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Never Give Up! Never Surrender! Holomaxx's Hail Mary

4/12/11

By Ken Magill

That Microsoft is a cutthroat competitor is no secret but email marketer Holomaxx has made new allegations against the technology giant accusing it and Yahoo! of some seriously anti-competitive behavior.

The allegations—appearing in amended complaints filed by Holomaxx last week—accuse Microsoft and Yahoo! of blocking the email marketer’s messages for nefarious reasons and are believed to be the first time this particular line of attack has been taken by an email marketer suing an ISP for blocking its messages as spam.

Holomaxx sued Microsoft, Yahoo!, Return Path and Cisco Ironport Systems in October claiming the four companies wrongly blocked its clients’ commercial messages from reaching would-be recipients.

Holomaxx quickly dropped the suits against Return Path and Cisco Ironport Systems

The complaints accused Microsoft and Yahoo! of using faulty spam filtering technology and alleged that the firms were motivated by profit to block good and bad emails.

Judge Jeremy Fogel dismissed the suits on March 11, but gave Holomaxx 30 days to file amended complaints.

In the amended complaints, Holomaxx claims—among other things—that Microsoft and Yahoo! have been blocking Holomaxx’s messages because the Pennsylvania email service provider competes with Microsoft and Yahoo! for advertising dollars and the two ISPs want to knock Holomaxx out of the market.

“Microsoft is a direct competitor with Holomaxx in the marketplace for consumer email and internet advertising revenue. To this end, Microsoft serves its email users with advertising for the same products and services that Holomaxx advertises,” said Holomaxx’s amended complaint against Microsoft.

“Microsoft derives millions (and possibly billions) of yearly revenue from such advertising. For example, Holomaxx sends emails to Microsoft users advertising: work from home opportunities; online dating; special offers/coupons for restaurants like Olive Garden; consumer products; educational services and colleges; consumer loans; and internet auction services,” the complaint continued.

Holomaxx’s amended complaint also claims it charges significantly less than Microsoft for advertising the same types of products and services.

“As such, Microsoft has instituted wholesale blocking of Holomaxx commercial emails so that Microsoft can shut Holomaxx out of the market and prevent consumers requesting advertisements from Holomaxx from receiving such advertisements,” the complaint said. “Holomaxx’s advertisers are prevented from reaching Microsoft’s users and must either pay Microsoft’s higher advertising fees or be shut out of the market.”

Holomaxx made a similar allegation against Yahoo!.

“Yahoo! improperly relies on a faulty automated spam filter (“SpamGuard”) and third-party evaluation services to determine whether incoming email is spam keeping legitimate competitors like Holomaxx out of the marketplace for internet advertising to Yahoo! email users,” the complaint said.

In another new development, the amended complaints also accuse Microsoft and Yahoo! of blocking Holomaxx’s messages in breach of industry standards set by the Messaging Anti-Abuse Working Group, or MAAWG, a trade group of ISPs, telecommunications companies, anti-spam vendors and ESPs.

The move appears to be a counter to Judge Fogel’s contention in his dismissals that Holomaxx had failed to identify an industry standard that Microsoft and Yahoo! failed to meet in its filtering process.

Judge Fogel also ruled in his dismissals that Microsoft and Yahoo! qualify for protection under the Communications Decency Act, which protects ISPs from liability for “any action voluntarily taken in good faith to restrict access to or availability of material that the provider or user considers to be … objectionable.”

Holomaxx’s amended complaints didn’t address the CDC aspect of Fogel’s rulings.

Holomaxx is seeking prelimnary and permanent injunctions barring Microsoft and Yahoo! from “intercepting, deprioritizing, blocking, delaying, or interfering with emails sent by Holomaxx.”

The suits also seek compensatory and punitive damages and attorney fees.

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