Facebook Faces Antitrust Suit From Advertisement-sponsored Skins Developer
Sambreel Holdings and two subsidiary companies that offered advertisement-supported skins for Facebook profile pages filed Monday an antitrust lawsuit against the social networking company in a U.S. federal court, its attorneys said.
The lawsuit charges that Facebook and third-party developers, that have their applications on Facebook, refused to deal with advertising partners that placed their ads on the browser-based PageRage application.
The social networking company also allegedly scanned computer users and demanded that they remove PageRage and the entire Yontoo platform offered by Sambreel, before accessing the Facebook site.
Sambreel in Carlsbad, California, offers software that is used to deliver advertisements. Users of the free PageRage will see additional ads placed by the company while browsing Facebook, it said on the PageRage website. These ads are not the responsibility of Facebook, it added.
Launched in October 2008, PageRage initially included the browser add-on along with an application that operated on the Facebook Platform.
By 2009, Sambreel was asked by Facebook to remove the application from its platform, according to a copy of the complaint on the website of Kotchen & Low, one of the law firms representing Sambreel in the case. Sambreel thereafter removed the application from the Facebook platform.
Facebook made it clear that it did not object to the browser add-on and even offered suggestions on how Sambreel could operate PageRage without the application, according to the complaint.
Between July 2009 and October 2010, PageRage grew significantly, to the point that it had over 1 million users per day and its revenue consistently exceeded US$1 million per month. At that point, Facebook's attitude towards PageRage changed, according to the complaint.
By the middle of July 2011, PageRage is claimed to have consistently had more than 4 million users per day. From Facebook's perspective, Sambreel had grown into a legitimate competitor in the sale of online display advertising impressions, leading Facebook by mid-2011 to allegedly boycott Sambreel's advertising partners, and demand users to remove Sambreel software, according to the complaint.
Sambreel's largest PageRage advertising partners, accounting for roughly 80 percent of the PageRage advertising revenue, are said to have ceased doing business with it.
Within two weeks of Facebook allegedly pressuring users, Sambreel is said to have lost more than one million users of its products. Facebook agreed to stop its demands on the users only after Sambreel agreed that it would no longer advertise on PageRage, and on Dec. 22 last year Sambreel took down all PageRage ads and stopped generating any revenue through PageRage, it said.
Since the start of 2012, Sambreel claims to have terminated 124 employees and contractors in San Diego County, which was more than half its workforce, stopped the development of new products, and suffered significant financial losses.
The law firm also said it filed a motion for preliminary injunction before the U.S. District Court for the Southern District of California to prevent Facebook from requiring Sambreel's advertising partners to boycott Sambreel and to prevent Facebook from scanning the computers of users, and forcing them to uninstall Sambreel's applications before they are allowed access to their Facebook accounts.
The plaintiffs hold that PageRage does not alter the programming of Facebook's computers or interact with its computers in any manner. Instead, PageRage operates by adding layers to the web browser residing on its users' computers, the complaint said. The designs added by PageRage are visible only to individuals who have installed the Yontoo Platform and enabled the PageRage application, it added.
Facebook did not immediately respond to a request for comment.
The Kelly Law Firm in Tempe, Arizona, described PageRage as adware in a blog post in October. PageRage does not make actual changes to Facebook's site itself when it changes the social networking site's appearance on participating users' computers, and merely tweaks the way that Facebook looks when using a particular browser, it said. "It appears unlikely, then, that Facebook would have any grounds for legal action against PageRage's developers," the law firm added.