throbber
Case 4:22-cv-00237-KAW Document 1 Filed 01/13/22 Page 1 of 118
`
`
`
`
`
`
`BATHAEE DUNNE LLP
`Yavar Bathaee (CA 282388)
`yavar@bathaeedunne.com
`Edward M. Grauman (p.h.v. forthcoming)
`egrauman@bathaeedunne.com
`Andrew C. Wolinsky (p.h.v. forthcoming)
`awolinsky@bathaeedunne.com
`445 Park Avenue, 9th Floor
`New York, NY 10022
`Tel.: (332) 322-8835
`
`Brian J. Dunne (CA 275689)
`bdunne@bathaeedunne.com
`633 West Fifth Street, 26th Floor
`Los Angeles, CA 90071
`Tel.: (213) 462-2772
`
`Attorneys for Plaintiffs
`
`
`UNITED STATES DISTRICT COURT
`
`NORTHERN DISTRICT OF CALIFORNIA
`
`SAN JOSE DIVISION
`
`
`TODD CROWDER, KEVIN SCHULTE, and
`GARRICK VANCE, on behalf of themselves and all
`others similarly situated,
`
` Plaintiffs,
`
`
` Case No. 5:22-cv-00237
`
`
`CLASS ACTION COMPLAINT
`
`
`DEMAND FOR JURY TRIAL
`
`v.
`
`LINKEDIN CORPORATION,
`
` Defendant.
`
`
`
`
`
`Class Action Complaint
`
`1
`2
`3
`4
`5
`6
`7
`8
`9
`10
`11
`12
`13
`14
`15
`16
`17
`18
`19
`20
`21
`22
`23
`24
`25
`26
`27
`28
`30
`31
`
`

`

`Case 4:22-cv-00237-KAW Document 1 Filed 01/13/22 Page 2 of 118
`
`
`
`TABLE OF CONTENTS
`
`III.
`
`IV.
`
`V.
`
`INTRODUCTION ....................................................................................................................................... 1
`PARTIES ................................................................................................................................................... 12
`I.
`PLAINTIFFS ................................................................................................................................. 12
`II.
`DEFENDANT ............................................................................................................................... 13
`JURISDICTION AND VENUE ................................................................................................................ 15
`DIVISIONAL ASSIGNMENT ................................................................................................................. 16
`I.
`LINKEDIN: THE BEGINNING OF A WINNER-TAKE-ALL BUSINESS ............................... 17
`A.
`SocialNet: A Social Network Before Its Time .................................................................. 17
`B.
`PayPal and the Power of Network Effects ......................................................................... 18
`C.
`“Blitzscaling”: Hoffman’s Insight from PayPal ................................................................ 20
`THE RISE OF LINKEDIN: A SPRINT TO DOMINANCE ........................................................ 22
`A.
`The Founding of LinkedIn ................................................................................................. 22
`B.
`LinkedIn Begins Monetizing Its Network of Users ........................................................... 24
`LINKEDIN IS ACQUIRED BY MICROSOFT WITH AN EYE TOWARD AI-DRIVEN
`MONETIZATION ......................................................................................................................... 27
`LINKEDIN’S DATA AND AI JUGGERNAUT .......................................................................... 29
`A.
`LinkedIn’s Extraction of Structured User Data to Train Machine-Learning Models ....... 30
`B.
`LinkedIn’s Data Centralization and Distribution Infrastructure ........................................ 34
`C.
`LinkedIn’s Social, Telemetry, and Inferred Data .............................................................. 37
`D.
`LinkedIn’s Acquisition of Drawbridge .............................................................................. 39
`THE LINKEDIN API AND THE SALE OF USER DATA TO PARTNERS ............................. 42
`A.
`LinkedIn’s REST and JSON API System ......................................................................... 42
`B.
`LinkedIn Privatized Its APIs in 2015 ................................................................................ 44
`C.
`LinkedIn Enters into Agreements with Select “Partners” for User Data Purchases
`through the APIs. ............................................................................................................... 46
`VII. THE DATA, MACHINE LEARNING, AND INFERENCE BARRIER TO ENTRY ................. 46
`A.
`Data Aggregation, Centralization, and Infrastructure Effects ........................................... 47
`B.
`The Effects of LinkedIn’s Machine-Learning Systems ..................................................... 50
`C.
`The Effects of Inference .................................................................................................... 54
`VIII. LINKEDIN ANTICOMPETITIVELY MAINTAINS ITS MONOPOLY ................................... 56
`LinkedIn Enters into Agreements to Anti-Competitively Sell User Data to “Partners”
`A.
`Through Its Privatized APIs .............................................................................................. 56
`
`VI.
`
`
`
`
`
`i
`Class Action Complaint
`
`
`1
`2
`3
`4
`5
`6
`7
`8
`9
`10
`11
`12
`13
`14
`15
`16
`17
`18
`19
`20
`21
`22
`23
`24
`25
`26
`27
`28
`30
`31
`
`

`

`Case 4:22-cv-00237-KAW Document 1 Filed 01/13/22 Page 3 of 118
`
`B.
`
`C.
`
`IX.
`
`X.
`
`
`
`LinkedIn Employs Technical Countermeasures to Prevent Rivals or Potential Entrants
`from Obtaining Even Data Users Have Decided to Make Public ..................................... 62
`LinkedIn Strengthened the Data, Machine Learning, and Infrastructure Barrier to
`Entry by Integrating with Parent Microsoft’s Azure Cloud and AI Systems .................... 64
`LINKEDIN AGREES WITH FACEBOOK TO DIVIDE THE MARKET .................................. 67
`A.
`LinkedIn and Facebook Were Poised to Compete Before 2015 ....................................... 68
`B.
`Internally, LinkedIn and Facebook Secretly Negotiated an Agreement ........................... 71
`C.
`After the Negotiations, Facebook Never Entered the Market with a Rival Product ......... 74
`D.
`Facebook Has a Practice of Dividing Markets with Potential Competitors, which Is
`Consistent with the Apparent Agreement Between LinkedIn and Facebook .................... 79
`THE RELEVANT MARKETS ..................................................................................................... 81
`A.
`The Professional Social Networking Market ..................................................................... 81
`1.
`The Professional Social Networking Market Is a Distinct Submarket. ..... 83
`2.
`LinkedIn Possesses Monopoly and Market Power in the Professional
`Social Networking Market ......................................................................... 94
`Relevant Geographic Market ..................................................................... 97
`3.
`Barriers to Entry ........................................................................................ 98
`4.
`HARM TO COMPETITION ......................................................................................................... 99
`XI.
`CLASS ACTION ALLEGATIONS ........................................................................................................ 102
`CLAIMS FOR RELIEF ........................................................................................................................... 107
`PRAYER FOR RELIEF .......................................................................................................................... 114
`JURY DEMAND ..................................................................................................................................... 115
`
`
`
`
`
`ii
`Class Action Complaint
`
`
`1
`2
`3
`4
`5
`6
`7
`8
`9
`10
`11
`12
`13
`14
`15
`16
`17
`18
`19
`20
`21
`22
`23
`24
`25
`26
`27
`28
`30
`31
`
`

`

`Case 4:22-cv-00237-KAW Document 1 Filed 01/13/22 Page 4 of 118
`
`
`
`
`INTRODUCTION
`
`1.
`
`This lawsuit concerns the unlawful monopolization of the professional social networking
`
`market by defendant LinkedIn. Plaintiffs are LinkedIn Premium subscribers who have been overcharged
`
`due to LinkedIn’s unlawful conduct, which has enabled LinkedIn to extract supracompetitive profits from
`
`its subscribers through inflated subscription prices and data sale revenues.
`
`2.
`
`After emerging as the unchallenged leader in the professional social networking market
`
`through what its founder Reid Hoffman called “Blitzscaling”—the rapid race to capture network and
`
`lock-in effects by scaling at any cost—LinkedIn quickly turned to protecting and monetizing its position,
`
`including by using sophisticated data acquisition and analysis to maximize user attention and revenues.
`
`By 2015, LinkedIn’s subscription business was protected by a powerful barrier to entry, which was the
`
`net sum of LinkedIn’s data centralization and aggregation, its machine learning and AI infrastructure,
`
`and the inferred data it produced. This Data, Machine Learning, and Inference Barrier to Entry
`
`(“DMIBE”) became LinkedIn’s greatest asset, and in 2016 drew a $26.5 billion acquisition of the
`
`company by Microsoft—owner of one of world’s largest and most powerful arsenals of massively
`
`scalable on-demand computational hardware. Combining LinkedIn’s unrivaled professional data trove
`
`and infrastructure with its parent Microsoft’s high-end cloud computing arrays, the companies are
`
`developing an AI and machine-learning-backed monopoly of enormous scale—fortifying and profoundly
`
`strengthening the DMIBE. At the time of this Complaint, the DMIBE represents a near-insurmountable,
`
`and growing, barrier to meaningful entry in the professional social networking market, let alone entry at
`
`sufficient scale to effectively check LinkedIn’s pricing and subscription terms.
`
`3.
`
`Since the Microsoft acquisition, LinkedIn has engaged in affirmative anticompetitive
`
`conduct that has strengthened (and continues to strengthen) the DMIBE, that has reduced consumer
`
`choice, and that has allowed LinkedIn to charge and maintain inflated Premium subscription prices and
`
`
`
`
` 1
`Class Action Complaint
`
`1
`2
`3
`4
`5
`6
`7
`8
`9
`10
`11
`12
`13
`14
`15
`16
`17
`18
`19
`20
`21
`22
`23
`24
`25
`26
`27
`28
`30
`31
`
`

`

`Case 4:22-cv-00237-KAW Document 1 Filed 01/13/22 Page 5 of 118
`
`
`
`subscription terms with no competitive check. This conduct has prevented—indeed, effectively
`
`precluded—entry by others into the professional social networking market, insulating prices from
`
`competition. Among this anticompetitive conduct was (and is): (i) LinkedIn’s non-optional sale of
`
`Premium user data to unnamed “partners,” which forcibly grafts a negative value feature—one that
`
`materially harms competition in the professional social networking market and at the same time lacks
`
`measurable procompetitive effects, even aside from its lack of consumer benefit—onto LinkedIn’s
`
`Premium subscription product; (ii) deploying sophisticated technological countermeasures specifically
`
`designed by LinkedIn to prevent users’ public data from being accessed by potential or actual
`
`competitors, thereby maintaining and fortifying the DMIBE and hindering potential entry at scale; (iii)
`
`aggressively integrating LinkedIn’s unmatched professional social networking data repository and
`
`pipeline and its powerful AI and machine-learning data and infrastructure with its parent company
`
`Microsoft’s Azure cloud servers and arrays of Graphical Processing Units (“GPUs”)—an internationally
`
`scarce hardware resources necessary for complex AI and machine learning computation at scale; and (iv)
`
`expressly or tacitly dividing markets with LinkedIn’s most natural potential competitor, Facebook—an
`
`agreement that, as explained in detail in this complaint, apparently continues to this day.
`
`4.
`
`Plaintiffs seek trebled damages for the price overcharge they have experienced (and
`
`continue to experience) for LinkedIn Premium subscriptions due to LinkedIn’s monopolization of the
`
`professional social networking market. They also seek injunctive relief to stop LinkedIn’s anticompetitive
`
`conduct, including, among other things, injunctive relief allowing Premium subscribers to opt out of
`
`LinkedIn’s parasitic data sale to unnamed partners and injunctive relief halting and unwinding the
`
`unprecedented and anticompetitive integration of LinkedIn’s professional data, machine learning, and AI
`
`infrastructure with Microsoft’s powerful cloud computing hardware. Absent abatement by this Court,
`
`
`
`
` 2
`Class Action Complaint
`
`1
`2
`3
`4
`5
`6
`7
`8
`9
`10
`11
`12
`13
`14
`15
`16
`17
`18
`19
`20
`21
`22
`23
`24
`25
`26
`27
`28
`30
`31
`
`

`

`Case 4:22-cv-00237-KAW Document 1 Filed 01/13/22 Page 6 of 118
`
`
`
`LinkedIn’s will continue to fortify and strengthen the DMIBE, potentially sealing off the professional
`
`social networking market from competition for years and perhaps decades to come.
`
`*
`
`*
`
`*
`
`5.
`
`Reid Hoffman, the enigmatic co-founder of PayPal, took away an important insight from
`
`his wildly successful early venture: rapidly scaling a online business can create powerful network effects,
`
`and those network effects can be durable. Hoffman didn’t just take this lesson to heart; he designed his
`
`professional life around it; evangelized it to everyone who would listen; and spent more than a decade
`
`trying to harness this phenomenon on his own. Hoffman called his business strategy of deploying massive
`
`first-mover resources to capture durable network effects, “Blitzscaling.”
`
`6.
`
`As Hoffman explained about his success at PayPal, “the faster we got to scale, the stronger
`
`we created network effects. . . .” In 2003, Hoffman took this key insight and applied it to his new venture,
`
`a professional social network called LinkedIn.
`
`7.
`
`Hoffman rapidly scaled LinkedIn, and by the middle of 2005, the company had 1.7 million
`
`users. By the summer of that same year, LinkedIn’s user base had doubled to 3.3 million. In Hoffman’s
`
`pursuit of blitzscaling for LinkedIn, nothing was off limits—even the reviled (and likely unlawful) tactic
`
`of commandeering LinkedIn users’ contact lists and spamming those contacts with invitations to
`
`Hoffman’s new venture.
`
`8.
`
`Hoffman recognized that LinkedIn’s exponential growth was the result of powerful
`
`network effects stemming from user growth, the inelastic ubiquity of job hunting and professional
`
`connection, and LinkedIn’s role as a source of professional identity. As Hoffman explained, “Just one of
`
`these network effects would probably be enough to create first-scaler advantage; all three working
`
`together built a massive strategic moat that protected the LinkedIn business from any new entrants.”
`
`
`
`
` 3
`Class Action Complaint
`
`1
`2
`3
`4
`5
`6
`7
`8
`9
`10
`11
`12
`13
`14
`15
`16
`17
`18
`19
`20
`21
`22
`23
`24
`25
`26
`27
`28
`30
`31
`
`

`

`Case 4:22-cv-00237-KAW Document 1 Filed 01/13/22 Page 7 of 118
`
`
`
`After a few years, LinkedIn had become the de facto standard for online professional
`
`9.
`
`identity, and the unchallenged market leader in professional social networking, both domestically and
`
`worldwide. But although LinkedIn had rapidly, and in some sense successfully, “blitzscaled,” two
`
`significant obstacles remained: user engagement and monetization.
`
`10.
`
`On the issue of monetization, the specific market niche LinkedIn had grown to dominate
`
`was (and is) unique from other social networking markets: professional social networking participants
`
`will pay upfront for important business services like advanced hiring tools and direct connections to other
`
`businesspeople. LinkedIn introduced Premium subscription products, and quickly accreted subscribers
`
`and subscriber revenue. But by the mid-2010s, as data aggregation and monetization technology—fueled
`
`by the rise of powerful machine learning and artificial intelligence tools, including powerful GPU arrays
`
`available in the cloud—transformed the business of high technology, LinkedIn realized that its monopoly
`
`could be supercharged (and supra-monetized) by leveraging data anticompetitively, including against its
`
`own Premium subscribers.
`
`11.
`
`12.
`
`That is exactly what LinkedIn did—and continues to do.
`
`As the 2010s reached their midpoint, it was clear to LinkedIn that the real profit-center in
`
`its business going forward was data-driven—and the company took a series of coordinated actions to
`
`leverage its market dominance in professional social networking to develop, deploy, and weaponize a
`
`massive-scale data acquisition, machine learning, and artificial intelligence apparatus that would both
`
`supercharge its overall profits, but also fortify and maintain the barrier to entry around its business. not
`
`only to serve content to users that drove engagement, but to monetize user data for profit.
`
`13.
`
`By 2015, LinkedIn had begun developing cutting edge machine learning and artificial
`
`intelligence infrastructure that could algorithmically serve content to users that drove engagement—and
`
`monetize user data for profit. That infrastructure included the vectorization, centralization, and
`
`
`
`
` 4
`Class Action Complaint
`
`1
`2
`3
`4
`5
`6
`7
`8
`9
`10
`11
`12
`13
`14
`15
`16
`17
`18
`19
`20
`21
`22
`23
`24
`25
`26
`27
`28
`30
`31
`
`

`

`Case 4:22-cv-00237-KAW Document 1 Filed 01/13/22 Page 8 of 118
`
`
`
`structuring of user data; the streamlining of real-time updates of user data and the development of
`
`machine learning and artificial intelligence models; the collection of detailed telemetry information
`
`derived from user interactions with LinkedIn’s app; and a massive trove of “inferred” data about users—
`
`data derived from predictions by machine learning and artificial intelligence models.
`
`14.
`
`As these new data tools and practices began to transform LinkedIn’s backend, a powerful
`
`barrier to entry formed around the company’s business—exponentially more powerful, indeed, than the
`
`network effects that had facilitated LinkedIn’s blitzscaling in the first instance.
`
`15.
`
`This new, incredibly powerful barrier to entry comprised (and comprises) three primary
`
`aspects: (1) LinkedIn’s data centralization, (2) LinkedIn’s machine learning models, and (3) the resulting
`
`trove of inferred data. What’s more, these three aspects of LinkedIn’s business together reinforced—and
`
`reinforce—each other, resulting in a Data, Machine Learning, and Inference Barrier to Entry (“DMIBE”).
`
`16.
`
`Standing alone, LinkedIn’s AI and machine-learning juggernaut was already extremely
`
`valuable (and ripe for misuse, given LinkedIn’s monopoly position in professional networking)—but in
`
`the hands of a company with a ubiquitous presence in the office, it could become an impenetrable source
`
`of monopoly rents for decades. This is precisely what happened after office software and cloud computing
`
`giant Microsoft acquired LinkedIn.
`
`17.
`
`By the middle of 2016, Microsoft, which had dominated office productivity software for
`
`decades, saw LinkedIn as a missing piece of its new business—artificial intelligence and machine
`
`learning in the cloud. LinkedIn needed more user engagement, and Microsoft’s cloud infrastructure and
`
`direct input into corporations around the world created powerful synergies.
`
`18.
`
`In June 2016, Microsoft announced that it would acquire LinkedIn for $26.2 billion—then
`
`the largest acquisition in Microsoft’s history. As Microsoft’s CEO Satya Nadella explained, the purpose
`
`of the merger was the “coming together of the professional cloud and the professional network.”
`
`
`
`
` 5
`Class Action Complaint
`
`1
`2
`3
`4
`5
`6
`7
`8
`9
`10
`11
`12
`13
`14
`15
`16
`17
`18
`19
`20
`21
`22
`23
`24
`25
`26
`27
`28
`30
`31
`
`

`

`Case 4:22-cv-00237-KAW Document 1 Filed 01/13/22 Page 9 of 118
`
`
`
`As the Financial Times described the merger, the acquisition was the product of “data
`
`19.
`
`gravity”—the “tendency for large bodies of data to attract suppliers of services and applications.” Despite
`
`concerns raised by Europe’s competition chief; the CEO of Salesforce, Marc Benioff; and others, the
`
`FTC did not challenge the acquisition out of a fear that if it challenged any merger based on data
`
`aggregation, it would have to challenge a host of other similar deals.
`
`20.
`
`In Microsoft’s hands, the DMIBE protecting LinkedIn’s monopoly in the professional
`
`social networking market became even more powerful. LinkedIn quickly began taking measures to
`
`further strengthen the DMIBE to keep out new entrants and competitors, but also began rapid integration
`
`of LinkedIn’s AI and machine-learning systems with Microsoft’s cloud computing service, Azure.
`
`21.
`
`From 2017 to the present, LinkedIn aggressively protected the DMIBE, including through
`
`anticompetitive conduct. Among them are four primary courses of action, which have irreparably sealed
`
`off LinkedIn from competition.
`
`22.
`
`First, LinkedIn aggregates and structures user data, then sells that data through its
`
`application programming interfaces (“APIs”) to private, undisclosed “Partners.” This paid access creates
`
`public-facing, permissioned endpoints that provide external access to LinkedIn’s massive trove of user
`
`data, which has been carefully structured, cleaned, and centralized for programmatic use and
`
`consumption.
`
`23.
`
`These data sale agreements with Partners dangerously expose user data. LinkedIn has no
`
`control over the data while it is in the hands of its partners; it does not disclose who its “partners” are
`
`with respect to the LinkedIn APIs; and the APIs create a massive security vulnerability by centralizing
`
`large amounts of user data and exposing that data to outward-facing interfaces. Indeed, massive troves of
`
`data corresponding to LinkedIn users—data purportedly gleaned at least in part from LinkedIn APIs—
`
`are currently being sold on the dark web.
`
`
`
`
` 6
`Class Action Complaint
`
`1
`2
`3
`4
`5
`6
`7
`8
`9
`10
`11
`12
`13
`14
`15
`16
`17
`18
`19
`20
`21
`22
`23
`24
`25
`26
`27
`28
`30
`31
`
`

`

`Case 4:22-cv-00237-KAW Document 1 Filed 01/13/22 Page 10 of 118
`
`
`
`LinkedIn’s data sale to Partners provides no value to Premium subscribers, and those
`
`24.
`
`subscribers cannot opt out of the data sale—or subscribe to a Premium product that does not include the
`
`sale of their data. At the same time, this data sale reinforces the DMIBE and allows LinkedIn to extract
`
`monopoly rents from subscribers and from contracting API Partners. Moreover, by exclusively partnering
`
`with certain consumers of its API, LinkedIn ensures that a new entrant—or even a firm that does not have
`
`a contract with LinkedIn—cannot surmount the DMIBE. These data sales reduce consumer choice,
`
`provide no pro-competitive effects for consumers, inflate prices, and prevent competition and entry,
`
`including by reinforcing the DMIBE.
`
`25.
`
`Second, LinkedIn protects the DMIBE and maintains its monopoly by deploying
`
`technological countermeasures that prevent any other party, competitor, or potential entrant from
`
`accessing public data on its site—even data that users want to make public. Indeed, a LinkedIn page is a
`
`public-facing professional resume and identity. Many (if not most) users elect to make these profiles
`
`public. LinkedIn, however, uses technological countermeasures, including technology it calls Fuse and
`
`Org Block, to prevent access to even public data. At the same time, LinkedIn whitelists certain companies
`
`such as Google, exempting them from LinkedIn’s technological countermeasures. By doing this,
`
`LinkedIn hoards millions of public identities provided by premium subscribers, preventing any potential
`
`entrant or competitor from developing a rival product. This has ensured that no price check has appeared
`
`or imminently will appear, allowing LinkedIn to maintain its DMIBE, monopoly, and unchallenged
`
`subscription prices.
`
`26.
`
`Third, despite maintaining its own servers before 2016, since the Microsoft acquisition
`
`LinkedIn has integrated—and is currently integrating—its standardized and structured trove of user data
`
`(and inferred data) with Microsoft’s powerful AI technology and Graphics Processing Unit (“GPU”)
`
`hardware, which it provides through its Azure cloud computing business. These cloud-based arrays of
`
`
`
`
` 7
`Class Action Complaint
`
`1
`2
`3
`4
`5
`6
`7
`8
`9
`10
`11
`12
`13
`14
`15
`16
`17
`18
`19
`20
`21
`22
`23
`24
`25
`26
`27
`28
`30
`31
`
`

`

`Case 4:22-cv-00237-KAW Document 1 Filed 01/13/22 Page 11 of 118
`
`
`
`GPUs are a scarce resource and are necessary for developing cutting-edge AI and machine learning
`
`models, including large language models. Only Google, Amazon, and Microsoft have such cloud-based
`
`hardware, and LinkedIn’s integration of its massive data infrastructure with Microsoft’s cutting-edge
`
`hardware, including NVIDIA A100 Tensor Core GPUs, creates a full-scale AI and machine-learning
`
`juggernaut acquiring, processing, analyzing, and re-analyzing LinkedIn’s unique pipeline of professional
`
`social networking data—permanently sealing off LinkedIn from competition, let alone competition at
`
`scale.
`
`27.
`
`Upon completion of the integration of LinkedIn’s AI and machine learning tools and data
`
`infrastructure with Azure, the DMIBE will be irreversibly strengthened, and LinkedIn’s integration
`
`efforts to date have already significantly fortified the DMIBE. This integration lacks procompetitive
`
`benefits, let alone benefits that outweigh the massive anticompetitive effects in the Professional Social
`
`Networking market. The net result is that LinkedIn will become virtually unchallengeable, and its
`
`subscription prices and terms will remain unchecked for years—and perhaps decades—to come.
`
`28.
`
`Finally, LinkedIn agreed with its most obvious natural competitor—social networking
`
`juggernaut Facebook—to divide markets, sealing off the last remaining source of potential rivalry to
`
`LinkedIn’s professional social networking dominance. As a result of this agreement, which appears to
`
`have grown of data access negotiations between the two companies in the early 2010s, LinkedIn has
`
`maintained its monopoly in professional social networking without the threat of entry by Facebook, and
`
`Facebook has fortified its dominance and control over personal social networking, perhaps through data
`
`assistance from LinkedIn—similar to an agreement that Facebook recently struck with its would-be
`
`competitor Google.
`
`29.
`
`By 2015, competition between Facebook and LinkedIn seemed inevitable. Press
`
`speculation that Facebook was building a professional social network to rival LinkedIn had reached a
`
`
`
`
` 8
`Class Action Complaint
`
`1
`2
`3
`4
`5
`6
`7
`8
`9
`10
`11
`12
`13
`14
`15
`16
`17
`18
`19
`20
`21
`22
`23
`24
`25
`26
`27
`28
`30
`31
`
`

`

`Case 4:22-cv-00237-KAW Document 1 Filed 01/13/22 Page 12 of 118
`
`
`
`fever pitch, as Facebook secretly developed a new product called Facebook at Work. For example, in
`
`November 2014, the Financial Times reported based on communications with “individuals familiar with
`
`the matter” that Facebook at Work would “allow users to chat with colleagues, connect with professional
`
`contacts and collaborate over documents, competing with Google Drive and Microsoft Office.” In
`
`December 2015, Forbes predicted that “LinkedIn could face intense competition from ‘Facebook at
`
`Work,’” which was at the time to be imminently released.
`
`30.
`
`Internally, Facebook was preparing for scorched earth competition with LinkedIn.
`
`According to publicly reported internal Facebook documents, Facebook had identified LinkedIn as a
`
`competitive threat, and was threatened by LinkedIn’s access to Facebook user data through Facebook
`
`APIs. According to Facebook Vice President Chris Daniels, representatives of the companies had met in
`
`2013, and LinkedIn had agreed with Facebook “not to access [Facebook’s] APIs until [the companies]
`
`worked out an agreement both ways . . . .” Nonetheless, LinkedIn appeared to be aggressively scraping
`
`Facebook user data as part of an arms race for user identities.
`
`31.
`
`Facebook’s senior executives scrambled to audit all of the applications using Facebook’s
`
`Platform APIs, bucketing each of the thousands of apps by whether they were competitive threats.
`
`Facebook identified LinkedIn as a competitive threat in the “reputation” category. After the audit,
`
`Facebook prepared to remove API functionality, breaking thousands of competitive apps, sparing only
`
`companies that entered into secret agreements with Facebook. Facebook internally debated what it would
`
`do about LinkedIn, including whether it would demand data from LinkedIn in exchange for its access to
`
`Facebook’s APIs beyond “status updates.” As Facebook Vice President Konstantinos Papamiltiadis
`
`internally stated, such a meager amount of data from LinkedIn was “not good enough for [him].”
`
`Facebook also sought a bargaining chip in its negotiations with LinkedIn, including a trumped-up policy
`
`
`
`
` 9
`Class Action Complaint
`
`1
`2
`3
`4
`5
`6
`7
`8
`9
`10
`11
`12
`13
`14
`15
`16
`17
`18
`19
`20
`21
`22
`23
`24
`25
`26
`27
`28
`30
`31
`
`

`

`Case 4:22-cv-00237-KAW Document 1 Filed 01/13/22 Page 13 of 118
`
`
`
`violation that it could use as a fig leaf for denying LinkedIn access to its APIs and the removal of “work
`
`history” information from LinkedIn’s scope of access.
`
`32.
`
`Although the specific result of the then-ongoing negotiations between the companies is
`
`not known, what happened after Facebook removed API functionality for thousands of developers speaks
`
`volumes. From April 2015 until the present, LinkedIn suffered no public problems or deprecation after
`
`Facebook privatized its APIs, indicating to some degree of certainty that a deal of some sort was in fact
`
`struck between the companies. And the other side of the equation—Facebook’s behavior—has been even
`
`more striking. Despite entering every adjacent market within its grasp, and seeking to leverage its
`
`professional social networking data and tools in products from messaging, to video, to gaming, and
`
`beyond, Facebook never entered the market for professional social networking. Even the expected
`
`Facebook at Work product, which was released under the name Workplace, had a glaring omission—it
`
`was released without any professional social networking functionality, and there was no competing
`
`subscription social networking product to rival LinkedIn. Facebook had carefully excised from its
`
`Workplace product features that would compete with LinkedIn’s professional social networking products
`
`and services.
`
`33.
`
`From 2016 until the present, Facebook aggressively diversified its lines of business,
`
`entering virtually every technology market. Facebook challenged ad giant Google in internet advertising
`
`and user tracking; Facebook acquired Instagram, directly competing with photo sharing and
`
`microblogging apps, including Twitter; Facebook aggressively moved into video sharing and streaming
`
`with its Facebook Live product; it launched Messenger and even spent billions acquiring WhatsApp;
`
`Facebook made several forays into payments, taking on the likes of PayPal and Venmo; Facebook took
`
`on eBay and Amazon with its Marketplace product; Facebook planned its own crypto currency; and
`
`Facebook even bought a virtual reality company, Oculus.
`
`
`
`
` 10
`Class Action Complaint
`
`1
`2
`3
`4
`5
`6
`7
`8
`9
`10
`11
`12
`13
`14
`15
`16
`17
`18
`19
`20
`21
`22
`23
`24
`25
`26
`27
`28
`30
`31
`
`

`

`Case 4:22-cv-00237-KAW Document 1 Filed 01/13/22 Page 14 of 118
`
`
`
`The only market it did not even attempt to enter was the one LinkedIn controlled—a
`
`34.
`
`market where users paid expensive subscriptions out of pocket for professional social networking. That
`
`market could have supported an additional competitor, and Facebook could have undercut prices to obtain
`
`market share, but Facebook never set foot near LinkedIn’s monopoly.
`
`35.
`
`This lack of entry is not reasonably explicable absent an agreement between LinkedIn and
`
`Facebook not to compete with each other, particularly given the state of the companies’ negotiations in
`
`2013 to 2015, which included potential data reciprocity terms.
`
`36.
`
`To this day, both companies deny that they compete with each other. Indeed, even though
`
`Facebook internally considered LinkedIn potentially competitive in late 2013, and it was widely reported
`
`that Facebook was preparing to launch a professional social networking product in 2015, Facebook CEO
`
`and founder Mark Zuckerberg told the U.S. Senate in 2018 that Facebook “do[es]n’t consider LinkedIn
`
`to be one of our direct competitors.” LinkedIn did not list Facebook as a competitor in its SEC filing
`
`when it went public in 2015.
`
`37.
`
`All of this evidence indicates that LinkedIn and Facebook

This document is available on Docket Alarm but you must sign up to view it.


Or .

Accessing this document will incur an additional charge of $.

After purchase, you can access this document again without charge.

Accept $ Charge
throbber

Still Working On It

This document is taking longer than usual to download. This can happen if we need to contact the court directly to obtain the document and their servers are running slowly.

Give it another minute or two to complete, and then try the refresh button.

throbber

A few More Minutes ... Still Working

It can take up to 5 minutes for us to download a document if the court servers are running slowly.

Thank you for your continued patience.

This document could not be displayed.

We could not find this document within its docket. Please go back to the docket page and check the link. If that does not work, go back to the docket and refresh it to pull the newest information.

Your account does not support viewing this document.

You need a Paid Account to view this document. Click here to change your account type.

Your account does not support viewing this document.

Set your membership status to view this document.

With a Docket Alarm membership, you'll get a whole lot more, including:

  • Up-to-date information for this case.
  • Email alerts whenever there is an update.
  • Full text search for other cases.
  • Get email alerts whenever a new case matches your search.

Become a Member

One Moment Please

The filing “” is large (MB) and is being downloaded.

Please refresh this page in a few minutes to see if the filing has been downloaded. The filing will also be emailed to you when the download completes.

Your document is on its way!

If you do not receive the document in five minutes, contact support at support@docketalarm.com.

Sealed Document

We are unable to display this document, it may be under a court ordered seal.

If you have proper credentials to access the file, you may proceed directly to the court's system using your government issued username and password.


Access Government Site

We are redirecting you
to a mobile optimized page.





Document Unreadable or Corrupt

Refresh this Document
Go to the Docket

We are unable to display this document.

Refresh this Document
Go to the Docket