misled Regulators and the Public About Its Integration of Instagram and 24 WhatsApp with Its Facebook Product ............................................................................ 116 CLASS ACTION ALLEGATIONS ....................................................................................................... 118 25 CLAIMS FOR RELIEF .......................................................................................................................... 124 26 PRAYER FOR RELIEF ......................................................................................................................... 127 27 JURY