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TECHNOLOGY

Google Must Answer Questions About Ad System

Antitrust Suit In Ohio Could Expose Its Nuts And Bolts

Updated at 3:08 p.m. on March 25.

A small online-mall firm has won an Ohio judge's approval to inspect the inner workings of Google's closely-held online advertising software, which its high-tech rivals say is illegally rigged to help Google and hurt its competitors.

 

The decision Wednesday by Franklin County Common Pleas Judge John Bessey rejecting Google's plea to delay discovery "gives us an opportunity to start gathering the evidence and documents that we need to prove our case... there's no limits on what we can ask for" except relevance, said Joseph Bial, a D.C.-based special counsel in the antitrust group at New York-based Cadwalader, Wickersham & Taft representing Ohio-based myTriggers.com.

"Discovery will commence immediately," he said.

The courtroom meeting was "nothing major, and certainly nothing out of the ordinary," said Google spokesman Andrew Pederson. "On discovery, it simply won't be stayed, as we had requested, so it's just a timing issue, and nothing substantive."

 

Google sued myTriggers last year, claiming non-payment of roughly $350,000 in online advertising fees. MyTriggers, which allows consumers to compare online prices for numerous items, such as office supplies, DVDs, and auto parts, then countersued, claiming violation of state antitrust laws. Google "put a company out of business, and then they tried to recover money," said Bial. The discovery "is intended to address the conduct that put myTriggers out of business." Investigators, he said, will focus on Google's "Quality Score" system, which is used to determine which company's ads are displayed.

The Ohio court case is significant because competing high-tech companies are hoping that Google becomes the target of a federal antitrust case. The company's popular software makes it the market leader in the online advertising sector, but advocates for other companies -- including Microsoft -- say it is illegally abusing its market power.

Any evidence of improper activity can be released and used by other legal teams if the judge approves, said Bial. For example, he said, last week a New York judge released information collected during pre-trial discovery about potential copyright violations by the founders of YouTube, which Google subsequently purchased. The information was discovered after Viacom filed a copyright infringement suit in March 2007.

Significantly, myTriggers' lawyers include a prominent state attorney, Stanley Chesley, as well as Rick Rule, the chief antitrust lawyer for Cadwalader. Rule has also served for many years as an antitrust lawyer for Microsoft.

 

Microsoft has much experience with antitrust charges. It was sued in May 1998 by officials in President Clinton's Justice Department who were supported by Microsoft's rivals in the high-tech sector. Microsoft's top managers evaded a potential court-ordered breakup and negotiated a settlement in November 2001. But the ordeal knocked the company off stride for several years, and helped upstarts, such as Google, establish themselves in the high-tech economy.

"Other than Microsoft is a client of our law firm, they have no involvement in this case," said Bial.

Google's advocates downplay the case. "These claims are entirely without merit, and we'll defend vigorously against them," the company said in a statement. "It's disappointing, but not surprising, to see our competitors try to use irrelevant cases to manufacture competition concerns."

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nmunro@nationaljournal.com

CLARIFICATION: This report has been changed from its original version to clarify what myTriggers' lawyers can request of Google.

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