LinkedIn faces a proposed class action over its alleged monopolization of the professional social networking market.
The 115-page antitrust lawsuit contends that a slew of anticompetitive conduct on the part of LinkedIn has caused premium subscribers to be overcharged and allowed the social media network to pull in “supracompetitive profits” by way of inflated subscription prices and sales of user data.
According to the suit, LinkedIn’s dominance in the professional social networking market has been protected since at least 2015 by the “powerful barrier to entry” created by the combined might of the company’s data centralization and aggregation, machine learning and artificial intelligence infrastructure, and inferred data. This barrier to entry was powerful enough to allow LinkedIn to command $26.5 billion when it was acquired in 2016 by Microsoft, the lawsuit relays, alleging the combination of the companies’ powers has greatly fortified LinkedIn’s stranglehold on the professional social networking arena.
“At the time of this Complaint, [LinkedIn’s data, machine learning, and inference barrier to entry] represents a near-insurmountable, and growing, barrier to meaningful entry in the professional social networking market, let alone entry at sufficient scale to effectively check LinkedIn’s pricing and subscription terms,” the complaint charges.
Per the case, LinkedIn’s allegedly anticompetitive conduct has ultimately harmed its own users, who have paid more for their subscriptions than they would have if a rival platform had been allowed to “serve as a price check.”
In the wake of Microsoft’s acquisition of the defendant, LinkedIn has, according to the lawsuit:
Sold premium subscribers’ data to unnamed “partners” without allowing users to opt out, which the lawsuit says “forcibly grafts a negative value feature” onto LinkedIn’s subscription product that materially harms market competition;
Deployed “sophisticated technological countermeasures” designed specifically to prevent users’ public data from being accessed by potential or actual competitors, which allows LinkedIn to maintain and fortify its grip on points of market entry; and
Aggressively integrated its “unmatched” repository of professional social networking data and powerful AI and machine-learning capabilities with Microsoft’s Azure cloud servers.
Further, the proposed class action alleges LinkedIn, either expressly or tacitly, has divided the market with its “most natural competitor,” Facebook, by way of an allegedly clandestine agreement that “apparently continues to this day.”
Per the lawsuit, a few years of quick, exponential growth at LinkedIn, credited in part to founder Reid Hoffman’s “blitzscaling” approach to rapidly growing the company based on the idea that a product is more valuable the more consumers use it, fell short of surmounting the obstacles of user engagement and monetization. The suit alleges that by the mid-2010s, as it became clear to LinkedIn that its real profit-center was rooted in user data, the company engaged in “a series of coordinated actions” to effectively weaponize its large-scale data acquisition, machine learning and AI apparatus. The goal of all this, the lawsuit says, was to not only “supercharge” profits but to erect, maintain and fortify “the barrier to entry around its business.”
According to the lawsuit, many speculated around 2015 that Facebook was secretly developing a new product called Facebook at Work as a way to compete with LinkedIn. Internally, Facebook was, at the time, “preparing for scorched earth competition with LinkedIn,” the case claims, and senior Facebook execs “scrambled” to audit every application using the platform’s APIs and categorize each by whether it was a competitive threat, the suit says.
Per the case, the fact that LinkedIn has “suffered no public problems or deprecation” in the years since Facebook prepared to go to battle against all would-be competitors “speaks volumes.”
“From April 2015 until the present, LinkedIn suffered no public problems or deprecation after Facebook privatized its APIs, indicating to some degree of certainty thata deal of some sort was in fact struck between the companies. And the other side of the equation—Facebook’s behavior—has been even more striking. Despite entering every adjacent market within its grasp, and seeking to leverage its professional social networking data and tools in products from messaging, to video, to gaming, and beyond, Facebook never entered the market for professional social networking. Even the expected Facebook at Work product, which was released under the name Workplace, had a glaring omission—it was released without any professional social networking functionality, and there was no competing subscription social networking product to rival LinkedIn. Facebook had carefully excised from its Workplace product features that would compete with LinkedIn’s professional social networking products and services.”
The lawsuit looks to represent all persons, business associations, entities and corporations who purchased LinkedIn Premium services or otherwise paid LinkedIn for any upgraded account features at any time from January 13, 2018 through the present.
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