Unlockd vs Google: What is Google really afraid of?
As Aussie start-up Unlockd prepares to battle Google in the courts, Stocard's Radinck van Vollenhoven poses the question on everyone's lips.
This week news broke that Unlockd, one of the fastest growing Australian start-ups with high profile backers like Lachlan Murdoch and the Leibovich brothers, is delaying its IPO as it seeks an injunction against Google’s AdMob.
Google believes the Unlockd app is in breach of its AdMob and Play Store terms of service. Unlockd has secured close to $60M in funding to date in various rounds and in 2017 poached Twitter APAC boss Aliza Knox to run their Asian business.*
Unlockd appears on the verge of exiting the ‘startup phase’ and is becoming a global player with an annual revenue run rate of close to $20M, along with strategic telco partners lined up in many markets around the world.
So, what’s all the fuss about? Unlockd relies on the Android Operating System and its proprietary app to display content and ads to customers when they unlock their devices.
AdMob, Google’s mobile advertising platform, provides the delivery vehicle for these ads. It then rewards customers for viewing them, effectively passing some of this value back from advertisers to the users in exchange for their time.
The Unlockd service is not available on the iOS platform, which means that Google threatening to remove Unlockd from the Play Store and block ads through AdMob seriously impacts their ability to generate revenues and survive as a business. Ironically, Unlockd is paying Google for ads linking to their injuction statement when a user searches for ‘Google Unlockd’.
Google is no stranger to anti-trust regulation. It was ordered to pay a AUD $3.85B fine in 2017 after it was deemed that it was systematically promoting its own shopping results over other competitive services, using its dominance in search to do this.
Given that Google generates over AU$100bn in annual revenues with net income of over $12bn for 2017, this ‘relatively small’ fine from the EU would not have impacted Google financially.
But a precedent was set with the ruling, meaning that Google needs to tread lightly when engaging in behaviour that could be deemed anti-competitive.
Having worked in the digital and mobile advertising world for many years, I can empathise with the Unlockd team. What they have accomplished is no mean feat – they have successfully pioneered a new model to provide value back to a specific consumer segment of the mobile market and created a new media channel for advertisers, while at the same time offering telcos a new way of generating engagement and increasing ARPU.
Back in 2009, I helped launch a very similar media offering in the Netherlands called Blyk, which was founded by the ex-CEO of Finnish giant Nokia.
This was one of the first iterations of engagement-based rewards on mobile devices. Blyk was miles ahead of its time and we saw excellent response rates and engagement in the 16-24 demographic, but needed the scale and resources of a large telco partner to make the unit economics work.
Regardless, the question remains: why has Google threatened to remove the Unlockd apps from the Play Store?
Is it because the Unlockd app violates the Play Store and AdMob terms of service and disrupts the user experience negatively?
Or is it because Google sees Unlockd as a prime competitor to their monopolistic advertising business and is using their platform market power in mobile to muscle them out of the market, just as Unlockd prepares for their highly anticipated IPO?
Time will tell, but it will be very interesting to see how the UK High Court responds to the injunction and how the ACCC in Australia will handle these claims, given that Unlockd is an Australian headquartered business.
I certainly hope that Matt and the team from Unlockd can keep pioneering and innovating, as their business benefits the entire eco-system, from consumers to advertisers and telcos.
Google – and Facebook, in recent years – control so much of the advertising market, it would be great to see some other players finally take a slice.
Radinck van Vollenhoven is the managing director for Stocard in AU/NZ. Stocard has over 2.3 million Australian users and enables shoppers to store all their loyalty cards in one place – on their smartphones.
*[Editor’s note: Knox has since left the company.]
Aliza’s been at Cloudflare since January https://twitter.com/alizaknox/status/955690061344854016
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Interesting article. The issues Unlockd are going through highlights the problem of building a business on top of someone else’s platform.
I doubt that Google seriously sees Unlockd as any threat to their ad business. The Unlockd mechanic violates their terms of use. Whether you agree with this or not, I can’t see them having much success in the courts. Google are not blocking them over their own competing product. The only recourse is if Google misled them in the past.
Regardless of the Google issues. If the business has had investment of $60m and only has a run rate of $20m I doubt an IPO is what they need at the moment.
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The idea is interesting but people invested $60m in a platform that just shows Google ads?
The IPO will be very much delayed, if it can go ahead at all, as there will be not just the return date for the injunction but the full trial of the action which could be a year or two.
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Thanks Burman – we have updated the story to reflect this.
@LJ – not sure, let’s let the ACCC decide as they previously approved the Unlockd apps – why suddenly change tack?
http://www.afr.com/technology/.....417-h0yv7x
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.
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@John, yes, good point. It will be interesting to see what happens.
Knowing Google they rarely fully commit to anything without some self serving caveats. I suspect they will claim their approval came with T&C’s and the right to change guidelines in the future.
Given that Unlockd have some major Telco backing, surely they need to work with the telco’s to circumnavigate the PlayStore and get a hard-install on handsets. Google themselves pay telcos and handset manufacturers to carry their apps as default.
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