DREAMSTIME.COM, LLC V. GOOGLE LLC
54 F.4th 1130
9th Cir.2022Background:
- Dreamstime, a Romania-based online stock image supplier, relied heavily on search-engine traffic (about two-thirds of customers) and advertised via Google Ads since 2004.
- In 2015 Google changed its search algorithm (salient terms signal); Dreamstime’s organic rankings on Google declined thereafter, allegedly reducing new customers by ~30% despite remediation efforts.
- Dreamstime sued Google (March 2018), asserting a Section 2 monopolization claim (among other claims), alleging Google harmed Dreamstime via actions including demoting organic results, favoring competitors (Shutterstock, Getty), selective enforcement of Ads policies, app suspension, data capture, and misusing Dreamstime images.
- The district court dismissed the Section 2 claim with prejudice for failing to plausibly allege anticompetitive conduct in the relevant market (online search advertising); state-law claims were later dismissed as well.
- On appeal the Ninth Circuit held Dreamstime repeatedly disavowed treating the broader online search market as the relevant market (waiver), and that its alleged actions did not plausibly show harm to competition in the defined online search advertising market; dismissal with prejudice was not an abuse of discretion.
Issues:
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Relevant market definition | Dreamstime contends the relevant market includes online search (organic) and search advertising. | Google argues Dreamstime defined the relevant market as online search advertising only. | Dreamstime expressly disavowed a two-market theory below and waived any claim based on the online search market; court proceeds with online search advertising market. |
| Anticompetitive conduct — customer mistreatment (auction rigging, selective enforcement, app suspension, favoritism) | These acts harmed Dreamstime as an Ads customer and spawned monopoly pricing. | Harm to a single customer or preferential contracting doesn’t show injury to the competitive process in the advertising market. | Allegations show mistreatment of Dreamstime but fail to allege conduct that harmed competition in the online search advertising market. |
| Anticompetitive conduct — organic-search effects (demotion, self-preferencing, image misappropriation) | Demotion and preferencing of Google Images impaired Dreamstime’s image business and thus harmed the advertising market. | Dreamstime disavowed relying on the online search market; alleged effects on organic results do not plausibly show advertisers were excluded from image supply or harmed competition in advertising. | Even accepting the pleaded facts, they do not plausibly allege anticompetitive conduct in the online search advertising market. |
| Aggregation/scheme and "inextricably intertwined" theory | The individual acts, when viewed together, demonstrate a scheme to maintain monopoly power in search advertising. | Separate non-actionable acts cannot be aggregated into an antitrust injury; plaintiff must allege harm to competition in the relevant market. | No synergistic anticompetitive effect when each alleged act fails to show anticompetitive injury; McCready/inextricably intertwined inapplicable absent pleaded harm to market. |
| Dismissal with prejudice / leave to amend | Dreamstime sought leave to amend. | District court previously allowed amendment and repeatedly asked Dreamstime to clarify; Dreamstime declined to pursue broader market theory. | Dismissal with prejudice was not an abuse of discretion given prior opportunities and Dreamstime’s litigation choices. |
Key Cases Cited
- United States v. Grinnell Corp., 384 U.S. 563 (monopolization elements and willful maintenance)
- Verizon Commc’ns Inc. v. Trinko, 540 U.S. 398 (monopoly possession vs. unlawful conduct; no duty to share infrastructure)
- Image Tech. Servs., Inc. v. Eastman Kodak Co., 125 F.3d 1195 (9th Cir.) (market-definition and maintenance vs. leveraging theories)
- Cascade Health Sols. v. PeaceHealth, 515 F.3d 883 (9th Cir.) (focus on competitive process, not individual rivals)
- Cont. Ore Co. v. Union Carbide & Carbon Corp., 370 U.S. 690 (antitrust injury must be judged as a whole but actionable acts required)
- Blue Shield v. McCready, 457 U.S. 465 (inextricably intertwined doctrine explained)
- Ashcroft v. Iqbal, 556 U.S. 662 (pleading standards; conclusory allegations insufficient)
- Fed. Trade Comm’n v. Qualcomm Inc., 969 F.3d 974 (9th Cir.) (antitrust injury requires harm to competitive process)
- United States v. Colgate & Co., 250 U.S. 300 (freedom to choose business partners; not unlawful per se)
- Brunswick Corp. v. Pueblo Bowl-O-Mat, Inc., 429 U.S. 477 (antitrust standing/antitrust injury principles)
- Movie 1 & 2 v. United Artists Commc’ns, 909 F.2d 1245 (9th Cir.) (market share as important factor for monopoly power)
- Cal. Comput. Prods., Inc. v. Int’l Bus. Machs. Corp., 613 F.2d 727 (9th Cir.) (no synergistic antitrust injury from individually non-actionable acts)