Background
hiQ is a data analytics company that “scrapes” data using automated bots from public LinkedIn profiles. hiQ then uses this data to develop corporate analytics tools (such as a tool that predicts when an employee might leave for another job) that it later sells to human resources departments. Recently, LinkedIn began to leverage the data available on its users’ profiles and announced a corporate analytics tool of its own, Talent Insights, that provides businesses with data about potential employees with the skills those companies are seeking. Pursuant to its user agreement with visitors to its website, which, in order to protect LinkedIn members’ privacy bars the use of bots to scrape data from profiles, LinkedIn then denied hiQ access to the data on public LinkedIn profiles.
The dispute: how public is public and related questions?
hiQ filed suit, alleging, among other things, that LinkedIn violated various antitrust laws by trying to prevent hiQ from accessing the public information on the website. Specifically, hiQ asserted claims for monopolization, attempted monopolization, and unreasonable restraint of trade. In addition, hiQ sought a preliminary injunction barring LinkedIn from denying access to publicly available data on LinkedIn profiles. The district court granted the preliminary injunction, which the Ninth Circuit Court of Appeals later affirmed, rejecting concerns raised by LinkedIn over member privacy and finding that hiQ was likely to suffer irreparable harm should it cease collecting data from LinkedIn profiles. See hiQ Labs, Inc. v. LinkedIn Corp., No. 17-16783, 2019 WL 4251889 (9th Cir. Sept. 9, 2019). Disputes about how and whether one may license information that might not otherwise be subject to copyright, trade secret, or other protections are not new, but the privacy considerations represent a novel aspect of this evolving area of acute legal concern for many data-centric enterprises.
hiQ case’s latest data-related antitrust developments
Private antitrust suits must plausibly allege a relevant market. An appropriate relevant market is one in which there is reasonable interchangeability in use between a product and substitutes. In its complaint, hiQ defined the relevant market as the “market for people analytics services,” or “a new type of predictive data analytics aimed at providing employers in-depth predictive insights into their workforce.” However, in granting LinkedIn’s motion to dismiss, the court found that the “parameters of the people analytics market – as pled – are vague,” particularly because hiQ failed to allege “what substitutes there are for people analytics products such as those offered by hiQ.” For example, the court considered whether “useful publicly available information cannot be gleaned from other sources such as ... other industry directories.” Thus, the court dismissed the antitrust claims but granted hiQ leave to amend to properly define the product market.
Beyond its failure to adequately allege a product market, the court ruled that hiQ also failed to adequately allege anticompetitive conduct. hiQ based its claims for monopolization, attempted monopolization, and unreasonable restraint of trade on the following antitrust theories:
- Unilateral refusal to deal
- Denial of essential facilities
- Lock-in, illegal tying arrangements
- Vertically arranged boycotts
- Raising rivals’ costs
- Leveraging
The court found “each theory of anticompetitive conduct implausible,” though the court permitted amendment of the claims based on unilateral refusal to deal and denial of essential facilities.
Implications
Though hiQ’s initial pleading was unsuccessful, it remains to be seen whether these defects can be remedied in an amended complaint. Moreover, this case highlights the increasing likelihood of disputes regarding the use of data by commercial parties and the potential for restrictions on data access to generate competition claims.
Client Alert 2020-548
