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Mobile advertising startup Unlockd has filed legal proceedings in the United States against Google claiming it collapsed because of the tech giant’s anti-competitive behaviour.
The once high-flying Australian founded startup has filed a 69-page complaint in the state of California, in which it claims it was forced into bankruptcy as a direct result of Google banning Unlockd’s apps from its services.
“Google is no longer the idealistic startup it once claimed to be,” the complaint states. “It has acquired monopoly power in multiple digital markets, in areas ranging from online search engines to mobile application distribution, and it uses its monopoly power to strengthen its dominance and exclude its competitors, always keeping in mind its core profit driver: digital advertising. Google’s history affirms the adage that absolute power corrupts absolutely.”
Unlockd co-founder Matt Berriman has brought legal proceedings in the US against Google, seeking damages after he claimed it abused its market power to put the company out of business.Credit:Arsineh Houspian
Unlockd was founded by Matt Berriman, Craig Watt and Chris Kerrisk in Australia in June 2014 and its app displayed advertising to users on Google’s Android operating system when they unlocked their phones.
Its big name backers included Lachlan Murdoch, former Seven Group CEO Peter Gammell, Margaret Jackson, Andrew Walsh and Catch of the Day founders Hezi and Gabby Leibovich.
Unlockd’s app, valued at over $200 million, was on track for an initial public offering on the Australian Securities Exchange before Google’s ban. Unlockd claims Google’s decision to reverse previous approvals for its apps and ban them from its services led to the startup’s collapse into voluntary administration in 2018.
“Rather than complete a successful IPO Unlockd’s capital dried up, its partners severed their ties with the company, and the company was ultimately forced into insolvency proceedings around the world, including in the United States,” the complaint states.
In its complaint, Unlockd said the full import of Google’s anti-competitive conduct was only revealed when Google recently made a “substantial strategic investment” in startup Glance that operates in the same manner and in the same space as Unlockd.
“By eliminating Unlockd from the scene, Google had positioned itself to invest in and partner with a company that does nearly the exact same thing as Unlockd, without Unlockd standing in the way. So much for ‘don’t be evil’. ”
Unlockd also claims Google’s actions against it had a chilling impact on competition more broadly.
“The well-publicised story of Unlockd’s demise disincentivised other would-be rivals from attempting to provide similar innovative advertising solutions, thereby creating spillovers beyond the effect of the loss of Unlockd alone,” the complaint states.
The proceedings have come as the Australian Competition and Consumer Commission weighs up enforcement action against Google over allegations it wields too much power in the $3.4 billion digital advertising technology market to stifle rivals.
Unlockd has filed antitrust lawsuits against Google in the United Kingdom and Australia for interim injunctions, but this litigation only provided preliminary relief.
In the proceedings in the United States it is seeking damages for lost profits and future profits, pre and post judgment interest, and legal costs.
An Unlockd shareholder who wished to remain anonymous said Google’s actions destroyed the business and shareholders’ value. “Shareholder value has now been reduced to being fought out via the legal system,” they said.
In a letter to shareholders on the weekend seen by The Age and The Sydney Morning Herald, Mr Berriman said he was pleased that a litigation trust created by the American subsidiaries of Unlockd had filed for damages against Google.
“I wanted you to hear this news from me, and thank you for always believing in Unlockd and me personally, but now that the matter is in litigation, I can have no further comment.”
Mr Berriman and Google declined to comment.
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