Case 4:21-cv-07250-HSG Document 61 Filed 03/14/22 Page 1 of 34
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`COOLEY LLP
`MICHAEL G. RHODES (116127) (rhodesmg@cooley.com)
`BEATRIZ MEJIA (190948) (mejiab@cooley.com)
`ASHLEY K. CORKERY (301380) (acorkery@cooley.com)
`3 Embarcadero Center, 20th Floor
`San Francisco, CA 94111-4004
`Telephone: (415) 693-2000
`Facsimile: (415) 693-2222
`
`JOHN C. DWYER (136533) (dwyerjc@cooley.com)
`ALEXANDER J. KASNER (310637) (akasner@cooley.com)
`3175 Hanover Street
`Palo Alto, CA 94304-1130
`Telephone: (650) 843-5000
`Facsimile: (650) 849-7400
`
`DEEPTI BANSAL (admitted pro hac vice) (dbansal@cooley.com)
`1299 Pennsylvania Avenue, NW, Suite 700
`Washington, DC 20004-2400
`Telephone: (202) 842-7800
`Facsimile: (202) 842 7899
`Attorneys for Defendants
`GOOGLE LLC, GOOGLE IRELAND LTD.,
`GOOGLE COMMERCE LTD., and GOOGLE ASIA
`PACIFIC PTE. LTD.
`
`UNITED STATES DISTRICT COURT
`NORTHERN DISTRICT OF CALIFORNIA
`OAKLAND DIVISION
`
`UNLOCKD MEDIA, INC. LIQUIDATION
`TRUST, by and through its duly appointed
`trustee, Peter S. Kaufman,
`Plaintiff,
`
`v.
`GOOGLE LLC, GOOGLE IRELAND LTD.,
`GOOGLE COMMERCE LTD., and GOOGLE
`ASIA PACIFIC PTE. LTD.,
`Defendants.
`
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`
`Case No. 4:21-cv-07250-HSG
`DEFENDANTS GOOGLE LLC, GOOGLE
`IRELAND LTD., GOOGLE COMMERCE LTD.,
`AND GOOGLE ASIA PACIFIC PTE. LTD.’S
`NOTICE OF MOTION AND MOTION TO
`DISMISS PLAINTIFF’S FIRST AMENDED
`COMPLAINT
`Date: July 14, 2022
`Time:
`2:00 p.m.
`Dept:
`Courtroom 2, 4th Floor
`Judge:
`Haywood S. Gilliam, Jr.
`
`Trial Date: Not Yet Set
`
`
`
`DEFENDANTS’ MOTION TO DISMISS
`CASE NO. 4:21-CV-07250-HSG
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`Case 4:21-cv-07250-HSG Document 61 Filed 03/14/22 Page 2 of 34
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`NOTICE OF MOTION AND MOTION TO DISMISS
`TO ALL PARTIES AND THEIR ATTORNEYS OF RECORD:
`PLEASE TAKE NOTICE that on July 14, 2022 at 2:00 p.m., or as soon thereafter as this
`Motion to Dismiss (“Motion”) may be heard in the above-titled court, located at Courtroom 2, 4th
`Floor, 1301 Clay Street, Oakland, CA 94612, Defendants Google LLC, Google Ireland Ltd.,
`Google Commerce Ltd., and Google Asia Pacific Pte. Ltd. (“Defendants” or “Google”) will move
`to dismiss the First Amended Complaint (ECF No. 54-3, the “Complaint” or “FAC”) of Unlockd
`Media, Inc. Liquidation Trust (“Plaintiff” or “Unlockd”).
`Pursuant to Federal Rule of Civil Procedure 12(b)(6), Google requests that this Court
`dismiss, with prejudice, each of Plaintiff’s claims for failure to state a claim upon which relief may
`be granted. Google’s Motion is based on this Notice of Motion and Motion, the accompanying
`Memorandum of Points and Authorities, the Declaration of Deepti Bansal, the Declaration of Sara
`Plummer, and all pleadings and papers on file in this matter, and upon such matters as may be
`presented to the Court at the time of hearing or otherwise.
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`DEFENDANTS’ MOTION TO DISMISS
`CASE NO. 4:21-CV-07250-HSG
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`Case 4:21-cv-07250-HSG Document 61 Filed 03/14/22 Page 3 of 34
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`TABLE OF CONTENTS
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`Page
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`INTRODUCTION .......................................................................................................................... 1
`STATEMENT OF FACTS ............................................................................................................. 3
`LEGAL STANDARD ..................................................................................................................... 6
`ARGUMENT .................................................................................................................................. 7
`I.
`PLAINTIFF FAILS TO PLEAD ANTITRUST STANDING. ........................................... 7
`A.
`Plaintiff Has Alleged Harm Only to Itself, Not to Competition. ............................ 8
`B.
`Plaintiff’s Theory of Antitrust Injury Is Economically Implausible. .................... 11
`PLAINTIFF FAILS TO STATE A CLAIM FOR ATTEMPTED
`MONOPOLIZATION. ...................................................................................................... 13
`A.
`Plaintiff Fails to Allege That Google’s Refusal to Deal Was
`Anticompetitive Conduct Under Aspen Skiing. .................................................... 13
`1.
`Plaintiff does not plausibly plead that Google terminated a
`profitable relationship. .............................................................................. 15
`Plaintiff does not plausibly plead that Google’s actions were not
`rooted in a proper business justification.................................................... 17
`Plaintiff Fails to Allege Google Had a Specific Intent to Monopolize. ................ 19
`Plaintiff Fails to Allege that the Exclusion of Unlockd Created a Dangerous
`Probability of Achieving Monopoly Power. ......................................................... 21
`1.
`Plaintiff fails to plausibly allege that Google controls a dominant
`market share. ............................................................................................. 22
`Plaintiff fails to allege that Google’s enforcement action had any,
`let alone a dangerous, probability of increasing Google’s market
`share. ......................................................................................................... 23
`Plaintiff fails to allege that rivals cannot enter or expand. ........................ 24
`3.
`CONCLUSION ............................................................................................................................. 25
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`II.
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`B.
`C.
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`2.
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`2.
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`DEFENDANTS’ MOTION TO DISMISS
`CASE NO. 4:21-CV-07250-HSG
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`Case 4:21-cv-07250-HSG Document 61 Filed 03/14/22 Page 4 of 34
`
`
`TABLE OF AUTHORITIES
`
`Cases
`
`
`
`Page(s)
`
`AD/SAT, Div. of Skylight. v. Assoc. Press,
`181 F.3d 216 (2d Cir. 1999) .................................................................................................... 24
`
`Aerotec Int’l, Inc. v. Honeywell Int’l Inc.,
`836 F.3d 1171 (9th Cir. 2016) ................................................................................................. 18
`
`Am. Ad Mgmt., Inc. v. Gen. Tel. Co.,
`190 F.3d 1051 (9th Cir. 1999) ................................................................................................... 7
`
`Am. Tobacco Co. v. United States,
`328 U.S. 781 (1946) ................................................................................................................ 21
`
`In re Apple iPod iTunes Antitrust Litig.,
`796 F. Supp. 2d 1137 (N.D. Cal. 2011) .................................................................................. 15
`
`Arminak & Assocs., Inc. v. Saint-Gobain Calmar, Inc.,
`789 F. Supp. 2d 1201 (C.D. Cal. 2011) .................................................................................. 19
`
`Ashcroft v. Iqbal,
`556 U.S. 662 (2009) .................................................................................................................. 7
`
`Aspen Skiing Co. v. Aspen Highlands Skiing Corp.,
`472 U.S. 585 (1985) ......................................................................................................... passim
`
`Atl. Richfield Co. v. USA Petroleum Co.,
`495 U.S. 328 (1990) .............................................................................................................. 8, 9
`
`Bell Atl. Corp. v. Twombly,
`550 U.S. 544 (2007) .................................................................................................................. 7
`
`Blix Inc. v. Apple, Inc.,
`2020 WL 7027494 (D. Del. Nov. 30, 2020) ..................................................................... 15, 16
`
`Brunswick Corp. v. Pueblo Bowl-O-Mat, Inc.,
`429 U.S. 477 (1977) ............................................................................................................ 8, 13
`
`Cascade Health Sols. v. PeaceHealth,
`515 F.3d 883 (9th Cir. 2008) ............................................................................................... 7, 13
`
`Coalition for ICANN Transparency, Inc. v. VeriSign, Inc.,
`611 F.3d 495 (9th Cir. 2010) ................................................................................................... 11
`
`Coronavirus Reporter v. Apple, Inc.,
`2021 WL 5936910 (N.D. Cal. Nov. 30, 2021) ................................................................. passim
`
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`ATTORNEYS AT LAW
`SAN FRANCISCO
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`DEFENDANTS’ MOTION TO DISMISS
`CASE NO. 4:21-CV-07250-HSG
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`Case 4:21-cv-07250-HSG Document 61 Filed 03/14/22 Page 5 of 34
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`TABLE OF AUTHORITIES
`(continued)
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`Page(s)
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`DeHoog v. Anheuser-Busch InBev SA/NV,
`899 F.3d 758 (9th Cir. 2018) ................................................................................................... 19
`
`Dreamstime.com, LLC v. Google, LLC,
`2019 WL 341579 (N.D. Cal. Jan. 28, 2019) ..................................................................... 14, 18
`
`Eastman v. Quest Diagnostics Inc.,
`108 F. Supp. 3d 827 (N.D. Cal. 2015) .................................................................................... 12
`
`Epic Games, Inc. v. Apple Inc.,
`2021 WL 4128925 (N.D. Cal. Sept. 10, 2021) ................................................................. 21, 23
`
`Feitelson v. Google, Inc.,
`80 F. Supp. 3d 1019, 1028-29 (D.D.C. June 28, 2021) .......................................................... 11
`
`FTC v. Facebook, Inc.,
`2021 WL 2643627 (N.D. Cal. Feb. 20, 2015) ........................................................................ 22
`
`FTC v. Qualcomm Inc.,
`969 F.3d 974 (9th Cir. 2020) ............................................................................................. 15, 17
`
`In re Google Digital Advert. Antitrust Litig.,
`2021 WL 2021990 (N.D. Cal. May 13, 2021) ........................................................................ 15
`
`Google, Inc. v. MyTriggers.com, Inc.,
`2011 WL 3850286 (Ohio Ct. Comm. Pleas Aug. 31, 2011) ................................................... 18
`
`hiQ Labs, Inc. v. LinkedIn Corp.,
`485 F. Supp. 3d 1137 (N.D. Cal. 2020) ...................................................................... 14, 15, 16
`
`Image Tech. Servs., Inc. v. Eastman Kodak,
`125 F.3d 1195 (1997) .............................................................................................................. 23
`
`Kelsey K. v. NFL Enters., LLC,
`757 Fed. App’x 524 (9th Cir. 2018) .......................................................................................... 7
`
`Kinderstart.com LLC v. Google, Inc.,
`2006 WL 3246596 (N.D. Cal. July 13, 2006) ......................................................................... 17
`
`Kinderstart.com LLC v. Google, Inc.,
`2007 WL 831806 (N.D. Cal. Mar. 16, 2007) .......................................................................... 18
`
`Korea Kumho Petrochemical v. Flexsys Am. LP,
`2007 WL 2318906 (N.D. Cal. Aug. 13, 2007) .......................................................................... 9
`
`Korea Kumho Petrochemical v. Flexsys Am. LP,
`2008 WL 686834 (N.D. Cal. Mar. 11, 2008) .......................................................................... 22
`DEFENDANTS’ MOTION TO DISMISS
`CASE NO. 4:21-CV-07250-HSG
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`Case 4:21-cv-07250-HSG Document 61 Filed 03/14/22 Page 6 of 34
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`TABLE OF AUTHORITIES
`(continued)
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`Page(s)
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`Korshin v. Benedictine Hosp.,
`34 F. Supp. 2d 133 (N.D.N.Y. 1999) ...................................................................................... 11
`
`Les Shockley Racing, Inc. v. Nat’l Hot Rod Ass’n,
`884 F.2d 504 (9th Cir. 1989) ..................................................................................................... 8
`
`LiveUniverse, Inc. v. MySpace, Inc.,
`2007 WL 6865852 (C.D. Cal. June 4, 2007) .......................................................................... 25
`
`LiveUniverse, Inc. v. MySpace, Inc.,
`304 Fed. App’x 554 (9th Cir. 2008) ........................................................................................ 15
`
`Lloyd’s Material Supply Co. v. Regal Beloit Corp.,
`2017 WL 5172206 (C.D. Cal. June 27, 2017) ........................................................................ 12
`
`McMahon v. Pier 39 Ltd. Partnership,
`2001 WL 1463814 (N.D. Cal. Nov. 8, 2001) .................................................................... 17, 18
`
`MetroNet Servs. Corp. v. Qwest Corp.,
`383 F.3d 1124 (9th Cir. 2004) ..................................................................................... 14, 15, 16
`
`Natsource LLC v. GFI Grp., Inc.,
`332 F. Supp. 2d 626 (S.D.N.Y. 2004) ..................................................................................... 23
`
`New York v. Facebook, Inc.,
`2021 WL 2643724 (D.D.C. June 28, 2021) ...................................................................... 15, 17
`
`NorthBay Healthcare Grp., Inc. v. Kaiser Found. Health Plan, Inc.,
`2017 WL 6059299 (N.D. Cal. Dec. 7, 2017) .......................................................................... 19
`
`NorthBay Healthcare Grp., Inc. v. Kaiser Found. Health Plan, Inc.,
`305 F. Supp. 3d 1065 (N.D. Cal. 2018) .................................................................................... 9
`
`Novation Ventures, LLC v. J.G. Wentworth Co., LLC,
`156 F. Supp. 3d 1094 (C.D. Cal. 2015) .................................................................................... 8
`
`Novell, Inc. v. Microsoft Corp.,
`731 F.3d 1064 (10th Cir. 2013) ......................................................................................... 15, 17
`
`Omega Environmental, Inc. v. Gilbarco, Inc.,
`127 F.3d 1157 (9th Cir. 1997) ................................................................................................. 20
`
`Pac. Bell Tel. Co. v. Linkline Commc’ns, Inc.,
`555 U.S. 438 (2009) ................................................................................................................ 14
`
`Pac. Recovery Sols. v. United Behav. Health,
`508 F. Supp. 3d 606 (N.D. Cal. 2020) .................................................................................... 17
`DEFENDANTS’ MOTION TO DISMISS
`CASE NO. 4:21-CV-07250-HSG
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`Case 4:21-cv-07250-HSG Document 61 Filed 03/14/22 Page 7 of 34
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`TABLE OF AUTHORITIES
`(continued)
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`Page(s)
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`Pac. Steel Grp. v. Comm. Metals Co.,
`2021 WL 2037961 (N.D. Cal. May 21, 2021) ........................................................................ 20
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`Person v. Google,
`346 Fed. App’x 230 (9th Cir. 2009) ........................................................................................ 18
`
`Phila. Taxi Ass’n, Inc v. Uber Techs., Inc.,
`886 F.3d 332 (3d Cir. 2018) .................................................................................................... 19
`
`R.C. Dick Geothermal v. Thermogenics, Inc.,
`890 F.2d 139 (9th Cir. 1989) ..................................................................................................... 7
`
`Rebel Oil Co., Inc. v. Atl. Richfield Co.,
`51 F.3d 1421 (1995) .................................................................................................... 21, 22, 24
`
`Reilly v. Apple Inc.,
`2022 WL 74162 (N.D. Cal. Jan. 7, 2022) ....................................................................... 8, 9, 10
`
`Rutman Wine Co. v. E. & J. Gallo Winery,
`829 F.2d 729 (9th Cir. 1987) ....................................................................................... 13, 19, 20
`
`Schor v. Abbott Labs.,
`457 F.3d 608 (7th Cir. 2006) ................................................................................................... 14
`
`Somers v. Apple, Inc.,
`729 F.3d 953 (9th Cir. 2013) ....................................................................................... 10, 12, 13
`
`Spectrum Sports, Inc. v. McQuillan,
`506 U.S. 447 (1993) ......................................................................................................... passim
`
`Stackla, Inc. v. Facebook Inc.,
`2019 WL 4738288 (N.D. Cal. Sept. 27, 2019) ....................................................................... 14
`
`Stanislaus Food Prods. Co. v. USS-POSCO Indus.,
`782 F. Supp. 2d 1059 (E.D. Cal. 2011) ................................................................................... 20
`
`Stearns v. Select Comfort Retail Corp.,
`2009 WL 1635931 (N.D. Cal. June 5, 2009) .......................................................................... 17
`
`Sumotext Corp v. Zoove, Inc.,
`2020 WL 533006 (N.D. Cal. Feb. 3, 2020) ................................................................ 13, 14, 17
`
`Thurman Indus., Inc. v. Pay ‘N Pak Stores, Inc.,
`875 F.2d 1369 (9th Cir. 1989) ................................................................................................. 21
`
`United Energy Trading, LLC v. PG&E,
`200 F. Supp. 3d 1012 (N.D. Cal. 2016) .................................................................................. 19
`DEFENDANTS’ MOTION TO DISMISS
`CASE NO. 4:21-CV-07250-HSG
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`TABLE OF AUTHORITIES
`(continued)
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`Page(s)
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`United States v. Syufy Enters.,
`903 F.2d 659 (9th Cir. 1990) ................................................................................................... 24
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`Verizon Commc’ns Inc. v. Trinko,
`540 U.S. 398 408 (2004) ............................................................................................. 14, 15, 16
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`William Inglis & Sons Baking Co. v. ITT Cont’l Baking Co.,
`668 F.2d 1014 (9th Cir. 1981) ................................................................................................. 20
`
`Zixiang Li v. Kerry,
`710 F.3d 995 (9th Cir. 2013) ..................................................................................................... 6
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`Other Authorities
`
`Fed. R. Civ. P. 12(b)(6) ................................................................................................................... 6
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`DEFENDANTS’ MOTION TO DISMISS
`CASE NO. 4:21-CV-07250-HSG
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`Case 4:21-cv-07250-HSG Document 61 Filed 03/14/22 Page 9 of 34
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`MEMORANDUM OF POINTS AND AUTHORITIES
`INTRODUCTION
`
`Plaintiff Unlockd is a defunct startup that seeks to blame Google for its business failures.
`Desperate to recoup something for its investors, Unlockd filed this action advancing the baseless
`theory that Google removed it from Google’s platforms to eliminate it as a competitor and
`monopolize the market for digital advertising. Unlockd’s allegations and theory of harm are legally
`and economically implausible and do not meet well-established pleading standards.
`Unlockd alleges it designed smartphone applications (“apps”) that pushed full-screen
`advertisements to a user each time the user unlocked her device. A user would thus need to click
`on or dismiss an advertisement before she could access the home screen or device. To incentivize
`users to endure these ads, Unlockd compensated users with benefits or discounts from corporate
`partners. Unlockd distributed its apps through the Google Play Store (which allows users to
`download apps) and used Google AdMob (a mobile advertising network) to connect to advertisers.
`Both Google services required that Unlockd agree to Google’s applicable terms and
`conditions, including those aimed at protecting advertisers from paying for low-quality ad traffic.
`Unlockd’s business model violated these terms and conditions because it generated user traffic by
`paying users to watch or click on ads. This is the epitome of low-quality ad traffic: users engaged
`with ad content not out of genuine interest, but because they were paid to do so. Google tried to
`work with Unlockd to bring its apps into compliance with the applicable terms and conditions, but
`Unlockd refused, resorting instead to a legal campaign against Google all over the world (Australia,
`the U.K., and now the U.S.). Google refused to accede to this pressure campaign.
`At base, Unlockd brings this competition claim based on what is no more than a contractual
`dispute over whether Google acted within its rights under the prevailing agreements. Unlockd fails
`to state a plausible antitrust claim. Indeed, Unlockd fails to adequately plead that it has antitrust
`standing—a threshold requirement of any antitrust case—or any of the elements of an attempted
`monopolization claim under Sherman Act Section 2. To have antitrust standing, Unlockd must
`allege that Google’s conduct resulted in or is reasonably likely to result in injury to competition,
`rather than harm to itself. Here, Unlockd fails to do so. The antitrust laws protect competition for
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`DEFENDANTS’ MOTION TO DISMISS
`CASE NO. 4:21-CV-07250-HSG
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`consumers, not individual competitors. The Complaint should be dismissed on this ground alone.
`Unlockd further fails to plausibly allege the basic elements of an attempted monopolization
`claim: (1) anticompetitive conduct, (2) a specific intent to monopolize, and (3) a dangerous
`probability of achieving monopoly power. First, Unlockd fails to allege Google engaged in
`anticompetitive, exclusionary conduct. A company’s refusal to deal with a competitor, or its
`decision to do so on its own terms, is afforded almost absolute protection under the antitrust laws.
`Recognizing this, Plaintiff attempts to contort its allegations into the needle-eyed exception set
`down in Aspen Skiing, which scrutinizes a refusal to deal only where a company terminates a
`profitable course of dealing and sacrifices short-term profits for what could only conceivably be an
`anticompetitive purpose. Courts in this District have uniformly rejected that exception where, as
`here, there are no plausible allegations that Google acted anticompetitively or lacked any
`conceivable business justification for terminating its relationship with Unlockd. Rather, as Google
`explained to Unlockd in writing, it was enforcing terms and conditions designed to protect its
`platforms from low-quality ads and to enhance both user and advertiser experience.
`Second, Plaintiff fails to allege that Google acted with specific intent to monopolize,
`offering neither plausible allegations nor a credible theory as to how Google’s actions could only
`conceivably be explained by anticompetitive ends.
`Finally, Plaintiff fails to allege the required element that Google had a dangerous probability
`of achieving “monopoly power.” Plaintiff relies on a single, unnamed source to allege that Google
`has a 44% share of the “U.S. Digital Advertising Market,” without any reference to the metrics,
`methods, or competitor shares used to support this figure. The claim is even untethered to any
`particular date. Plaintiff similarly claims that barriers to entry exist in that market but provides
`little to no factual support. And Plaintiff never alleges how Google’s decision not to deal with a
`single, early-stage business with no alleged market share could plausibly elevate Google’s claimed
`44% market share to monopoly power. It is simply not plausible that the elimination of one small
`player in the proposed Digital Advertising Market could place Google within striking distance of
`achieving monopoly power. Indeed, Google allegedly terminated Unlockd years ago, yet Plaintiff
`does not plausibly plead any resulting change in market power to date, severely undermining the
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`COOLEY LLP
`ATTORNEYS AT LAW
`SAN FRANCISCO
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`DEFENDANTS’ MOTION TO DISMISS
`CASE NO. 4:21-CV-07250-HSG
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`COOLEY LLP
`ATTORNEYS AT LAW
`SAN FRANCISCO
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`Case 4:21-cv-07250-HSG Document 61 Filed 03/14/22 Page 11 of 34
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`plausibility of its claims. These deficiencies each mandate that the Complaint be dismissed.
`STATEMENT OF FACTS
`Google operates a series of platforms and services designed to connect the world online.
`First Amended Complaint (“Complaint” or “FAC”) ¶ 1. Among its services are the Google Search
`online search engine, the Android smartphone operating system, and the Chrome internet browser.
`Id. ¶¶ 2, 47, 162. Google also operates the Google Play Store—a digital distribution service that
`allows users to search for and download apps usable on the Android and Chrome operating systems.
`Id. ¶¶ 6, 48, 50. Google likewise runs AdMob, a mobile advertising network that connects app
`developers, i.e., publishers, to advertisers seeking to buy ad space on those apps. Id. ¶¶ 3, 6.
`Mobile app developers must first agree to Google’s Developer Distribution Agreement (the
`“DDA”) before they can promote their apps on the Google Play Store. See id. ¶¶ 25, 63. If mobile
`app developers would like to monetize their apps by being matched with advertisers through
`AdMob, they must also agree to the AdSense Terms of Service (“AdSense TOS,” and, together
`with the DDA, the “Agreements”). See id. ¶¶ 25, 70. Google maintains policies for Google Play
`and AdMob that are incorporated by reference into the Agreements, id. ¶¶ 25, 63, 70; Bansal Decl.,1
`Exs. 5–6 (DDA ¶ 4.1, AdSense TOS ¶ 1), and which are designed to “protect both advertisers and
`users of Google’s services,” Bansal Decl., Ex. 4 (03/02/2018 Letter) at 1. It is the developer’s
`responsibility to ensure that it complies with these Agreements, see id. at 2, and developers
`understand and agree upon sign-up that Google may terminate apps from AdMob or Google Play
`for any violation or “for any reason.” Bansal Decl., Exs. 5–6 (DDA ¶ 10.3, AdSense TOS ¶ 10).
`Typically, app developers show users ads in two places: within an app that a user has
`opened, FAC ¶ 56, or on the locked screen of a user’s device while the device is not in use, see
`id. ¶ 33. Unlockd was a mobile app developer whose purportedly “innovative” apps instead
`bombarded users with ads on their home screens whenever users unlocked their phones. Id. ¶¶ 51–
`53, 56. Thus, Unlockd apps required users to view or dismiss ads every time they wanted to access
`and use their smartphone. See id. ¶¶ 51–53. Unlockd paid users rewards, such as “mobile credit,
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`1 Documents attached to the Declaration of Deepti Bansal (“Bansal Decl.”) are properly before this
`Court, as outlined in the accompanying request for incorporation by reference and judicial notice.
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`DEFENDANTS’ MOTION TO DISMISS
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`CASE NO. 4:21-CV-07250-HSG
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`COOLEY LLP
`ATTORNEYS AT LAW
`SAN FRANCISCO
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`Case 4:21-cv-07250-HSG Document 61 Filed 03/14/22 Page 12 of 34
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`loyalty points, or subsidized streaming services,” in exchange for enduring these ads. Id. ¶ 53.
`Unlockd developed apps customized with various corporate partners’ branding, which could be
`downloaded from the Play Store. Id. ¶¶ 57, 60 & n.3. It began distributing its apps through the
`Google Play Store in 2015, subject to the terms contained in the Google Play DDA, and likewise
`began using Google’s AdMob service to source ads for its apps in November 2016, subject to the
`AdSense TOS. See id. ¶¶ 25, 63, 70.
`Google first alerted Unlockd that it was violating the Agreements as early as April 18, 2017.
`See id. ¶ 77 (citing April 2017 email in which Google suggested “brainstorm[ing] together [a] few
`ideas . . . in order to comply with Google policy”) (emphasis added). Google explained that the
`AdSense TOS did not permit ads to be shown outside of the app environment or for apps to
`encourage users to view or click on ads. See id. Unlockd’s apps, by definition, functioned outside
`of the app environment. See id. ¶¶ 51–53, 56 (noting what made Unlockd “unique” was that it did
`not deliver ads to users “inside apps” or on the “home screen” but “at the unlock event instead”).
`Five months later, on September 20, 2017, Google again alerted Unlockd that at least one
`of its apps did not comply with Google’s AdSense TOS, which prohibited apps from incentivizing
`ad traffic by offering users compensation or benefits for viewing ads. Google thus suspended
`Unlockd’s Australian app, Unlock Rewards, from using AdMob. See id. ¶ 97; Bansal Decl., Ex. 1
`(09/20/2017 Email) at 2. In that same notification, however, Google provided Unlockd with the
`opportunity to come into compliance with Google’s policies, stating that, “[w]hile ad serving has
`been disabled to the [Australian Unlockd] app, [Unlockd’s] AdMob account remains active[,]” and
`advising Unlockd to “review the rest of [its] applications to ensure . . . compliance . . . to reduce
`the likelihood of future policy emails from us.” Bansal Decl., Ex. 1 (09/20/2017 Email) at 2.
`A week later, after discussion with Unlockd and review of all Unlockd accounts and apps,
`Google sent a formal report re-confirming Unlockd’s violations. See Bansal Decl., Ex. 2
`(09/26/2017 Email). Google noted that Unlockd’s apps violated three policies incorporated into
`the AdSense TOS: the “Pages that offer compensation programs” policy,2 which prohibits
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`2 The “Pages that offer compensation programs” policy at times was referred to as the “Encouraging
`Clicks” and “Incentivized Traffic” policy. See FAC ¶¶ 97, 101–02, 127. Regardless of the name,
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`DEFENDANTS’ MOTION TO DISMISS
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`CASE NO. 4:21-CV-07250-HSG
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`COOLEY LLP
`ATTORNEYS AT LAW
`SAN FRANCISCO
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`Case 4:21-cv-07250-HSG Document 61 Filed 03/14/22 Page 13 of 34
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`publishers from placing ads in a manner that incentivizes invalid impressions or clicks; the
`“Valuable inventory” policy, which prohibits apps from containing more ad than non-ad content;
`and the “Disallowed Interstitial Implementation” policy, which prohibits placing ads outside the
`app environment. See FAC ¶¶ 101–03; Bansal Decl., Ex. 2 (09/26/2017 Email) at 1. These policies
`are aimed at, inter alia, protecting advertisers from paying for low-quality ad traffic generated by
`users who watch or click on ads only because they are paid to do so, rather than because of a genuine
`interest in the ad content. See FAC ¶ 102. Google provided another opportunity for Unlockd to
`comply, reiterating that it “value[d] [Unlockd’s] business and along with the policy team would
`like to assist in solving this issue as fast as possible.” Bansal Decl., Ex. 2 (09/26/2017 Email) at 3.
`On October 20, 2017, Unlockd submitted an appeal application through Google’s online
`appeal portal, which Google flagged that day for a compliance review. See FAC ¶¶ 110, 112.
`Unlockd’s appeal argued its apps “benefited all stakeholders” and “did not violate” Google’s
`AdSense TOS. Id. ¶ 111. Unlockd did not modify its apps in any way to come into compliance.
`Id. However, on the same day as receiving the appeal, a Google reviewer mistakenly “re-enabled
`[Unlockd] in good faith with the belief that all violations were fixed.” See Bansal Decl., Ex. 3
`(01/23/2018 Email) at 1; see also FAC ¶ 120. In January 2018, Google realized that Unlockd was
`still violating the AdSense TOS. On January 23, 2018, Google sent a letter to Unlockd again
`detailing its violations and setting a two-month deadline for Unlockd to fix its apps, not