Case: 20-16472, 12/06/2022, ID: 12603050, DktEntry: 71-1, Page 1 of 26
`
`FOR PUBLICATION
`
`UNITED STATES COURT OF APPEALS
`
`FOR THE NINTH CIRCUIT
`
`
`FILED
`
`
`DEC 6 2022
`
`MOLLY C. DWYER, CLERK
`U.S. COURT OF APPEALS
`
`
` No. 20-16472
`
`
`D.C. No. 3:18-cv-01910-WHA
`
`
`
`OPINION
`
`DREAMSTIME.COM, LLC,
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`
`
` v.
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`
`GOOGLE LLC,
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`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
` Plaintiff-Appellant,
`
` Defendant-Appellee.
`
`Appeal from the United States District Court
`for the Northern District of California
`William Alsup, District Judge, Presiding
`
`Argued and Submitted February 16, 2022
`San Francisco, California
`
`Before: Ronald M. Gould and Johnnie B. Rawlinson, Circuit Judges, and Jennifer
`G. Zipps,* District Judge.
`
`
`
`
`
`
`Opinion by Judge Gould
`
`
` The Honorable Jennifer G. Zipps, United States District Judge for the
`*
`
`
`District of Arizona, sitting by designation.
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`
`
`
`
`
`
`

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`SUMMARY**
`
`Antitrust
`
`
`
`
`The panel affirmed the district court’s dismissal of an antitrust claim brought by
`Dreamstime.com, LLC, an online supplier of stock images, against Google LLC.
`
`Dreamstime alleged that Google violated § 2 of the Sherman Act by maintaining
`a monopoly in the online search advertising market. Dreamstime asserted that
`Google furthered this monopoly by impeding Dreamstime’s use of Google’s paid
`advertising services as well as harming Dreamstime’s performance on Google’s free
`search engine. The district court dismissed on the ground that Dreamstime did not
`sufficiently allege anticompetitive conduct in the relevant market of online search
`advertising.
`
` A
`
` § 2 claim includes two elements: (1) the defendant has monopoly power in the
`relevant market, and (2) the defendant has willfully acquired or maintained
`monopoly power in that market. To meet the first element, a plaintiff generally must
`(1) define the relevant market, (2) establish that the defendant possesses market
`share in that market sufficient to constitute monopoly power, and (3) show that there
`are significant barriers to entering that market. The second element requires that the
`defendant engaged in willful acts to acquire or maintain a monopoly in the relevant
`market. This element requires a showing that a defendant possessing monopoly
`power undertook anticompetitive conduct and did so with an intent to control process
`or exclude competition in the relevant market.
`
`The panel held that the record did not support Dreamstime’s contention that it
`defined the relevant market to include the online, organic search market (in addition
`to the online search advertising market). Rather, by its course of conduct before the
`district court, Dreamstime waived any § 2 claim arising from the online search
`market.
`
`The panel affirmed the district court’s conclusion that Dreamstime failed to
`allege anticompetitive conduct in the online search advertising market. The panel
`
`
`** This summary constitutes no part of the opinion of the court. It has
`
`
`been prepared by court staff for the convenience of the reader.
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`

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`held that, as to Dreamstime’s allegations that Google mistreated Dreamstime as a
`Google customer, Dreamstime did not show that this mistreatment harmed
`competition in the online search advertising market, and so there was no antitrust
`injury. Allegations related to Dreamstime’s performance in Google’s unpaid,
`organic search results did not plausibly state a claim for anticompetitive conduct in
`the online search advertising market. Dreamstime’s allegation that Google
`unlawfully captured data from users and advertisers also did not state
`anticompetitive behavior.
`
`Finally, the panel held that the district court properly dismissed Dreamstime’s
`§ 2 claim with prejudice and without leave to amend.
`
`The panel addressed additional issues in a separate memorandum disposition
`filed simultaneously with this opinion.
`
`
`
`
`
`
`
`
`COUNSEL
`
`Jaime W. Marquart (argued), Donald R. Pepperman, and Brian T. Grace, Waymaker
`LLP, Los Angeles, California; James Bailey, Bailey Duquette PC, New York, New
`York; Jason A. Fischer, Bryn & Associates PA, Miami, Florida; for Plaintiff-
`Appellant.
`Jonathan M. Jacobson (argued) and Brian M. Wilen, Wilson Sonsini Goodrich &
`Rosati, New York, New York; Lauren Gallo White (argued) and Paul N. Harold,
`Wilson Sonsini Goodrich & Rosati, San Francisco, California; Kelly M. Knoll and
`Dylan J. Liddiard, Wilson Sonsini Goodrich & Rosati, Palo Alto, California; for
`Defendant-Appellee.
`Sandeep Vaheesan, Open Markets Institute, Washington, D.C., for Amicus Curiae
`Open Markets Institute.
`
`
`

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`GOULD, Circuit Judge:
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`
`
`This appeal arises from an antitrust action brought by Dreamstime.com,
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`LLC (“Dreamstime”), an online supplier of stock images, against Google LLC. In
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`short, Dreamstime alleged that Google violated Section 2 of the Sherman Act by
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`maintaining a monopoly in the online search advertising market. Dreamstime
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`asserted that Google furthered this monopoly by impeding Dreamstime’s use of
`
`Google’s paid advertising services as well as harming Dreamstime’s performance
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`on Google’s free search engine. The district court dismissed Dreamstime’s Section
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`2 claim with prejudice. The district court reasoned that Dreamstime had not
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`sufficiently alleged anticompetitive conduct in the relevant market of online search
`
`advertising. Dreamstime appeals, and we affirm.
`
`FACTUAL BACKGROUND
`
`I
`
`
`
`Google operates the most used search engine in the world. Google’s search
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`engine connects users to websites based on the search query that a user enters into
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`the search bar on Google. Google uses proprietary algorithms to interpret user
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`search queries, cross-reference Google’s index of webpages, and display a ranked
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`list of webpages to users. Google’s algorithms take into account, among other
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`things, the page’s relevance, usability, and age, as well as the user’s past behavior
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`and browser settings, to identify and rank relevant webpages. Google also operates
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`
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`2
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`

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`a search engine for images (“Google Images”) that shows relevant pictures at the
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`top of the search results. Google Images has become the largest image repository
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`in the world. Google does not charge users for its search services.
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`Instead, Google’s search services are monetized, in part, by advertising
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`revenues. Google’s online advertising service is called “Google Ads.”1 Google
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`Ads charges companies to display their ads next to the search results generated by
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`Google’s search engines as well as on other websites. When displayed next to
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`Google’s search results, these advertisements are referred to as “sponsored” or
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`“paid” search results. By contrast, the search results generated by Google’s search
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`engines—and displayed alongside these advertisements—are referred to as
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`“organic” or “free” search results.
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`II
`
`
`
`Dreamstime, a supplier of online stock images, is based in Romania.
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`Dreamstime offers a searchable repository of tens of millions of stock photos for
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`purchase as well as millions of free images. Dreamstime, for its business model,
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`relies heavily on user traffic directed to it from search engines like Google. About
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`two-thirds of Dreamstime’s customers come to its website from search results
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`generated by such search engines.
`
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`1 Google Ads was formerly known as “Google AdWords” and is, at times, referred
`to as such in the parties’ briefing.
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`
`
`3
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`

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`
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`Dreamstime began advertising on Google in 2004. In doing so, Dreamstime
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`agreed to the Google Ads Agreement, which is a prerequisite for companies to
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`advertise on Google. Among other things, this contract expressly authorized
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`Google to suspend or remove specific advertisements from its network, cancel
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`advertising accounts, and otherwise enforce Google’s advertising policies. The
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`agreement made no guarantees about how Dreamstime’s advertisements would
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`perform in either sponsored or organic search results. In 2012, Google began
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`offering Dreamstime a dedicated, European-based advertising support team.
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`Throughout its first decade as a Google Ads customer, Dreamstime ranked in the
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`top three organic search results for searches related to stock photography.
`
`III
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`
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`In 2015, Google revised the algorithm powering its search engine. This
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`revision altered the “salient terms signal,” a part of Google’s search algorithm that
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`helps generate terms associated with a webpage so that Google’s search engine can
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`find and list webpages responsive to a user’s search query. The salient terms
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`revision gave more weight to “certain words based on how the webpage displayed
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`them.”
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`
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`After Google revised its algorithm, Dreamstime’s organic search ranking
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`began to fall. Dreamstime alleges that this drop in search ranking caused its
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`number of new customers to fall 30% by April 2016. During this time,
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`
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`4
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`Dreamstime raised the issue of its declining organic search rankings to Google’s
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`advertising support team.
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`
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`In response, Google’s advertising support team recommended an external
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`Search Engine Optimization (SEO) expert to help Dreamstime address its search
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`rankings. The SEO expert concluded, in a free analysis sent to Dreamstime, that
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`the reason behind Dreamstime’s flagging search ranking was “the weak content of
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`[its] site.” Dreamstime then invested millions of dollars in an attempt to improve
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`its search ranking. Despite these efforts, Dreamstime’s organic search ranking on
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`Google continued to decline. Dreamstime’s organic search ranking on other search
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`engines did not decline during this time.
`
`
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`The parties dispute whether the revision to Google’s algorithm caused
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`Dreamstime’s organic search ranking to decline. Dreamstime contends that it did,
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`but Google has denied this claim. Both sides point to experiments that Google
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`conducted to test the algorithmic update. One experiment found the proposed
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`algorithmic revision improved the overall customer experience using Google’s
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`search engine. A second side-by-side experiment compared salient terms
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`generated for a sample of 2,300 websites before and after the proposed algorithmic
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`change. One of the sample webpages in that experiment was a Dreamstime
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`webpage, and it was rated as a “loss,” meaning that the algorithm was worse at
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`identifying that webpage’s salient terms because of the change to the algorithm.
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`
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`5
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`

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`
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`Dreamstime asserts that this result shows that Google’s changed algorithm
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`contributed to Dreamstime’s organic search ranking decline.2 Google responds
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`that the “loss” rating in the experiment only measured salient term recognition and
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`did not translate to predicting a “loss” in organic search ranking. Google
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`highlights that many other webpages—including several of its own—received
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`“loss” ratings. Google points further to notes that accompanied the algorithmic
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`revision launch stating that there was no “correlation between [the algorithmic
`
`revision] and any effect on ranking.”
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`PROCEDURAL BACKGROUND
`
`
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`Dreamstime sued Google in March 2018. It asserted four claims: (1)
`
`violation of Section 2 of the Sherman Act, 15 U.S.C. § 2, (2) breach of contract,
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`(3) breach of the implied covenant of good faith and fair dealing, and (4) violations
`
`of California’s Unfair Competition Law (“UCL”). Google moved to dismiss all
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`claims. After briefing and a hearing on Google’s motion to dismiss, the district
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`court permitted Dreamstime to file a First Amended Complaint (“FAC”).
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`Dreamstime promptly did so.
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`
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`Google again moved to dismiss. After further briefing, another motion to
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`dismiss, and an order seeking clarification from both parties, the district court
`
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`2 Dreamstime also retained an expert in this litigation who opined that the
`algorithmic revision was the “most likely cause” for the rankings decline.
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`
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`6
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`

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`granted in part and denied in part Google’s motion to dismiss. The district court
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`dismissed with prejudice Dreamstime’s Section 2 claim. The district court
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`reasoned that Dreamstime had “not plausibly allege[d] harm to competition in the
`
`relevant market” of online search advertising. However, it initially allowed
`
`Dreamstime’s remaining claims asserting state law violations to proceed. The
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`district court later dismissed Dreamstime’s remaining state law claims in Rule 12
`
`and summary judgment proceedings.
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`
`
`Dreamstime timely appeals the district court’s dismissal of its Section 2
`
`claim.3 We have jurisdiction under 28 U.S.C. § 1291, and we affirm.
`
`STANDARD OF REVIEW
`
`We review de novo the district court’s dismissal of a claim under Federal
`
`Rule of Civil Procedure 12(b)(6) for failure to state a claim. Glen Holly Ent., Inc.
`
`v. Tektronix, Inc., 352 F.3d 367, 368 (9th Cir. 2003). To survive a motion to
`
`dismiss, an antitrust complaint “need only allege sufficient facts from which the
`
`court can discern the elements of an injury resulting from an act forbidden by the
`
`antitrust laws.” Cost Mgmt. Servs., Inc. v. Wash. Nat. Gas Co., 99 F.3d 937, 950
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`(9th Cir. 1996) (citation omitted). At the motion to dismiss stage, we must accept
`
`
`3 Dreamstime also appeals the district court’s grant of summary judgment in favor
`of Google on its implied covenant and UCL claim. We affirm that decision in a
`separate memorandum disposition filed simultaneously with this opinion.
`
`
`
`7
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`

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`all facts in Dreamstime’s complaint as true. See Wojciechowski v. Kohlberg
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`Ventures, LLC, 923 F.3d 685, 688 n.2 (9th Cir. 2019).
`
`DISCUSSION
`
`
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`Dreamstime argues on appeal that the district court erred in dismissing with
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`prejudice its claim under Section 2 of the Sherman Act. Dreamstime asserts that
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`the district court mischaracterized the relevant market for this claim as only the
`
`online search advertising market. Dreamstime insists that its Section 2 claim
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`“defined the relevant market as both [the] search and search advertising” markets.
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`Dreamstime contends further that the district court also erred in concluding that
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`Dreamstime failed to allege anticompetitive conduct. Finally, and in any event,
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`Dreamstime argues that the district erred in dismissing its Section 2 claim with
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`prejudice and without leave to amend. For the reasons provided below, we
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`disagree on all three points, and we affirm.
`
`I
`
`
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`Section 2 of the Sherman Act prohibits concerted and independent action
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`that “monopolize[s] or attempt[s] to monopolize.” 15 U.S.C. § 2. A Section 2
`
`claim includes two elements: (1) the defendant has monopoly power in the relevant
`
`market, and (2) the defendant has willfully acquired or maintained monopoly
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`
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`8
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`

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`power in that market.4 United States v. Grinnell Corp., 384 U.S. 563, 570–71
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`(1966). Both elements are required. “The mere possession of monopoly power,
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`and the concomitant charging of monopoly prices, is not only not unlawful; it is an
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`important element of the free-market system.” Verizon Commc’ns Inc. v. L. Offs.
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`of Curtis V. Trinko, LLP, 540 U.S. 398, 407 (2004).
`
`
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`In the context of a Section 2 claim, monopoly power means the power to
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`“control prices or exclude competition.” Grinell, 384 U.S. at 571 (citation
`
`omitted). We have recognized that market share is perhaps the “most important
`
`factor to consider” when determining whether a defendant has monopoly power.
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`Movie 1 & 2 v. United Artists Commc’ns, 909 F.2d 1245, 1254 (9th Cir. 1990). To
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`meet the first element of a Section 2 claim, a plaintiff generally must (1) define the
`
`relevant market, (2) establish that the defendant possesses market share in that
`
`market sufficient to constitute monopoly power,5 and (3) show that there are
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`significant barriers to entering that market. See Image Tech., 125 F.3d at 1202.
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`
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`The second element of a Section 2 claim requires that the defendant engaged
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`in “willful” acts to acquire or maintain a monopoly in the relevant market.
`
`
`4 Section 2 plaintiffs must also establish standing. We need not address this issue
`because Google does not challenge Dreamstime’s standing to bring its Section 2
`claim.
`5 Generally, 65% market share is sufficient to establish that a defendant has
`monopoly power. See Image Tech. Servs., Inc. v. Eastman Kodak Co., 125 F.3d
`1195, 1206 (9th Cir. 1997).
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`
`
`9
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`

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`Grinnell, 384 U.S. at 570–71. This element is referred to as the “‘conduct’
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`element.” Image Tech., 125 F.3d at 1208. This element requires a showing that a
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`defendant possessing monopoly power undertook “anticompetitive conduct,”
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`Trinko, 540 U.S. at 407, and that the defendant did so with an “intent to control
`
`prices or exclude competition in the relevant market,” Cal. Comput. Prods., Inc. v.
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`Int’l Bus. Machs. Corp., 613 F.2d 727, 736 (9th Cir. 1979). Anticompetitive
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`conduct consists of acts that “tend[] to impair the opportunities of rivals” and “do[]
`
`not further competition on the merits or do[] so in an unnecessarily restrictive
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`way.” Cascade Health Sols. v. PeaceHealth, 515 F.3d 883, 894 (9th Cir. 2008).
`
`
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`The focus of this element is on conduct that harms “the competitive process”
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`as a whole; it is “not on the success or failure of individual competitors.” Id. at
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`902. We must “ensur[e] that [enforcing] the antitrust laws do[es] not punish
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`economic behavior that benefits consumers and will not cause long-run injury to
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`the competitive process.” Id. at 903. Indeed, anticompetitive conduct does not
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`include “growth or development” that occurs “as a consequence of a superior
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`product, business acumen, or historic accident.” Grinnell, 384 U.S. at 571.
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`Likewise, Section 2 generally does not require firms that “acquire monopoly power
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`by establishing an infrastructure that renders them uniquely suited to serve their
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`customers . . . to share the source of their advantage.” Trinko, 540 U.S. at 407.
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`10
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`
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`Section 2 permits different theories of unlawful monopolization. For
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`example, a “maintenance theory” alleges that the defendant by improper conduct
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`maintained a monopoly in one market. Image Tech, 125 F.3d at 1208. By
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`contrast, a “leveraging theory” alleges that the defendant used its monopoly in one
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`market to gain (or attempt to gain) a monopoly in a second, downstream market,
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`id., as that is also willful anti-competitive conduct.6
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`II
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`
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`One important question on appeal lies at the threshold: Did Dreamstime
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`define the relevant market for its Section 2 claim to include the online, organic
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`search market (in addition to the online search advertising market)? Dreamstime
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`maintains that it did, and that the district court erroneously focused solely on the
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`online search advertising market as the sole relevant market. This issue is critical
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`to evaluating Dreamstime’s claim that the district court erred in concluding that
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`Dreamstime did not allege anticompetitive conduct in the relevant market.
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`
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`We hold that the record does not support Dreamstime’s current contention
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`that it included online search in its definition of the relevant market. To the
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`contrary, the district court repeatedly offered Dreamstime the opportunity to define
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`the relevant market as including the online search market, and, at every turn,
`
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`6 We do not suggest that these two examples exhaust the categories of conduct that
`may support a monopolization claim.
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`
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`11
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`Dreamstime expressly disavowed any intent to do so. By such a course of conduct,
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`Dreamstime waived any Section 2 claim arising from the online search market.
`
`A
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`
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`Questions and confusion surrounded the relevant market for Dreamstime’s
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`Section 2 claim from the outset of this action. In the first paragraph of its original
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`complaint, Dreamstime defined the relevant market as the “online search
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`advertising” market and alleged that Google was carrying out a strategy that
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`“further entrench[ed] Google’s monopoly of the relevant online search advertising
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`market.” Later, the complaint repeated that “the online search advertising market”
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`was “the relevant antitrust market for purposes of this case.”
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`
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`This would seem clear enough. However, other sections of Dreamstime’s
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`original complaint muddied the waters. Other language in Dreamstime’s original
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`complaint appeared to hint at a second market—the online search market—for its
`
`Section 2 claim. Specifically, Dreamstime alleged as follows:
`
`Though the online search market and online search advertising markets
`are described separately for the sake of precision, and though the online
`search advertising market is the relevant antitrust market for purposes
`of this case, they are essentially one and the same, and Google’s
`monopoly power exists in both. In essence, Google is monetizing a
`monopoly position in online search by selling advertising on top of
`search results.
`The confusion was not lost on the district court, which endeavored to nail
`
`
`
`down the relevant market for Dreamstime’s Section 2 claim. At the hearing on
`
`
`
`12
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`Google’s motion to dismiss the original complaint, the district court asked whether
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`Dreamstime was asserting a one-market (i.e., maintenance) theory arising out of
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`the online search advertising market, or a two-market (i.e., leveraging) claim
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`arising out of markets beyond the online search advertising market (e.g., the online
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`search or stock image markets). Dreamstime responded expressly that it was “not
`
`alleging a two-market monopoly leveraging theory.” Dreamstime further
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`explained that its claim arose from its position as “a consumer of Google’s
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`AdWords services in the search advertising market.” Dreamstime specified that it
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`was “not claiming there is a downstream stock photo market that Google is trying
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`to monopolize.” Instead, Dreamstime assured the district court that it was
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`asserting a “straightforward monopoly maintenance”—i.e., one-market—claim.
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`When the district court suggested that Dreamstime’s best strategy could be to
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`pursue a two-market leveraging claim that included the market for searching online
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`images, Dreamstime expressly disavowed that it was pursuing such a theory.
`
`
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`After this hearing, the district court granted Dreamstime leave to amend its
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`original complaint in response to the arguments raised in Google’s original motion
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`to dismiss and discussed at the hearing, which Dreamstime elected to do. In its
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`FAC, Dreamstime again asserted that the relevant market for its Section 2 claim
`
`was the “online search advertising market.” But, as in the original complaint, the
`
`FAC mentioned both the online search and the online stock photo markets in
`
`
`
`13
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`detail. The question then remained whether Dreamstime was pursuing a single-
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`market claim based on the online search advertising market alone, or whether it
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`was now pursuing a two-market claim that included the online search market.
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`
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`As a result, at the hearing on Google’s motion to dismiss the FAC, the
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`district court once again asked Dreamstime to clarify the relevant market for its
`
`Section 2 claim. Dreamstime responded, “[t]he relevant market we have defined in
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`the complaint has always been the online search advertising market.” The district
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`court would again ask Dreamstime what the relevant market was for its Section 2
`
`claim. Dreamstime responded that “the restraint is taking place on Google’s search
`
`-- online search advertising website. That’s the market.” This answer prompted
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`the district court again to ask whether the relevant market included the online
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`search market “for images.” Dreamstime responded again that the market was
`
`only “online search advertising.” The district court ended the hearing by seeking
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`to eliminate any doubt whatsoever on the relevant market, asking Dreamstime as
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`follows: “Tell me again – I have to bring it to a close . . . Tell me very specifically
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`what is the market that you allege.” Dreamstime responded, “[t]he online search
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`advertising market.”
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`
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`The district court gave Dreamstime ample opportunity to clarify the relevant
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`market for its Section 2 claim. The district court issued a “Request to Plaintiff for
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`Clarification” after the hearing. Among other things, the district court explained in
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`
`
`14
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`Case: 20-16472, 12/06/2022, ID: 12603050, DktEntry: 71-1, Page 17 of 26
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`this request that it understood Dreamstime to have “forsworn any reliance” on two
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`theories: (1) that “Google leveraged its position in the market for online search
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`advertising to reduce competition in the market of online stock photography,” and
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`(2) that “Google engaged in predatory acts to monopolize the online search
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`advertising market in a specific attempt to destroy Dreamstime as a future potential
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`competitor in that market.” In addition, the district court asked Dreamstime’s
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`counsel to explain if it thought “online search advertising” meant anything other
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`than “sponsored ads featured on search engines.”
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`Dreamstime responded “yes” to the district court’s first request and clarified
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`that “Dreamstime [was] not asserting a separate” two-market leveraging claim. As
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`to whether it had forsworn the second theory, Dreamstime said it was alleging that
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`Google monopolized the “online search advertising relevant market” but
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`Dreamstime clarified that it foreswore the theory that Dreamstime was “a future
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`potential or actual direct competitor” to Google in that market. Finally,
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`Dreamstime affirmed that it “defined the relevant market (or submarket) in this
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`case for antitrust purposes as online search advertising” which included sponsored
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`ads that appear within search results as well as photo ads.
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`B
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`The record is clear: Dreamstime refused expressly and repeatedly to include
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`the online search market within its definition of the relevant market for its Section
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`Case: 20-16472, 12/06/2022, ID: 12603050, DktEntry: 71-1, Page 18 of 26
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`2 claim before the district court. It is not our role to resuscitate claims that the
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`parties expressly disavowed below. The responsibility for framing the case lies
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`with the parties. United States v. Sineneng-Smith, 140 S. Ct. 1575, 1579 (2020)
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`(“[I]n both civil and criminal cases, in the first instance and on appeal ..., we rely
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`on the parties to frame the issues for decision and assign to courts the role of
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`neutral arbiter of matters the parties present.”). We will not consider
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`Dreamstime’s claim on appeal that the district court erred by not considering the
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`online search market. In re Mortg. Elec. Registration Sys., Inc. v. Amer. Home
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`Mortgage, 754 F.3d 772, 780 (9th Cir. 2014) (“[A]rguments not raised in the
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`district court will not be considered for the first time on appeal.”); see also USA
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`Petroleum Co. v. Atl. Richfield Co., 13 F.3d 1276, 1286 (9th Cir. 1994)
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`(considering an antitrust theory waived that plaintiff “recognized was available but
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`expressly chose not to pursue” because that would impermissibly allow a “second
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`bite at the apple”). We review this case on the basis that Dreamstime litigated it.
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`We proceed on the understanding that the relevant market for Dreamstime’s
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`Section 2 claim is the online search advertising market.
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`III
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`We now consider whether the district court properly concluded that
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`Dreamstime failed to allege anticompetitive conduct in the online search
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`advertising market. Dreamstime expressly disclaimed any intent to compete with
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`Case: 20-16472, 12/06/2022, ID: 12603050, DktEntry: 71-1, Page 19 of 26
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`Google in the online search advertising market. Instead, Dreamstime’s theory is
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`that Google undertook anticompetitive conduct to damage Dreamstime’s online
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`image business to maintain Google’s monopoly in the online search advertising
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`market, which thereby harmed Dreamstime as an online search advertising
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`consumer. In its FAC, Dreamstime alleged that Google committed eight acts that
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`(individually and taken as a whole) harmed competition in the online search
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`advertising market. Those acts are as follows: (1) rigging the Google Ads bidding
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`process; (2) demoting Dreamstime’s organic search results on Google; (3) favoring
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`Google’s stock photo contractual partners, Shutterstock and Getty Images; (4)
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`selectively enforcing the Google Ads rules and terms; (5) elevating inferior stock
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`photo websites above Dreamstime in search results; (6) suspending Dreamstime’s
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`mobile application; (7) misappropriating Dreamstime’s licensed photos and
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`showing them on Google Images; and (8) unlawfully capturing data from users and
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`advertisers. For the reasons set forth below, we hold that the district court did not
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`err in concluding that the alleged actions (individually and taken together) did not
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`harm competition in the online search advertising market.
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`A
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`Four of the anticompetitive behaviors alleged by Dreamstime relate to
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`purported mistreatment of Dreamstime as a Google customer: (1) rigging the
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`advertisement auction bidding, (2) selectively enforcing its terms and rules, (3)
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`Case: 20-16472, 12/06/2022, ID: 12603050, DktEntry: 71-1, Page 20 of 26
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`removing Dreamstime’s mobile application, and (4) favoring contractual stock
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`photo partners over Dreamstime and smaller stock photo websites. These
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`allegations fall short of alleging anticompetitive conduct in the online search
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`advertising market. Google harming one of its own online search advertising
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`customers does not exclude its competitors in the online search advertising market,
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`i.e., Yahoo! and Bing. Harm to a single customer does not, by itself, constitute
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`“harm [to] the competitive process” that “thereby harm[s] consumers” as a whole.
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`Fed. Trade Comm’n v. Qualcomm Inc., 969 F.3d 974, 987 (9th Cir. 2020)
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`(emphasis added). Indeed, Google’s alleged mistreatment of customers may lead
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`harmed customers, such as Dreamstime, to spend more on paid search
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`opportunities with Google’s competitors. These allegations do not constitute
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`anticompetitive conduct.
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`Dreamstime counters that Google’s “rigged” policies and “selective
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`enforcement” of policies on Google Ads “spawns monopoly pricing.” This
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`allegation also misses the mark. Merely possessing monopoly power and charging
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`monopoly prices—without accompanying anticompetitive conduct—is not enough
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`to state a claim under Section 2. Trinko, 540 U.S. at 407. This is because the
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`“opportunity to charge monopoly prices” is a feature, not a bug, of the free market
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`system, according to the Supreme Court. Id.
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`Case: 20-16472, 12/06/2022, ID: 12603050, DktEntry: 71-1, Page 21 of 26
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`Likewise, the fact that Google entered into partnerships with Dreamstime’s
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`competitors in the online stock photo market, or that it allegedly favored those
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`contractual partners, is not anticompetitive conduct under Section 2.7 The
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`Sherman Act aims to “preserve the right of freedom to trade,” and it does not
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`infringe upon a company’s right “freely to exercise [its] own independent
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`discretion as to parties with whom [it] will deal.” United States v. Colgate & Co.,
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`250 U.S. 300, 307 (1919). Section 2 does not require Google to enter into a
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`partnership with Dreamstime like the one it has with Shutterstock and Getty
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`Images.
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`In sum, these allegations have, at most, alleged that Google mistreated
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`Dreamstime as a Google cust