This is one of several lawsuits filed by unfortunate Google advertisers, each claiming that Google unscrewed it from Google’s own interests. (A reminder that advertisers always feel crazy because they think they can make more customers for less money). Anti-Google lawsuits tend to cause a stir when filing because everyone likes to hate Google. and cases receive extra attention if they survive a rejection request, as they did twice – first for general reasons, then for the first change. However, these early procedural gains usually do not signal any merit. They only delay the inevitable.
Dreamstime sells photos. It had cheap organic indexing that made some money, and it bought AdWords advertising that made more money. Dreamstime was large enough to receive personal support from Google, including the actual responses to its email requests. Over time, however, organic indexing decreased, as did the conversion rate for advertising. So Dreamstime sued Google for its unfounded belief that Google had tried to screw it up.
This case started out as antitrust proceedings, but this argument fell apart. Dreamstime also claimed that Google intentionally downgraded it, but it has withdrawn it ("both sides now agree that Google didn't intentionally downgrade Dreamstime's search ranking"). After successive decisions had knocked the case out, all that remained was a breach of the implied good faith and fair dealing agreement and related claims of 17200 on the theory that "Google has fraudulently concealed the reasons behind Dreamstime's decline in search rankings, to increase his advertising revenue. "Not surprisingly, the discovery didn't produce anything damn.
The implicit covenant claim failed because the AdWords contract does not regulate organic results. Judge Alsup says: "The implicit contract cannot write any obligation or promise regarding organic search in the advertising agreement."
In relation to the 17200 claim, Dreamstime's fraud claims fail for a simple reason. Nobody on Google, neither on the advertising nor on the organic side, has ever believed that Dreamstime's ranking has dropped due to the update of the Google algorithm for outstanding terms. "Even if Google’s tests showed that an algorithm update would harm Dreamstime, Google was under no obligation to disclose this type of confidential information to its advertisers.
In both cases, Dreamstime attempted to support Google's personal support, and basically claimed that Google that respected Dreamstime led Google to exercise greater due diligence. A way to appreciate the additional love from Google that most Google advertisers want. Stay noble.
In my first blog post on this case, I wrote:
Despite the positive decision to claim the Sherman Act, this is certainly a frustrating decision for Google. Dreamstime will almost certainly lose this case at some point. By giving the case the green light for the next phase and making discoveries – including an investigation into a dismissed lawsuit – the judge ensured that the parties spent a great deal of time and money to achieve the inevitable resolution. Even if the judge technically has the right to file a motion to dismiss, this is one of the situations where Google certainly wished the judge would ask for more substantive support in the complaint. I am confident that this judge will exempt the Dreamstime case if he does not back up his allegations with credible and reasonable evidence, but he will need a lot of resources from both parties to prove this negative.
In my second blog post I wrote:
This maneuver puts Dreamstime in an probably impossible position. Google certainly didn't promise to index Dreamstime or rate it prominently. So what promise can Dreamstime implement to remedy the situation? Judge Alsup lets Dreamstime indulge in the discovery, but I think we would all be shocked if Dreamstime found a disposable smoking weapon.
And here we are. 🎯 This case lasted 2.5 years, extensive discoveries, and a constantly changing plaintiff's theory before Judge Alsup finally closed it. Judge Alsup might have skilfully handled this no-burger case, but his approach cost extra time and money.
Case quote: Dreamstime.com, LLC v Google LLC, 2020 WL 3630390 (N.D. Cal. July 3, 2020)