Breaking: Canadian court rejects case against Google-Apple search deal
Competition Tribunal refuses to hear arguments in first public-interest abuse-of-dominance complaint brought under new laws
Canada’s Competition Tribunal has refused an application by an independent video game developer to kill Google’s multi-billion-dollar search deal with Apple, the first case to test new laws that allow private parties to charge large companies with abuse of dominance in the name of the public interest.
In a 46-page decision released Tuesday, Justice Andrew Little concluded that while he was open to hearing such a case in general, there were significant shortcomings in the application by the Toronto-based developer, Alexander Martin - known online as droqen - filed in June.
“Taken as a whole, this assessment of a substantial competition law dispute at the first step suggests a genuine and conceptually plausible application…” Little wrote, “but one that is not well supported by evidence at this stage. There are aspects of the filed evidence that are unsatisfactory on their face.”
The application, he wrote, did not present enough first-hand evidence and instead relied too heavily on a recent similar case involving Google and Apple in the U.S., in which it was revealed that Google has been paying Apple upward of $20 billion (U.S.) per year for making its search engine the default on iPhones and other devices.
The implications in that case were that the payments were enough to dissuade Apple - one of the few big tech companies with the resources to develop a search engine that could actually compete with Google’s - from doing so.
In his filing, Martin argued that this deal - likely in effect in Canada as well - was harming competition and therefore forcing both Canadian businesses and consumers to use Google. (Story continues below)
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Back in June, Toronto-based independent game developer Alexander Martin – known as Droqen online – filed a lawsuit against Google, charging that the company was abusing its dominance in search by paying Apple billions of dollars to make its search engine the default on iPhones and iPads.
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His request for leave to argue the case was the first to take advantage of changes to the Competition Act that, as of last June, allow private parties to bring abuse-of-dominance cases to the Competition Tribunal on behalf of the public interest. Previously, only the Competition Bureau or businesses that were directly being harmed by the alleged behaviour could do so.
Parliament changed the laws in order to give ordinary citizens and civil society groups the ability to fight back against dominant companies, and to alleviate the burden on the Bureau.
Experts have been watching this application closely on account of it being the first test of the new laws, with the biggest question being how much evidence a private individual or consumer group would need to present upfront to have the Tribunal agree to hear their case.
In his decision, Little agreed with calls - including from the Bureau - that this threshold should be somewhat lower given that private parties can’t reasonably be expected to have the resources or necessary evidence in hand to even get in the veritable door, especially when trying to take on large, deep-pocketed adversaries.
That said, he wrote that Martin’s request fell short of even that lower threshold and did not suggest ways in which the case would be argued if it were accepted:
“While the applicant testified that he is a user of Google’s general search engine in his business and for personal use, he did not provide much (if any) information about what his own evidence might be and how it could support his application… For example: does the applicant own an Apple device? If so, did it (or another device he uses) include Google as a preloaded general search engine? Has the applicant attempted to switch away from Google’s product by installing another search engine? If so, how did the attempt to switch go, and how well did the other search engine work for him or his business? In the absence of evidence on these types of issues on this leave application, I am unable to find that the applicant personally will provide any material evidence at a hearing on the merits, or a particularly useful or distinctive perspective that could assist the resolution of those issues in the proposed application.”
The Tribunal’s rejection closely follows two other applications that similarly seek to take advantage of the new laws. Over the holidays, the Samuelson-Glushko Canadian Internet Policy and Public Interest Clinic (CIPPIC), a public interest advocacy group based at the University of Ottawa, filed a request to open Apple’s App Store while the Consumers Consumer of Canada is seeking the breakup of Live Nation-Ticketmaster. (We covered both here at Do Not Pass Go over the past week)
Martin and his lawyer did not immediately return requests for comment Tuesday evening, but I’ll update this story if they do respond.
Jennifer Quaid, a law professor at the University of Ottawa who has been following this application closely, says the decision is a win for plaintiffs seeking access to the Tribunal despite the rejection.
“Justice Little’s legal interpretation of public interest follows most closely what the Commissioner argued (though it’s not identical and actually a little more generous), which is a sensible adaptation of the criteria developed by the Supreme Court for public interest in constitutional cases,” she said in an email Tuesday night.
“Justice Little’s reasons are filled with pointers and tips for future litigants - it’s clear he wants to set expectations and also provide litigants with a kind of rough map of how to navigate the leave stage. And he was clear that some cases will require more work, materials and prep at the leave stage, just as in some constitutional litigation.”
As one other person knowledgeable with the situation told me last night, someone could even try again in this same Google case, but they would now have a better understanding of what the Tribunal is expecting from them: “There is still a chance for David to slay Goliath, but he has to come correct (as the kids would say).”
Read the judgment here.
Bill C-11 needs to be repealed before any such case will be heard. Too many people in this country are too supplicant to the Americans for that to happen, though.
Justice Little’s clarification on the "lower threshold" directly addresses a major concern we saw during the legislative process.
When Bill C-59 was being debated at the House Industry committee, MPs and witnesses worried that expanding private access would clutter the Tribunal with weak claims. This decision shows those guardrails are actually working. Parliament wanted to empower citizens, but the transcripts suggest they didn't intend for the Tribunal to operate on hearsay or US court filings alone. You still need to show your own receipts to get a seat at the table.