With the advent of satellite-based Wi-Fi, the competitive landscape for in-flight Wi-Fi is heating up. Still, Gogo's extensive control of domestic Wi-Fi and airline fleets is a legitimate cause of competition concern.
A federal judge ruled that a consumer lawsuit against in-flight Wi-Fi provider Gogo Inc, can proceed because the plaintiffs made plausible arguments that Gogo’s market share in the U.S. is big enough to constitute an unlawful barrier to entry for new players.
Gogo sought to dismiss a second amended complaint in the lawsuit, which dates to 2012, arguing that the plaintiffs didn’t prove their contention that Gogo has an 85% market share of in-flight Internet on U.S. domestic flights, and that its contracts with airlines are relatively easy to exit.
The judge denied Gogo’s motion to dismiss the plaintiffs’ second amended complaint, which seeks class-action status.
In James Stewart, et al., v. Gogo Inc., the plaintiffs alleged that Gogo has an unlawful monopoly through exclusive contracts to be the the inflight Wi-Fi provider on U.S. domestic flights, locking up all or nearly the entire fleets of partner airlines in long-term deals.
U.S. District Judge Edward Chen in the Northern District of California noted, however, that Gogo has contracts with major carriers such as Delta, American and US Airways even if Gogo doesn’t have an agreement with Southwest and doesn’t have the entire United Airlines fleet locked up.
“Thus, it is plausible that even if not an 85% market share, Gogo has a substantial enough market share such that, together with the allegations in Plaintiffs’ complaint that there are high barriers to entry, a substantial share of the market has been foreclosed,” the judge ruled.
The judge also had little patience for Gogo’s arguments that one need just consider the case of AirTran, which terminated a contract with Gogo, to show that it is relatively easy to get out of one of Gogo’s contracts.
Judge Chen stated that in an SEC filing Gogo contended that AirTran had no right to terminate the contract, and that Gogo unsuccessfully sued AirTran to try to stop it from ending the contract when AirTran merged with Southwest.
“Accordingly, the Court concludes that Plaintiffs have alleged plausible antitrust claims for
purposes of Rule 12(b)(6) and denies Gogo’s motion to dismiss,” the judge ruled.
Gogo has 30 days to respond.
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Photo credit: Business Elite customers on Delta 747s are hooked up with in-flight entertainment and Wi-Fi.