Case 3:24-cv-06101 Document 1 Filed 08/28/24 Page 1 of 66
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`IN THE UNITED STATES DISTRICT COURT
`FOR THE NORTHERN DISTRICT OF CALIFORNIA
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`Case No. 3:24-cv-6101
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`COMPLAINT
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`DEMAND FOR JURY TRIAL
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`Sathya Gosselin (SBN 269171)
`Swathi Bojedla (pro hac vice motion forthcoming)
`HAUSFELD LLP
`888 16th Street, N.W., Suite 300
`Washington, DC 20006
`Tel: (202) 540-7200
`Fax: (202) 540-7201
`sgosselin@hausfeld.com
`sbojedla@hausfeld.com
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`Counsel for Yelp Inc.
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`(additional counsel listed on signature page)
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`YELP INC.,
`350 Mission Street, 10th Floor
`San Francisco, California 94105,
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`Plaintiff,
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`v.
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`GOOGLE LLC,
`1600 Amphitheatre Parkway
`Mountain View, California 94043,
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`Defendant.
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`COMPLAINT
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`TABLE OF CONTENTS
`INTRODUCTION......................................................................................................................... 1
`JURISDICTION AND VENUE ................................................................................................... 5
`INTRADISTRICT ASSIGNMENT ............................................................................................ 6
`PARTIES ....................................................................................................................................... 6
`FACTUAL ALLEGATIONS ....................................................................................................... 7
`I. Google’s History and the Development of Internet Search ................................................ 7
`II.
`Search Monetization and Architecture............................................................................ 8
`MARKET ALLEGATIONS ...................................................................................................... 15
`I. General Search Services ................................................................................................... 15
`A. General Search Services in the United States Is a Relevant Antitrust Market ............. 15
`B. Google Has Monopoly Power in the General Search Services Market in the United
`States ....................................................................................................................................... 18
`II.
`Local Search Services ................................................................................................... 22
`A.
`Local Search Services in the United States Is a Relevant Antitrust Market. ................ 22
`B. Google Has Monopoly Power in the Local Search Services Market in the United
`States. ...................................................................................................................................... 26
`III.
`Local Search Advertising .............................................................................................. 28
`A.
`Local Search Advertising in the United States Is a Relevant Product Market. ............ 28
`B. Google Has Market Power in the Local Search Advertising Market in the United
`States. ...................................................................................................................................... 34
`ANTICOMPETITIVE CONDUCT IN THE RELEVANT MARKETS ............................... 36
`I. Google’s Anticompetitive Conduct in Local Search Services Market ............................. 36
`II.
`Google’s Anticompetitive Conduct in Local Search Advertising ................................ 48
`III.
`Yelp Has Been Injured by Google’s Anticompetitive Conduct .................................... 49
`IV.
`Google’s Anticompetitive Conduct Persists and Recurs Every Day ............................ 51
`INTERSTATE COMMERCE AND TRADE .......................................................................... 51
`CLAIMS FOR RELIEF ............................................................................................................. 52
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`COMPLAINT
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`Case 3:24-cv-06101 Document 1 Filed 08/28/24 Page 3 of 66
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`PRAYER FOR RELIEF............................................................................................................. 62
`JURY DEMAND ......................................................................................................................... 63
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`COMPLAINT
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`Yelp Inc. brings this action under Section 2 of the Sherman Act, 15 U.S.C. § 2, and
`California’s Unfair Competition Law to safeguard competition, protect consumer choice,
`recover damages, and prevent Google LLC from engaging in various anticompetitive practices
`designed to monopolize the markets for local search services and local search advertising.
`INTRODUCTION
`Americans rely on internet search services for high-quality information about the
`1.
`world around them, responsive to their search queries. In key areas, however, Google—a multi-
`trillion-dollar company and confirmed monopolist—abuses
`its unlawfully maintained
`dominance in general internet search to steer users to its own inferior content to pad its massive
`revenues. As a result, consumers, businesses, and competition all suffer.
`This is a case about Google, the largest information gatekeeper in existence,
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`abandoning its stated mission to deliver the best information available to its consumers and
`instead forcing its own low-quality local search content on them. Google’s scheme prevents
`businesses from reaching customers without paying Google and starves competitors of the traffic
`and revenues that would allow them to achieve scale and pose a competitive constraint on
`Google’s conduct.
`Yelp was founded in 2004 with a mission to connect consumers with great local
`3.
`businesses through local search. Through its websites and mobile applications, Yelp empowers
`consumers nationwide to share—and learn from—a wide variety of content, including detailed
`and passionate reviews about businesses in thousands of neighborhoods. In turn, local businesses
`providing exceptional service can establish and promote themselves on Yelp. To sustain its
`business, Yelp sells local search advertising, enabling businesses to advertise directly to potential
`customers seeking specific businesses and services within particular neighborhoods.
`Since the dawn of the world wide web, people have harnessed its information-
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`sharing potential to learn more about, and share information about, local businesses, creating an
`opportunity for local search providers to aggregate this information to benefit consumers (and
`provide advertising opportunities). But Google, which was late to market in this respect, has
`never been able to develop a high-quality local search service to rival that of Yelp and other local
`1
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`COMPLAINT
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`Case 3:24-cv-06101 Document 1 Filed 08/28/24 Page 5 of 66
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`search platforms. Unwilling to invest or innovate to attract users in a competitive environment,
`Google has instead relied on a simple but effective strategy—it uses its monopoly power in
`general search to make sure that users never get to local search competitors in the first instance,
`diverting traffic away from those rivals and toward Google’s own inferior local search product.
`Google’s strategy is part of a deliberate plot to self-preference its own products
`5.
`in all aspects of search, no matter the attendant costs to consumers or market effects. It openly
`admits that its policy is to put its own products ahead of competitors, regardless of quality. In
`discussing an early search product that pioneered this approach, Marissa Meyer, Google’s former
`Vice President of Search Products and User Experience, explained that “when we rolled out
`Google Finance1 we did put the Google link first” ahead of the “top five finance sites in their
`order of popularity” and “that’s actually been a policy then, because of Finance, we implemented
`in other places. So for Google Maps, again, it’s the first link…and after that it’s ranked usually
`by popularity.”2
`It was not always this way. When Google’s general search engine launched in
`6.
`1998, it was lauded as an unbiased and impartial matchmaker sitting between consumers and all
`the web had to offer. Google’s algorithm, also known as its “organic” search, elevated the best
`of the internet, incentivizing companies to put forth their finest products and services to be found
`by consumers. As Google’s co-founder Larry Page put it in 2004: “We want to get you out of
`Google and to the right place as fast as possible.” And Google has dominated the field. As United
`States District Judge Amit Mehta (D.D.C.) recently concluded, following a months-long bench
`trial, Google has acquired an 89.2% share of the general search market, and it is the first place
`that most users turn to when they have an inquiry, effectively serving as the “gateway” to the
`internet. Each day, roughly 9 billion searches are performed using Google’s general search
`engine. Google has tremendous, singular influence over what people see online.
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`1 A Google service that provides financial information, e.g. real-time market quotes, business
`news, and analytics.
`2 @ChrisPavlovski, X (June 13, 2024, 12:16 PM),
`https://x.com/chrispavlovski/status/1801287521755709772.
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`COMPLAINT
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`Google exists in a search ecosystem with specialized vertical providers (“SVPs”),
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`like Yelp, which are platforms that respond to user queries on a particular subject matter with
`proprietary, structured data that is not available elsewhere and made possible only through
`sustained investment. Just as Yelp provides a vertical search option for local businesses, so too
`does Expedia provide a vertical search option for travel, Glassdoor for jobs and employers, and
`Zillow for apartment rentals and real estate. Consumers can use Google as a general search
`gateway to find and access these vertical search platforms (and often do), or they can go directly
`to an SVP.
`SVPs typically generate revenue by offering the best narrow and deep subject-
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`matter information possible, thereby enticing consumers to use their search platform, and then
`selling advertisements, subscriptions, or monetizing their specialized content in other ways.
`Advertising revenue is the lifeblood of many online businesses; it allows companies like Yelp
`to provide services and invest in continued innovation, content moderation, and user design. And
`local search—which enables consumers to search locales for relevant businesses, professionals,
`services, and activities and receive detailed information, including passionate and detailed
`consumer reviews and other content—accounts for roughly a third of all desktop search volume
`and over half of mobile search on Google. On a level playing field, SVPs like Yelp are a threat
`to Google, which sells advertising in conjunction with search queries, given their ability to
`siphon traffic (and thus revenue) away from it. As such, Google has sought to create and steadily
`expand its own foothold in the local search market so that it can sell more of its own advertising,
`as opposed to sending consumers to Yelp (or any other local search providers), however much
`Google’s own organic algorithm suggests the match.
`For years, when Google was focused on organic search and creating the best
`9.
`possible general search engine, Yelp peacefully coexisted with Google, working together and
`licensing Yelp’s user-generated content for Google’s use. Google even sought to acquire Yelp,
`recognizing the quality and value of the local content available on Yelp. But when Yelp rebuffed
`Google, Google began a years-long mission to stymie Yelp’s ability to reach consumers through
`Google’s dominant general search platform, with the goal of keeping Yelp’s would-be users on
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`COMPLAINT
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`Google platforms instead. Google has engaged in numerous anti-competitive practices, including
`stealing information from Yelp’s website and passing it off as Google’s own; preferencing
`Google’s own local search results over Yelp’s; implementing a “OneBox” feature to prioritize
`Google’s own inferior local search services at the top of the search results page; and even going
`so far as to tweak its algorithm and steer customers away from Yelp. Google has undertaken
`these practices not to provide a better product to consumers or compete fairly, but instead to
`enhance its own bottom line and stifle competition. And consumers and competition have been
`harmed in myriad ways, forced to contend with an inferior product and obscured, objectively
`superior results (even by Google’s own indicators).
`Antitrust authorities worldwide have scrutinized similar conduct by Google,
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`resulting in numerous antitrust probes and billions of dollars in fines. From 2011-13, for
`example, the Federal Trade Commission investigated Google’s appropriation of content from
`SVPs, and FTC staff concluded that Google’s conduct violated Section 2 of the Sherman Act.
`As part of this inquiry, FTC staff authored a report finding Google self-preferenced its own
`inferior vertical search results over its competitors, depriving them of an equal opportunity to
`compete for customers. In 2017, the European Commission fined Google €2.42 billion for
`abusing its dominance as a search engine and favoring its own, ad-sponsored comparison-
`shopping service over organic search results for competing comparison-shopping sites. And
`earlier this month, in United States v. Google, a case brought by the Department of Justice and
`various state attorneys general, Judge Mehta found Google liable for violating the federal
`antitrust laws by unlawfully maintaining its monopoly in the markets for general search services
`and general search
`text ads
`through exclusive distribution agreements with purely
`anticompetitive effects.
`Google uses its dominant position in the market for general search services to
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`give itself an advantage in various adjacent markets, including the markets for local search
`services and for local search advertising. This monopoly leveraging undermines competition in
`those markets by, e.g., preventing competing providers from achieving scale, reaching
`customers, and building content. When competitors cannot achieve scale, this softens the
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`competitive constraints on Google on both the consumer and advertiser side. On the consumer
`side, this means less need for Google to invest in quality (e.g., by improving curation of its online
`reviews) and greater incentives to show less relevant but nevertheless monetizable results. On
`the advertiser side, Google is able to extract higher fees from advertisers.
`12. Within the local search services market, Google’s self-preferencing and
`gatekeeping has resulted in stagnant or diminished traffic to Yelp and other local search
`competitors despite objectively superior offerings, as confirmed by Google’s own quality
`indicators. This undermining of competitive pressure allows Google to offer an inferior product
`to users without consequence. Google’s conduct has injured Yelp through lower traffic, reduced
`advertising revenues, raising Yelp’s own costs, and impaired network effects that come with
`fewer new and returning users.
`The same is true for the local search advertising market. When a customer seeks
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`a local business online, such as a plumber or hairstylist, they typically turn to local search
`providers to find that business. Local and national businesses purchase local search advertising
`(delivered in response to particular local search queries) to help ensure that customers are steered
`toward them. Google, Yelp, and other local search providers compete fiercely for local search
`advertising dollars, but Google has leveraged its dominant position in general search to ensure
`that more local search advertisers purchase local search advertising from Google, as Google
`keeps users within its own inferior local search vertical and away from Yelp and other local
`competitors. In this way, Google also suppresses competition in the market for local search
`advertising.
`By this action, Yelp seeks injunctive relief, monetary damages, restitution, pre-
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`and post-judgment interest, its attorney fees, costs, and expenses, and a declaratory judgment
`that Google’s conduct violates the antitrust laws.
`JURISDICTION AND VENUE
`This Court has subject matter jurisdiction over this action under 28 U.S.C. §§
`15.
`1331, 1337, and 1367, and the Clayton Act, 15 U.S.C. §§ 4, 15, and 26.
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`COMPLAINT
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`Venue is proper in this District under the Clayton Act, 15 U.S.C. § 22, and 28
`16.
`U.S.C. § 1391(b). A substantial part of the events giving rise to the claims alleged herein
`occurred in the Northern District of California, Google conducts substantial business in the
`Northern District of California, and Google resides within the Northern District of California.
`This Court also has personal jurisdiction over Google. Again, Google conducts
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`substantial business in the Northern District of California, and Google resides within the
`Northern District of California.
`INTRADISTRICT ASSIGNMENT
`Pursuant to Civil Local Rule 3-2(c), this antitrust case shall not be assigned to a
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`particular Division of this District and instead shall be assigned on a District-wide basis.
`PARTIES
`Plaintiff Yelp Inc. is a corporation organized and existing under the laws of
`19.
`Delaware and headquartered in San Francisco, California. Yelp was founded in July 2004 by
`Jeremy Stoppelman, its current CEO, and his former colleague from PayPal, Russel Simmons,
`to provide a local search platform to connect consumers with great local businesses. Yelp’s
`website, Yelp.com, went live in October 2004, providing a forum for people to share their word-
`of-mouth recommendations for local businesses more broadly, and for local businesses to reach
`customers who might not otherwise have heard of them.
`Via its websites and mobile applications, Yelp provides a one-stop local platform
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`for consumers to easily discover, connect, and transact with local businesses across a broad range
`of categories. Through Yelp, consumers can find home services, restaurants, health care
`professionals, and more, and they can consider trusted reviews of local businesses, and other
`contributions, from other users (and in turn contribute their own reviews, photos, videos, and
`other content).
`Yelp was born out of a need for reliable, easy-to-find information about
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`businesses in local communities.
`By the end of 2023, over 7.1 million active claimed local businesses were listed
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`on Yelp’s platform, with over 287 million reviews. More than 77 million consumers use Yelp
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`every month to decide how and where to spend their money. Yelp also helps small businesses
`reach new customers by amplifying their positive word-of-mouth. Yelp serves as a vital resource
`for consumers, local businesses, and advertisers nationwide.
`Google LLC is a limited liability company organized and existing under the laws
`23.
`of the State of Delaware and headquartered in Mountain View, California. Google provides a
`range of products and services that are marketed, distributed, and offered to consumers
`throughout the United States, across state lines, and internationally. Google operates a general,
`“horizontal” search engine, as well as numerous integrated vertical search options that focus on
`specific content areas, such as local, product or shopping comparison, and travel. Google
`engages in, and its activities substantially affect, interstate trade and commerce. Google also sells
`advertising on searches run through its search engine.
`FACTUAL ALLEGATIONS
`I. Google’s History and the Development of Internet Search
`Google’s aims were once noble, and its early history illustrates just how much
`24.
`has changed.
`Prior to Google’s founding in 1998, early internet search engines relied on
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`automatic indexing of web pages, focusing on keyword-based techniques to rank search results.
`Google co-founders Larry Page and Sergey Brin developed a novel method for
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`general internet search. Instead of relying on keyword searching, they created a prototype (called
`BackRub) that crawled the internet, from page to page, following links from one page to another.
`As Google explains: “The web is like an ever-growing library with billions of books and no
`central filing system. We use software known as web crawlers to discover publicly available
`webpages. Crawlers look at webpages and follow links on those pages, much like you would if
`you were browsing content on the web. They go from link to link and bring data about those
`webpages back to Google’s servers.”
`Page and Brin’s prototype mapped the internet through that connection of links,
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`ranking pages more highly if other highly ranked webpages linked to it. This method, called
`PageRank, was a way to quality-control internet searching, ensuring that more relevant and high-
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`quality information (as measured by other webpages linking to that information) would move to
`the top of the search rankings. According to Google, PageRank operated “by counting the
`number and quality of links to a page to determine a rough estimate of how important the website
`is. The underlying assumption is that more important websites are likely to receive more links
`from other websites.”3
`Page and Brin launched their search engine Google.com in 1998. Google’s search
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`engine used an algorithm based on PageRank, which still underlies Google search today.
`In its early days, Google revolutionized and democratized the internet. Its
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`algorithm focused on returning quality results to users. As Page said in Google’s initial public
`offering in 2004, “We want you to come to Google and quickly find what you want. Then we’re
`happy to send you to the other sites. … We want to get you out of Google and to the right place
`as fast as possible.” Acknowledging its important role in providing its “users unbiased access to
`information, focusing on their needs and giving them the best products and services,” Google’s
`unofficial motto, incorporated into the Google Code of Conduct, was: “Don’t be evil.”
`Unfortunately, upon obtaining dominance in general search, Google’s desire to provide
`“unbiased” access to information vanished.
`Search Monetization and Architecture
`II.
`As Google’s dominance in general search grew, it became adept at monetizing
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`search. When consumers search the internet, they provide Google with information on their
`focused interest in various topics. This information is valuable to Google and to advertisers, who
`can learn what specific terms users associate with their queries and reach customers at the point
`at which the customer is seeking the product or service. Starting in 2000, Google monetized that
`information through its AdWords program (later renamed Google Ads), which allows advertisers
`to purchase advertising tethered to various search terms to direct consumers to advertisers’
`websites. Starting in 2002, Google adopted a cost-per-click auction model in which advertisers
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`3 Google, Facts About Google and Competition: About Search, The Wayback Machine,
`https://web.archive.org/web/20111104131332/https://www.google.com/competition/howgoogl
`esearchworks.html.
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`would bid on how much to pay per ad click. The winning bidder would receive preferential
`advertising placement on the search engine results page, or “SERP,” when those keywords were
`used, and Google would receive a payment per click for each time a user clicked through the ad
`to the advertiser’s site.
`This type of advertising is referred to as “search advertising” and includes any ad
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`served on the SERP in response to a consumer’s real-time search query. These can include
`sponsored links, which are simply text links to websites with related copy, or “product listing
`ads” (“PLAs”), also known as shopping ads, which include images. Search advertising is a
`powerful form of advertising because it captures the user at the moment of intent, when the user
`indicates that they want to purchase a specific product or service. As a result, advertisers view
`search advertising as a particularly efficient way at driving “conversion” from curiosity to intent
`to actual purchases.
`32. Within the Google SERP, those who purchase search advertising receive
`preferential placement at the top of the SERP, above links to organic search results. When a user
`submits a commercial query to Google (as recognized as such by Google’s algorithm), generally
`the first results are sponsored results, rather than those organically selected by Google’s
`algorithm as the highest-quality option.
`High placement on Google’s SERP (either through paid advertising or through
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`organic search results) is key to driving traffic. Consumers overwhelmingly focus on the top of
`the results page, the “visible area” that users immediately see when they open a webpage without
`having to scroll down or across.4 The first-ranked search result is by far the most likely to receive
`clicks, accounting for 31% of user clicks.5 Click-through rates decline precipitously from
`
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`4 Dirk Lewandowski, Sebastian Sünkler, & Nurce Yagci, The influence of search engine
`optimization on Google’s results: A multi-dimensional approach for detecting SEO, WebSci ’21:
`Proceedings of the 13th ACM Web Science Conference 2021, at 12-20, The ACM Digital
`Library (June 22, 2021), https://doi.org/10.1145/3447535.3462479.
`5 Sebastian Schultheiß, Sebastian Sünkler, and Dirk Lewandowski, We still trust in google, but
`less than 10 years ago: An eye-tracking study, Information Research Vol. 23 No. 3 (September
`2018), https://informationr.net/ir/23-3/paper799.html; Owen Fay, Value Of #1 Position On
`Google – Positional Analysis Study [2023], Poll The People
`(May 6, 2022),
`https://pollthepeople.app/the-value-of-google-result-positioning-3/.
`9
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`COMPLAINT
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`Case 3:24-cv-06101 Document 1 Filed 08/28/24 Page 13 of 66
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`there—results six to ten, e.g., make up 3.73% of clicks combined.6 Consumers also tend to trust
`Google’s positioning of search results, believing that Google’s search result rankings are
`accurate and trustworthy, sometimes over even their own relevance judgments.
`Google generates most of its revenue from search advertising. In 2023, Google
`34.
`brought in a staggering $175 billion in revenue from search advertising, accounting for the vast
`majority of its overall revenue. Search advertising is a key component of Google’s business
`model, and it creates incentives to keep users within Google and its own properties, in contrast
`to its original promise of getting users out of Google and to the right place as fast as possible.
`As early as 2005, Google felt threatened by the rise of SVPs, which provide users
`35.
`with specialized search results and proprietary data that can attract traffic away from Google’s
`general search. Given the cost-per-click nature of search advertising, Google only receives
`advertising revenue if users click on its own search advertising, and not the search advertising
`of its competitors. Google realized that allowing SVPs to develop scale and entice consumers
`would be detrimental to its own bottom line. In one internal document, a Google product
`manager wrote that one threat of SVPs gaining ground would be “loss of traffic from google.com
`because folks search elsewhere for some queries ….”7 Another internal email noted that
`“Google’s core business is monetizing commercial queries. If users go to competitors … long-
`term revenue will suffer.”8 Google grew concerned that consumers would start going directly to
`those SVPs, creating a “risk to our monetizable traffic.”9
`Google was particularly worried that SVPs would entice advertisers away from
`36.
`Google. A 2008 presentation, entitled “Online Advertising Challenges: Rise of the Aggregators,”
`highlighted Google’s concerns (in this case with respect to a finance vertical website called
`MoneySupermarket):
`
`
`
`6 Id.
`7 Federal Trade Commission, Bureau of Competition, Staff Memorandum Re: Google Inc.
`(August 8, 2012) at 20 n.102, https://stratechery.com/wp-content/uploads/2021/03/Staff-
`Memo.pdf (hereinafter, “FTC Staff Memo”).
`8 Id.
`9 Id.
`
`10
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`COMPLAINT
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`Case 3:24-cv-06101 Document 1 Filed 08/28/24 Page 14 of 66
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`Issue 1. Consumers migrating to MoneySupermarket. Driver: General search
`engines not solving consumer queries as well as specialized vertical search . . . .
`Consequence:
`Increasing proportion of visitors going directly
`to
`MoneySupermarket … Google Implication: Loss of query volumes.
`
`Issue 2: MoneySupermarket has better advertising proposition. Driver:
`MoneySupermarket offers cheaper, lower risk … leads to advertisers. Google
`Implication: Advertiser pull: Direct
`advertisers
`switch
`spend
`to
`MoneySupermarket/other channels.10
`
`Google thus wanted to remove the risk of disintermediation—that users would
`37.
`bypass Google and go directly to SVPs—and the related risk that advertisers would see those
`SVPs as more enticing than Google. To deal with this threat to its bottom line, Google has
`leveraged its dominant position in general search to keep users within its confines, hoarding
`traffic and advertising dollars, suppressing competition, and limiting escape from its walled
`garden despite an awareness that consumers want choice.
`Beginning in the mid-2000s, Google developed certain vertical properties in-
`38.
`house, such as travel and shopping. Initially, Google’s verticals were displayed via tabs at the
`top of the general SERP, but traffic was limited. As Google complained privately, “few users
`[were] motivated to click on our tabs ….”11 This was problematic, as Google’s SVP competitors
`were growing to compete for user traffic and advertising dollars. To combat this threat, and to
`give itself a leg up over its competitors, Google moved its own vertical search results to the main
`SERP in OneBoxes, which were actual boxes containing search results above all else. If a user
`queried Google for, say, “flights to NYC,” Google would send that query to its own travel
`vertical and return any results in a travel OneBox, at the top of the SERP and above any organic
`search results.
`In 2007, Google launched “universal search.” Per a Google blog post at the time,
`39.
`the purpose was to “blend content from Images, Maps, Books, Video, and News”—in other
`words, Google’s other search verticals that were previously less popular with users—with
`
`10 Id. at 20.
`11 Id. at 21.
`
`COMPLAINT
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