Why Australian startup Unlockd is taking Google to court

One of the more promising startups coming out of the Australian scene has launched court action against Google, after the search engine giant threatened to pull the company’s app from its Android app store and cut advertising revenue through its AdMob service.

Unlockd was founded in 2014 and has over $60 million in venture capital in its pocket. Its main product offering allows Android phone users to receive rewards for viewing advertising content on their smartphones.

The company has over 330,000 users, and just last year raised one of the largest venture capital rounds of 2017, pulling in $30 million from Asian telco giant Axiata Group.

However, the startup’s future is now clouded with uncertainty after Google reportedly told the startup it would be pulling its app down from the Play Store, claiming it falls outside the marketplace’s terms of use. The search giant also stated Unlockd would no longer receive ad revenue from Google’s AdMob — a mobile app advertising monetisation service.

Unlockd’s product can only operate on Android systems, so a ban from Google would spell disaster for the startup, which was planning an initial public offering in mid-April. According to Fairfax, an IPO would have landed the company between $40 and $50 million.

“We had completed a non-deal roadshow, had significant cornerstone investor interest and were on target to launch research and our prospectus this week,” co-founder and chief executive Matt Berriman told Fairfax.

“The process will be on hold until we resolve this matter, allowing us to continue to build the great company we have been doing so uninterrupted for the last three years.”

Unlockd says it has applied for an injunction from the UK High Court to prevent Google’s actions against it, claiming Google’s threats to remove its services “represent an abuse of its dominant position and breach of competition rules”.

Fairfax also reports the Australian Competition and Consumer Commission will be taking the case into consideration as part of its broader inquiry into the competition practises of tech giants such as Google in Australia. Given Google has previously approved Unlockd’s apps, which have undergone little change since, the company claims its imminent IPO may have sparked Google into “anti-competitive” action.

“It is particularly striking that Google’s warnings emerged at a time of speculation around an Unlockd IPO in mid-April 2018. Google’s anti-competitive conduct is preventing Unlockd from raising capital to continue its rapid expansion and innovation, and therefore protecting Google from a growing and potential competitor,” the company said in a statement provided to StartupSmart.

“The IPO has been postponed pending the resolution of this matter. Notwithstanding the legal action, we continue to explore all possible avenues to find a solution that works for both parties and avoids unnecessary disruption to our partners and customers.”

In a further statement to StartupSmart, Berriman reinforced that Google’s threats to remove Unlockd’s products from the Play Store were “a reversal” from the company’s previous position, and that the startup had received written approval in the past allowing the app’s use with AdMob and giving it the green light for listing in the Play Store.

“Unlockd has not made any changes to the App that justifies a change of approach. The legal advice we have received is that Google’s actions represent an abuse of Google’s dominant market position and are intended to eliminate our innovative offering from scaling and being in a position to compete with Google,” he says.

“We believe this stifling of competition is harmful to consumers.”

However, in a statement to Fairfax, a Google spokesperson said the company had previously alerted Unlockd to the issues with its app and had provided time for the company to make changes.

“We explained our concerns to Unlockd, outlined how they could fix the problems or use alternatives, and gave them time to make changes. And despite having agreed at the outset to comply with our product policies, their app remains in infringement today,” a Google spokesman said.

*This article was updated at 10.25AM to include further comment from Berriman.

NOW READ: Why former Twitter executive Aliza Knox left the global tech giant to join Australian startup Unlockd