​​Google faces Australian probe over its treatment of advertising startup Unlockd

8 January 2019 3:17pm

3 January 2019. By James Panichi.

Allegations that Google violated Australian competition laws when it imposed restrictions on local digital startup Unlockd are being investigated by the country’s antitrust watchdog, MLex has learned.

In its December draft report into online platforms, the Australian Competition & Consumer Commission, or ACCC, revealed it was investigating an unnamed company over access restrictions imposed on a “third-party app developer” over possible violations of the country’s competition laws.

Sources have confirmed that the investigation is centering on Google’s treatment of Unlockd, a platform that allows consumers using the Android operating system to opt in to receiving targeted advertisements when unlocking their mobile devices, in return for in-kind payments.

The ACCC declined to add further detail to the wording it used in the digital-platforms draft report. The inquiry is a world-first examination of the impact of digital platforms, including Facebook and Google, on the publishing and media industries.

Unlockd is now in receivership, with Australian administrators laying the blame for the company’s insolvency squarely at the feet of Google’s plan to deny the Melbourne-based startup access to its Google Play Store and AdMob services.

“The administrators consider that the primary reason for Unlockd Australia’s failure was the unresolved dispute with Google, given Unlockd’s access to Google’s Play Store and AdMob platforms was critical to its business model,” the receivers’ report says.

Unlockd is continuing to fight Google in a UK court, accusing the US platform of an abuse of dominance and claiming it used its market clout to push out a competitor. Parallel legal action in the Federal Court of Australia was discontinued in October.

Australian court documents seen by MLex reveal Unlockd had alleged that Google violated competition and consumer laws by treating the local startup in an “inconsistent and discriminatory manner” when compared to other apps using the Google Play Store and AdMob services.

Last year's action in the Federal Court of Australia, in Melbourne, prompted Judge Mark Moshinsky to impose a temporary injunction on Google, preventing it from taking any action that would terminate or suspend Unlockd’s availability through Google Play Store or Google AdMob.

In its submission to the court, Unlockd argued that a “substantial anti-competitive purpose of Google’s conduct” could be “inferred from the effect of the conduct and from the circumstances in which the conduct has been engaged in, in defiance of reasonable and ethical commercial behavior.”

In a notice of filing dated Oct. 30, Unlockd announced it had ended its Australian court action, but didn’t provide information on why it had decided to walk away from the claims.

The Federal Court decision came just weeks after the UK’s Competition Appeal Tribunal announced its decision to extend the trial timetable to allow Unlockd additional time to secure funding for its antitrust claim.

In granting an interim injunction against Google, Judge Moshinsky said that if Unlockd were barred from the Google Play Store and AdMob services, the Australian company would lose its only means of distribution, while also being denied access to an essential source of advertising content.

“If Google...terminates supply of the Google Play Store and/or Admob services, Unlockd is unlikely to remain in existence,” Moshinsky’s judgment concludes.

The collapse of Unlockd would cause company employees — in Australia and abroad — to lose their jobs, with a substantial part of the investment in the business also lost, along with a “pipeline of commercial partnerships and future opportunities,” the judge found.

The ACCC’s draft report on platforms recommended changes to Australia’s laws to allow regulators reviewing an acquisition involving a global digital player to take into account whether the deal is designed to remove a “potential” competitor — even if present competition concerns were minimal.

ABA 2019