OAKLAND, Calif. (CN) — A federal judge allowed claims to proceed against LinkedIn from a class of users who say the company has a monopoly over the professional networking market, allowing it to charge more money for its premium service.
The plaintiffs are subscribers to LinkedIn Premium, which provides paying users with additional features on the business and employment-focused social media site. Subscriptions range from $14.99 to $99.95 per month.
Through centralized data and machine learning models, LinkedIn has amassed a trove of data that has created a powerful barrier to market entry, the plaintiffs say, staving off would-be rivals who don't stand a chance at competition without those assets.
LinkedIn goes to great lengths to protect its monopoly, the plaintiffs claim, including selling private user data through application programming interfaces to exclusive third parties known as "partners,” who agree not to compete with LinkedIn.
In their complaint the plaintiffs cited a 2019 blog post on Medium, titled "The frustrations of dealing with the LinkedIn API.”
“LinkedIn has a number of APIs, there’s the Profile-API for getting users profiles and there’s the Profile-Edit-API which can be used to send a patch of the user’s profile to update the content. In order to use the Profile-Edit-API you need to have the w_compliance permission associated with your app. The w_compliance permission is gained via LinkedIn’s partner program where an app that promises not to compete with LinkedIn or abuse the API can gain access to more data.”
The plaintiffs also relied on information from a public website discussing LinkedIn’s API agreement policies.
LinkedIn said the case should be dismissed, and argued that the blog post, which was not written by a LinkedIn employee or developer, was an “unverified source” and the plaintiffs could not rely on it to plead any monopoly claims — and that outside of the blog post the plaintiffs had not adequately pleaded that LinkedIn engaged in any anticompetitive conduct.
U.S. District Judge Haywood Gilliam Jr. ruled Thursday that there was enough on the record at this point, however, for the customers to adequately plead that LinkedIn has “no competitive check” for what prices it can charge for Premium users.
“Plaintiffs identify some of defendant’s API partners and allege that these companies, but for signing API agreements, would be well positioned to compete with defendant,” Gilliam wrote. “These facts adequately allege that defendant entered into non-compete agreements which work to ‘impair the opportunities of rivals and do not further competition.’”
With his ruling Gilliam lifted a previously issued stay on discovery in the case.
The judge wrote that LinkedIn’s argument about the blog post being an unverified source don't matter at this point because the plaintiffs have pleaded a cognizable legal theory. “Whether this theory bears out factually is for a later stage, but plaintiffs have adequately alleged it,” he wrote.
Similarly, the attempted monopolization survived because they were based on the same evidence as actual monopolization claims, the judge said, thwarting LinkedIn's argument to toss the claims because the company didn't have a “specific intent to control prices or destroy competition.”
“Plaintiffs claim that but for the non-compete agreements, there would be greater price competition in the premium product market that defendant currently monopolizes. The [first amended complaint] pleads that defendant ‘charges premium subscription prices that range from $29.99 to $99.95,’ and that ‘no general social networks provide comparable subscription products that enhance a user’s ability to access information about others on the social network.’”
According to the plaintiffs, this anticompetitive conduct allows LinkedIn to enjoy “unheard of” price stability.
“Together, these allegations adequately plead harm to competition,” Gilliam Jr. wrote.
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