Ninth Circuit declares that selectively banning potential competitors from accessing and using public data “may well be considered unfair competition under California law.”
On September 9, 2019, the Ninth Circuit Court of Appeals issued a decision that could have broad implications for the role of antitrust laws in the privacy sphere. In hiQ Labs, Inc. v. LinkedIn Corp., No. 17-16783, 2019 WL 4251889 (9th Cir. Sept. 9, 2019), a Ninth Circuit panel affirmed the district court's grant of a preliminary injunction in favor of hiQ, which prohibited LinkedIn from denying access to publicly available data on LinkedIn profiles.
hiQ, described by the Ninth Circuit as a competitor to LinkedIn, 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.
LinkedIn sent a cease-and-desist letter to hiQ purporting to bar hiQ from collecting additional data from LinkedIn profiles and asserting that future collection would be in violation of state and federal law, including the Computer Fraud and Abuse Act (CFAA). Rather than comply, hiQ filed suit to seek a preliminary injunction forbidding LinkedIn from denying hiQ access to the data on LinkedIn profiles.The district court granted hiQ’s preliminary injunction, and the Ninth Circuit affirmed. The Ninth Circuit agreed with the district court that hiQ had no viable way to remain in business and therefore was likely to suffer irreparable harm should hiQ cease collecting data from LinkedIn profiles. The Ninth Circuit also found that hiQ raised serious questions as to the merits of its own claims and LinkedIn’s CFAA defense and that the public interest was served by the preliminary injunction
In affirming the district court’s holding that the balance of the equities favored hiQ, the Ninth Circuit considered and rejected LinkedIn’s argument that data scraping threatened its users’ privacy. LinkedIn argued that even users who display their profile to the public likely do not consent to the collection of data by third-party scrapers. However, the Ninth Circuit disagreed, noting that LinkedIn’s own products that monitor changes to its users’ profiles arguably interfere with those users’ expectations of privacy. The Ninth Circuit warned that “[i]f companies like LinkedIn, whose servers hold vast amounts of public data, are permitted selectively to ban only potential competitors from accessing and using that otherwise public data, the result – complete exclusion of the original innovator in aggregating and analyzing the public information – may well be considered unfair competition under California law."
The developments in this case highlight the increasing likelihood of disputes regarding access to and use of data by commercial parties and the great likelihood of privacy justifications intersecting with competition policy concerns. While the decision was couched in terms of California’s unfair competition law, the reasoning of the Ninth Circuit also has antitrust implications for Big Tech companies with an interest in maintaining the privacy of user data on their sites. In rejecting LinkedIn’s privacy argument, the Ninth Circuit may have opened the door to antitrust lawsuits by plaintiffs claiming that similar limitations on the collection of publicly available data amount to an anticompetitive attempt to restrict competitors’ products. It will be important to monitor whether plaintiffs like hiQ and other data scrapers resort to antitrust claims as the next step.