Rumble, Inc. v. Google LLC et al, No. 4:2021cv00229 - Document 57 (N.D. Cal. 2022)

Court Description: ORDER DENYING 32 MOTION TO DISMISS AND TO STRIKE.Case Management Statement due by 8/23/2022. Initial Case Management Conference set for 8/30/2022 02:00 PM. The August 23rd proceeding will be held by AT&T Conference Line. The parties are a dvised that in the event of an audio problem, counsel should be prepared to attend the hearing via Zoom conference at the Courts direction. The court circulates the following conference number to allow the equivalent of a public hearing by telephone .For conference line information, see: https://apps.cand.uscourts.gov/telhrg/ All counsel, members of the public and press please use the following dial-in information below to access the conference line: Dial In: 888-808-6929Acc ess Code: 6064255The Court may be in session with proceedings in progress when you connect to the conference line. Therefore, mute your phone if possible and wait for the Court to address you before speaking on the line. For call clarity, pa rties shall NOT use speaker phone or earpieces for these calls, and where at all possible, parties shall use landlines. The parties are further advised to ensure that the Court can hear and understand them clearly before speaking at length.< P>PLEASE NOTE: Persons granted access to court proceedings held by telephone or videoconference are reminded that photographing, recording, and rebroadcasting of court proceedings, including screenshots or other visual copying of a hearing, is absolutely prohibited. See General Order 58 at Paragraph III. Signed by Judge Haywood S. Gilliam, Jr. on 7/29/2022. (ndr, COURT STAFF) (Filed on 7/29/2022)
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Rumble, Inc. v. Google LLC et al Doc. 57 1 2 3 4 UNITED STATES DISTRICT COURT 5 NORTHERN DISTRICT OF CALIFORNIA 6 7 RUMBLE, INC., Plaintiff, 8 v. 9 10 ORDER DENYING MOTION TO DISMISS AND TO STRIKE Re: Dkt. No. 32 GOOGLE LLC, Defendant. 11 United States District Court Northern District of California Case No. 21-cv-00229-HSG 12 Pending before the Court is Defendant’s partial motion to dismiss and motion to strike, 13 14 briefing for which is complete. See Dkt. No. 32 (“Mot.”), 44 (“Opp.”), 45 (“Reply”). Defendant 15 asks the Court to dismiss Plaintiff’s tying and search-dominance theories of liability and strike 16 paragraphs 34, 35, and 75-176 of Plaintiff’s First Amended Complaint. See Mot. at i. The Court 17 held a hearing on the motion, see Dkt. No. 50, and now DENIES it. 18 19 I. BACKGROUND “Since 2013, Rumble has operated an online video platform.” Dkt. No. 21 (“FAC”) ¶ 14. 20 Plaintiff alleges that “Rumble is one of the most respected independent and privately owned 21 companies in the online video platform industry and market, and its business model is premised 22 upon helping the ‘little guy/gal’ video content creators monetize their videos.” Id. According to 23 Plaintiff, “Rumble currently has more than 2 million amateur and professional video content- 24 creators that now contribute to more than 100 million streams per month.” Id. ¶ 22. Plaintiff 25 alleges that “Rumble’s success, however, has been far less than it could and should have been as a 26 direct result of Google’s unlawful anticompetitive, exclusionary and monopolistic behavior . . . .” 27 Id. ¶ 23. 28 Rumble alleges that “Google has willfully and unlawfully created and maintained a Dockets.Justia.com 1 monopoly in the online video platform market by pursuing at least two anticompetitive and 2 exclusionary strategies”: 3 First, by manipulating the algorithms (and/or other means and mechanisms) by which searched-for-video results are listed, Google insures [sic] that the videos on YouTube are listed first, and that those of its competitors, such as Rumble, are listed way down the list on the first page of the search results, or not on the first page at all. Second, by pre-installation of the YouTube app (which deters smart phone manufacturers from pre-installing any competitive video platform apps) as the default online video app on Google smart phones, and by entering into anti-competitive, illegal tying agreements with other smartphone manufacturers to do the same (in addition to requiring them to give the YouTube app a prime location on their phones’ opening page and making it not-deletable by the user), Google assures the dominance of YouTube and forecloses competition in the video platform market. 4 5 6 7 8 9 10 United States District Court Northern District of California 11 12 Id. ¶ 27; see also id. ¶ 194 (alleging that Google’s “anticompetitive and exclusionary conduct . . . 13 has included rigging its search engine algorithms such that YouTube videos will always be listed 14 first in search results and requiring pre-installation and prominent placement of Google’s 15 YouTube apps on all Android smartphones in the United States”). Plaintiff further alleges that 16 “manufacturers and carriers are beholden to Google’s Android ecosystem, which Google uses to 17 preserve its monopolies in general search, search advertising, general search text advertising and 18 the online video platform market.” Id. ¶ 147. Plaintiff alleges that Defendant’s “chokehold on 19 search is impenetrable, and that chokehold allows it to continue unfairly and unlawfully to self- 20 preference YouTube over its rivals, including Rumble, and to monopolize the online video 21 platform market.” Id. ¶ 146. Plaintiff alleges that Defendant uses various agreements with Android-based mobile smart 22 23 device manufacturers and distributors to ensure its monopoly of the video platform market. See 24 id. ¶¶ 75–89. According to Plaintiff, Defendant “requires Android device manufacturers that want 25 to preinstall certain of Google’s proprietary apps to sign an anti-forking agreement.” Id. ¶ 84.1 26 27 28 Plaintiff explains that “in general an anti-forking agreement sets strict limits on the manufacturers’ ability to make and sell Android-based devices that do not comply with Google’s technical and design standards.” FAC ¶ 84. 2 1 United States District Court Northern District of California 1 Plaintiff alleges that once an Android device manufacturer signs an anti-forking agreement, 2 Google will only provide access to its vital proprietary apps and application program interfaces if 3 the manufacturer agrees: “(1) to take (that is, pre-install) a bundle of other Google apps (such as its 4 YouTube app); (2) to make certain apps undeletable (including its YouTube app); and (3) to give 5 Google the most valuable and important location on the device’s default home screen (including 6 for its YouTube app).” Id. ¶ 85. As another example, Plaintiff asserts that “Google provides a 7 share of its search advertising revenue to Android device manufacturers, mobile phone carriers, 8 competing browsers, and Apple; in exchange, Google becomes the preset default general search 9 engine for the most important search access points on a computer or mobile device.” Id. ¶ 86. 10 “And, by becoming the default general search engine, Google is able to continue its manipulation 11 of video search results using its search engine to self-preference its YouTube platform, making 12 sure that links to videos on the YouTube platform are listed above the fold on the search results 13 page.” Id.; see also id. ¶¶ 161–72 (alleging that Google’s revenue sharing agreements allow it to 14 maintain a monopoly in the general search market and online video platform market). 15 Plaintiff alleges that Defendant uses these agreements “to ensure that its entire suite of 16 search-related products (including YouTube) is given premium placement on Android GMS 17 devices.” Id. ¶ 149. Rumble alleges that the agreements “effectuate a tie” that “reinforces 18 Google’s monopolies.” Id. ¶ 151. Specifically, Plaintiff alleges that Defendant provides “Android 19 device manufacturers an all-or-nothing choice: if a manufacturer wants Google Play or GPS, then 20 the manufacturer must also preinstall, and in some cases give premium placement to, an entire 21 suite of Google apps, including Google’s search products and Google’s YouTube app.” Id. 22 Plaintiff alleges that “[t]he forced preinstallation of Google’s apps (including the YouTube app) 23 deters manufacturers from preinstalling those of competitors, including Rumble’s app. . . . [and] 24 forecloses distribution opportunities to rival general search engines and video platforms, 25 protecting Google’s monopolies.” Id. Moreover, Plaintiff alleges that “[i]n many cases” the 26 agreements expressly prohibit the preinstallation of rival online video platforms, like Rumble. See 27 id. ¶ 87. 28 According to Plaintiff, Defendant’s “monopolist’s stranglehold on search, obtained and 3 1 maintained through anticompetitive conduct, including tying agreements in violation of antitrust 2 laws, has allowed Google to unfairly and wrongfully direct massive video search traffic to its 3 wholly-owned YouTube platform” and therefore secure monopoly profits from YouTube- 4 generated ad revenue. Id. ¶ 176. Plaintiff alleges that because “a very large chunk of that video 5 search traffic . . . should have rightfully been directly to Rumble’s platform,” Plaintiff and content 6 creators who have exclusively licensed their videos to Rumble “have lost a massive amount of ad 7 revenue they would otherwise have received but for Google’s unfair, unlawful, exclusionary and 8 anticompetitive conduct.” Id. Accordingly, Plaintiff alleges that Defendant’s conduct violates Section 2 of the Sherman United States District Court Northern District of California 9 10 Act, which makes it unlawful for any person to “monopolize, or attempt to monopolize . . . any 11 part of the trade or commerce among the several States, or with foreign nations. . . .” 15 U.S.C. § 12 2; see id. ¶¶ 55, 191–200. 13 II. LEGAL STANDARD 14 Federal Rule of Civil Procedure 8(a) requires that a complaint contain “a short and plain 15 statement of the claim showing that the pleader is entitled to relief.” Fed. R. Civ. P. 8(a)(2). A 16 defendant may move to dismiss a complaint for failing to state a claim upon which relief can be 17 granted under Rule 12(b)(6). “Dismissal under Rule 12(b)(6) is appropriate only where the 18 complaint lacks a cognizable legal theory or sufficient facts to support a cognizable legal theory.” 19 Mendiondo v. Centinela Hosp. Med. Ctr., 521 F.3d 1097, 1104 (9th Cir. 2008). To survive a Rule 20 12(b)(6) motion, a plaintiff need only plead “enough facts to state a claim to relief that is plausible 21 on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). A claim is facially plausible 22 when a plaintiff pleads “factual content that allows the court to draw the reasonable inference that 23 the defendant is liable for the misconduct alleged.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). 24 In reviewing the plausibility of a complaint, courts “accept factual allegations in the 25 complaint as true and construe the pleadings in the light most favorable to the nonmoving party.” 26 Manzarek v. St. Paul Fire &amp; Marine Ins. Co., 519 F.3d 1025, 1031 (9th Cir. 2008). Nevertheless, 27 courts do not “accept as true allegations that are merely conclusory, unwarranted deductions of 28 fact, or unreasonable inferences.” In re Gilead Scis. Secs. Litig., 536 F.3d 1049, 1055 (9th Cir. 4 United States District Court Northern District of California 1 2008) (quoting Sprewell v. Golden State Warriors, 266 F.3d 979, 988 (9th Cir. 2001)). 2 III. DISCUSSION 3 A. 4 Plaintiff pleads a single cause of action alleging Defendant violated Section 2 of the Motion to Dismiss 5 Sherman Act. “The offense of monopoly under [Section 2] has two elements: (1) the possession 6 of monopoly power in the relevant market and (2) the willful acquisition or maintenance of that 7 power as distinguished from growth or development as a consequence of a superior product, 8 business acumen, or historic accident.” United States v. Grinnell Corp., 384 U.S. 563, 570-71 9 (1966). Plaintiff defines the relevant market as the “online video platform market,” where 10 platforms “allow content creators and other consumers to upload, view, share and download video 11 content.” FAC ¶ 55. 12 Without real dispute, Plaintiff has adequately alleged a Section 2 claim. First, it alleges 13 that Defendant obtained and maintains monopoly power in the online video platform market, 14 asserting that YouTube controls 73% of global online video activity. Id. ¶ 37, 63, 193. And 15 second, Plaintiff alleges among other things that Defendant, with no valid business purpose or 16 benefit to users, designs its search engine algorithms to show users YouTube links instead of links 17 to its competitors’ sites. Id. ¶ 71; see also ¶¶ 68-74. According to Plaintiff, “Rumble and 18 consumers (e.g. content creators) are disadvantaged, and competition is harmed, in the defined 19 market because Google provides self-preferencing search advantages to its wholly-owned 20 YouTube platform as a part of its scheme to maintain its monopoly power, and to reap a 21 monopolist’s financial rewards.” Id. ¶ 74. 22 Instead, Defendant’s motion is based on the somewhat counterintuitive premise that 23 Plaintiff has pled too much. Defendant argues that Plaintiff’s amended complaint should be 24 broken into distinct theories of liability based on (1) self-preferencing, (2) tying of the YouTube 25 app to other Google apps, and (3) unlawfully dominating the search market with agreements 26 involving distribution of Defendant’s search product. Mot. at 1. Defendant does not dispute that 27 Plaintiff has adequately pled a Section 2 claim based on the first theory of liability, self- 28 preferencing, but argues that the second and third theories, tying and unlawful domination of the 5 1 search market, should be dismissed. Id. at 1-2. The only authority Defendant cites for the premise that a court can disaggregate a single United States District Court Northern District of California 2 3 Section 2 cause of action into subtheories, then scrutinize and potentially dismiss some 4 subtheories without dismissing the entire cause of action, comes from two unpublished district 5 court cases, one from the Northern District of California and another from the District of 6 Delaware. See Mot. at 3; Staley v. Gilead Scis., Inc., No. 19-cv-02573, 2020 WL 5507555, at *11 7 (N.D. Cal. July 29, 2020); see also In re Sensipar (Cinacalcet Hydrochloride Tablets) Antitrust 8 Litig., No. 19-CV-01461, 2020 WL 7022364, at *3-4 (D. Del. Nov. 30, 2020).2 Defendant does 9 not cite, and the Court has been unable to find, any Supreme Court or Ninth Circuit authority 10 ratifying this approach. And the sort of parsing urged by Defendants is at least arguably in tension 11 with the Supreme Court’s direction that Sherman Act plaintiffs “should be given the full benefit of 12 their proof without compartmentalizing the various factual components and wiping the slate clean 13 after scrutiny of each.” Continental Ore Co. v. Union Carbide &amp; Carbon Corp., 370 U.S. 690, 14 699 (1962); see also LePage’s Inc. v. 3M, 324 F.3d 141 (3d Cir. 2003). This is especially true 15 given the Ninth Circuit’s holding that “even though [a] restraint effected may be reasonable under 16 section 1, it may constitute an attempt to monopolize forbidden by section 2 if a specific intent to 17 monopolize may be shown.” California Comput. Prods., Inc. v. Int’l Bus. Machs. Corp., 613 F.2d 18 727, 737 (9th Cir. 1979) (quoting United States v. Columbia Steel Co., 334 U.S. 495, 531-532 19 (1948). Ultimately, in the absence of controlling authority supporting Defendant’s proposed 20 approach, the Court declines to reach the viability of each of the purported subtheories, given that 21 Plaintiff undisputedly has adequately pled a Section 2 claim based on self-preferencing. 22 Defendant’s motion to dismiss is accordingly DENIED.3 23 24 25 26 27 28 2 In its Reply, Defendant cites two additional authorities referencing the expense of antitrust discovery, but these cases are also not controlling, and do not support (or even discuss) the premise that a court can dismiss select subtheories within a single cause of action. See Reply at 4, Kelsey K. v. NFL Enters., LLC, 757 F. App’x 524, 527 (9th Cir. 2018) (affirming denial of discovery where “no plausible claim for relief has been pled”); Feitelson v. Google Inc., 80 F. Supp. 3d 1019, 1025 (N.D. Cal. 2015). 3 Plaintiff also contends that Defendant’s motion to dismiss is procedurally improper under Federal Rule of Civil Procedure 12(g)(2). Opp. at 19-20. However, the Court finds that the allegations in the original complaint were insufficient to place Defendant on notice of the additional theories described in the new allegations it seeks to dismiss. The Court’s finding is 6 B. Motion to Strike 1 Defendant also moves to strike paragraphs 34, 35, and 75 through 176 of the amended 2 complaint. See Mot. at 2. These paragraphs generally concern Plaintiff’s allegations that Google 3 has unlawfully achieved and continues to maintain a monopoly in the online video platform 4 5 6 market by conditioning access to its mobile operating system and Defendant’s other popular services on preinstallation of the YouTube app and in some cases “expressly prohibiting the preinstallation of any rival . . . apps (which would include the Rumble app)[.]” See FAC ¶¶ 34, 7 87. Plaintiff argues that the allegations Defendant seeks to strike relate to forms of exclusionary 8 conduct that are properly considered in adjudicating a monopolization claim, and further argues 9 that “antitrust claims are to be adjudicated as a whole, . . . not parsed into discrete pieces.” Opp. at 10 20. United States District Court Northern District of California 11 Rule 12(f) of the Federal Rules of Civil Procedure states that a district court “may strike 12 from a pleading an insufficient defense or any redundant, immaterial, impertinent, or scandalous 13 matter.” Motions to strike are “regarded with disfavor” because they are often used as delaying 14 tactics and because of the limited importance of pleadings in federal practice. Z.A. ex rel. K.A. v. 15 St. Helena Unified Sch. Dist., No. 09-CV-03557-JSW, 2010 WL 370333, at *2 (N.D. Cal. Jan. 25, 16 2010). Where there is any doubt about the relevance of the challenged allegations, courts in this 17 Circuit err on the side of permitting the allegations to stand. See id. (citing Fantasy, Inc. v. 18 Fogerty, 984 F.2d 1524, 1528 (9th Cir. 1993), rev&#039;d on other grounds, Fogerty v. Fantasy, Inc., 19 510 U.S. 517, 534, 114 S. Ct. 1023 (1994)); accord Pilgram v. Lafave, No. 12-CV-5304 GAF-EX, 20 2013 WL 12124126, at *5 (C.D. Cal. Feb. 7, 2013); Art Attacks Ink, LLC v. MGA Ent., Inc., No. 21 04-CV-1035-BLM, 2006 WL 8439887, at *4 (S.D. Cal. June 21, 2006). This is particularly true 22 when the moving party shows no prejudice and when striking the allegations will not streamline 23 24 25 26 27 28 consistent with the purpose of the federal rules, as described by the Ninth Circuit. See In re Apple iPhone Antitrust Litig., 846 F.3d 313, 318 (9th Cir. 2017) (reading “12(g)(2) in light of the general policy of the Federal Rules of Civil Procedure, expressed in Rule 1”). And to the extent Defendant could have raised its arguments in a prior motion, the Court nonetheless exercises its discretion to consider those arguments in the interest of judicial economy. See id. (quoting Banko v. Apple, Inc., No. 13–02977 RS, 2013 WL 6623913, at *2 (N.D. Cal. Dec. 16, 2013) (“Although Rule 12(g) technically prohibits successive motions to dismiss that raise arguments that could have been made in a prior motion . . . courts faced with a successive motion often exercise their discretion to consider the new arguments in the interests of judicial economy.”). 7 1 the ultimate resolution of the action. St. Helena Unified Sch. Dist., 2010 WL 370333 at *2. For the same reasons underlying the Court’s denial of the motion to dismiss, Defendant has United States District Court Northern District of California 2 3 not shown that the allegations are so redundant, immaterial, impertinent, or scandalous as to 4 justify striking them. As noted above, substantial authority suggests that, depending on the factual 5 record as it actually develops, all of the interrelated conduct alleged in the complaint could be 6 relevant to the Section 2 claim that is not being challenged in this motion. That fact alone weighs 7 dispositively against striking the allegations targeted by Defendant. Obviously, whether those 8 allegations end up being backed by sufficient evidence to survive a summary judgment motion, or 9 to warrant presentation to the jury at trial under the Federal Rules of Evidence, is a matter for a 10 later stage of the case. Accordingly, Defendant’s motion to strike is DENIED. 11 IV. CONCLUSION Defendant’s motion to dismiss and to strike is DENIED. The court SETS a telephonic 12 13 case management conference on August 30, 2022 at 2:00 p.m. The parties shall submit an updated 14 joint case management statement by August 23, 2022. All counsel shall use the following dial-in 15 information to access the call: 16 Dial-In: 888-808-6929; 17 Passcode: 6064255 18 For call clarity, parties shall NOT use speaker phone or earpieces for these calls, and where 19 at all possible, parties shall use landlines. IT IS SO ORDERED. 20 21 22 23 Dated: 7/29/2022 ______________________________________ HAYWOOD S. GILLIAM, JR. United States District Judge 24 25 26 27 28 8