Tyntec Inc. et al v. Syniverse Technologies, LLC

Middle District of Florida, flmd-8:2017-cv-00591

AMENDED COMPLAINT and Demand for Jury Trial, Injunctive Relief Sought against Syniverse Technologies, LLC with Jury Demand. filed by Tyntec Inc., Tyntec Group LTD.

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UNITED STATES DISTRICT COURT MIDDLE DISTRICT OF FLORIDA TAMPA DIVISION TYNTEC INC., a Delaware Corporation, and) TYNTEC GROUP LTD. f/k/a Phoenix Spring Ltd.,) a United Kingdom Corporation,)) Plaintiffs,)) v.) Case No. 8:17-cv-00591-RAL-MAP) SYNIVERSE TECHNOLOGIES, LLC, a) Delaware Corporation,)) Defendant.) FIRST AMENDED COMPLAINT AND DEMAND FOR JURY TRIAL INJUNCTIVE RELIEF SOUGHT 1. Plaintiffs tyntec Inc. and tyntec Group Ltd. f/k/a Phoenix Spring Ltd. (together "tyntec"), by and through its undersigned counsel, for its first amended complaint against Syniverse Technologies, LLC ("Syniverse"), asserts claims for (a) monopolization and attempted monopolization under Section 2 of the Sherman Act, 15 U.S.C. § 2, and (b) tortious interference with contract and tortious interference with business relations pursuant to the common law of the State of Florida. tyntec pleads and alleges as follows: I. INTRODUCTION A. Nature Of The Action 2. Syniverse is a monopolist in the U.S. inter-carrier vendor ("ICV") market. There are only three competitors in the U.S. ICV market—Syniverse, SAP, and tyntec. Each of these companies provides the platform needed to allow the subscribers of one telecommunications carrier, such as Verizon, to send text messages ("SMS" messages) and video and picture 1 723660991 messages ("MMS" messages) to the subscribers of another telecommunications carrier, such as AT&T. Syniverse has at least a 70% market share in the U.S. ICV market. 3. tyntec is the smallest competitor in the U.S. ICV market. Despite its small size, tyntec has invested millions of dollars to grow its presence in the U.S. ICV market. tyntec has attempted to compete head-on with Syniverse as a low cost competitor with superior services and solutions, and it has contracted to add twenty or more wireless carriers accounting for approximately 170,000,000 messages per month. Now, just as tyntec has made a major investment in competing fiercely against Syniverse, Syniverse has decided to use its dominant market share to force tyntec out of the U.S. ICV market. 4. tyntec and Syniverse have a mutually beneficial and profitable course of dealing. Over the course of 13 years, tyntec and its predecessor have entered into Peering Agreements (defined infra) with Syniverse and its predecessors that allowed telecommunications carriers that use Syniverse for ICV services to send SMS and MMS messages to carriers that use tyntec for ICV services. These Peering Agreements are profitable and mutually beneficial. Peering agreements, such as the ones between tyntec and Syniverse, make it easier for subscribers to send SMS and MMS messages, and have allowed text messaging to become a ubiquitous and frictionless form of communication amongst all subscribers. Without these peering agreements, it is doubtful that SMS and MMS messaging would be as popular as it is today in the United States. The Peering Agreements between tyntec and Syniverse are based on a "bill and keep" system under which tyntec and Syniverse do not charge each other for providing ICV services in the U.S. and Canada (referred to herein as the "U.S." or "United States"), but rather charge their respective customers for use of their ICV services in North America. 5. Now, Syniverse is unilaterally forcing an important change in this long-standing 2 723660991 and profitable way of doing business in the U.S. ICV market. Despite this long-standing, customary and mutually advantageous course of dealing, and without any legitimate pro-competitive justification, in a letter to counsel for tyntec, dated November 10, 2016, Syniverse first announced its intention not to renew its Peering Agreements with tyntec when the current terms of the Agreements terminate on April 7, 2017. Notably, Syniverse first moved to terminate these Peering Agreements before it knew how much traffic tyntec planned to send to Syniverse’s telecommunications customers, and even before tyntec’s current customers had the ability to send SMS and MMS messages to Syniverse’s customers. 6. Syniverse is refusing to deal with tyntec on the traditional "bill and keep" terms. Instead, Syniverse seeks to impose terms on tyntec that would force tyntec to pay it a U.S. per-message fee for carrying messaging traffic. These fees are unprecedented in the U.S. ICV market. They are comparable to or exceed the fees that Syniverse charges its telecommunications carrier customers for messaging traffic. These exorbitant fees are intended to force tyntec to leave the U.S. ICV market, and tyntec will exit the market if it is required to pay these fees. 7. Syniverse is not offering to do business with tyntec on alternate but feasible contractual terms; rather, it is offering tyntec an impossible choice. tyntec can either chose to (1) exit the market, or (2) pay Syniverse exorbitant and anticompetitive fees that are unprecedented in the U.S. ICV market that will force tyntec to leave the market. Under either option, Syniverse is not attempting to continue to do business with tyntec; it is engaging in a predatory act that will exclude tyntec from the U.S. ICV market. tyntec is willing to negotiate contractual terms with Syniverse that would allow both firms to benefit from a Peering Agreement, as is the case with the current "bill and keep" arrangement, and at the same time, not drive tyntec from the market. However, Syniverse has refused to offer any terms to tyntec that would allow tyntec to remain as 3 723660991 a competitor. 8. One critical flaw with Syniverse's proposal to impose new per use costs on tytnec (as it attempted to do with Iris) is that these fees rise each month in direct proportion to any increase in tyntec's customer base. At its core, these fees are essentially a tax or a tithe, paid only by tyntec to Syniverse. Syniverse and SAP – the other ICVs – will be able to compete without paying these high fees. This arrangement flies in the face of the course of dealing in the U.S. ICV market since 2004 and will prevent tyntec from being able to compete fairly against Syniverse and SAP. 9. Syniverse’s anticompetitive intent is unambiguous. During a January 27, 2017 meeting, Syniverse representatives specifically stated that Syniverse’s decision to terminate its peering agreements with tyntec was rooted in the fact that Syniverse did not want tyntec to be a competitor in the U.S. ICV market. Indeed, in a letter from outside counsel for Syniverse dated March 10, 2017, Syniverse makes plain its anti-competitive intent, stating that it will continue to carry traffic only for tyntec’s existing two small customers (Flyp and Shelcomm) and will not do so for any new customers, limiting tyntec’s ability to grow and compete. Specifically, the letter states "if tyntec pays such amounts into escrow, Syniverse will continue to carry tyntec’s traffic for tyntec’s two existing customers (and no new customers) pending resolution of the parties’ dispute." 10. There is no valid justification for Syniverse’s refusal to deal with tyntec. In its meetings and correspondence with tyntec, Syniverse has claimed that the SMS and MMS traffic exchanged between Syniverse and tyntec is "out of balance." This is not true. Currently, the SMS and MMS traffic between tyntec and Syniverse is balanced. Balanced traffic means that Syniverse customers are sending as many messages to tyntec customers as tyntec customers are 4 723660991 sending to Syniverse customers. This fact highlights one of the benefits that Syniverse and its carriers in fact currently derive from the existing peering arrangement with tyntec: Syniverse’s carriers are able to exchange messages with carriers that are customers of tyntec, are interested in exchanging such messages, and derive a benefit from doing so. 11. If tyntec is excluded from the U.S. ICV market, competition in that market will be harmed. There will be only two ICVs left—Syniverse and SAP. It will be virtually impossible for any company to enter the U.S. ICV market because no company can do so without first reaching an agreement with Syniverse. Without tyntec, there will be no company in the U.S. ICV market that is focused solely on providing ICV services at low prices with superior service and solutions. As a result, telecommunications carriers will pay increasingly higher prices to send text messages through Syniverse’s ICV system. 12. Continuation of this mutually beneficial course of dealing is critical to tyntec’s survival in the U.S. ICV market and the commercial success of tyntec’s business. Moreover, the ability of wireless customers to send and receive low-cost text messages depends upon the continued existence of the tyntec/Syniverse Peering Agreements. 13. Unless Syniverse is preliminarily and permanently enjoined from violating these laws and ordered to continue peering with tyntec pursuant to the terms of the Peering Agreements, tyntec (and its telecommunications carrier customers and their subscribers) will suffer immediate and irreparable harm, as discussed herein. B. The Iris Wireless Litigation 14. This is not the first time that Syniverse has attempted to push a competitor out of the U.S. ICV market. Three years ago, it was only the timely intervention of this Court that kept Syniverse from excluding tyntec’s predecessor, Iris Wireless LLC ("Iris Wireless" or "Iris") 5 723660991 from the U.S. ICV market. Iris brought claims against Syniverse, in this Court, on a nearly identical fact pattern, alleging that Syniverse’s attempt to terminate the same Peering Agreements discussed herein violated, inter alia, federal antitrust law. That case was captioned Iris Wireless LLC v. Syniverse Techs., No. 14-cv-1741-JSM-TGW (M.D. Fla.) (Moody, J.). 15. In the Iris Wireless action, like here, Syniverse attempted to use its monopoly power to destroy a smaller competitor and further increase its overwhelming market share in the U.S. ICV market. By eliminating one of its few remaining competitors (both then and now), Syniverse is plotting to raise prices to telecommunications carriers who will have no choice but to pay them. These telecommunications carriers then will pass on those costs to their customers. Today, average consumers in the U.S. pay little or nothing for something they do every minute of every day: send and receive text messages. This fact is largely due to the current peering arrangement between ICVs. If Syniverse succeeds in driving out competition from the ICV market, it will be free to raise their prices to carriers, carriers will pass through those costs to consumers, and this now free service may become charged on a per message basis. 16. On September 8, 2014, this Court held in the Iris Wireless case that Iris had properly stated claims against Syniverse for monopolization and attempted monopolization under Section 2 of the Sherman Act (the "September 2014 Ruling"). See Iris Wireless LLC v. Syniverse Techs., 49 F. Supp. 3d 1022 (M.D. Fla. 2014). 17. Following the September 2014 Ruling, Syniverse agreed to continue peering with Iris on the same bill and keep terms for the U.S. ICV market that had been in effect for more than ten years (which terms still exist in the Peering Agreements today). 18. tyntec acquired the Peering Agreements from Iris, and now Syniverse has renewed its wrongful effort to terminate those Peering Agreements to prevent its smaller 6 723660991 competitor from attempting to compete fairly in the ICV market, as discussed herein. The most compelling difference between then and now is that today Syniverse controls an even larger percentage of the relevant market that it monopolizes. II. THE PARTIES 19. Plaintiff tyntec Group Limited f/k/a Phoenix Spring Limited is a United Kingdom corporation. It is the ultimate holding company of four global operating companies, including plaintiff tyntec Inc. Plaintiff tyntec Inc. is a privately-held operating company, incorporated in Delaware, with business operations in San Francisco, California and Dallas, Texas. It carries out tyntec’s U.S. ICV business. For ease of reference, plaintiffs, tyntec Group Limited and tyntec Inc., shall be referred to as "tyntec." 20. tyntec has provided telecommunications services to tyntec customers, with specialization in the area of messaging, since approximately 2002 – i.e., for over fourteen years. 21. In June 2016, tyntec acquired substantially all of the assets of Iris Wireless, including the Peering Agreements and its existing business with the purpose of operating as an ICV in the U.S. ICV services market. tyntec provided Syniverse with written notice of its acquisition of the Peering Agreements and otherwise complied with the express assignment provisions of the Peering Agreements. 22. On information and belief, Defendant Syniverse is a privately-held company, with its principal place of business located at 8125 Highwoods Palm Way, Tampa, Florida 33647. On March 8, 2017, at Syniverse’s Fourth Quarter 2016 Conference Call, Syniverse CEO Steven Gray reported that Syniverse directly serves "84% of the world with the network that we provide today" and serves the other 16% of the world indirectly. III. JURISDICTION AND VENUE 7 723660991 23. The Court has subject matter jurisdiction over this action pursuant to 28 U.S.C. §§ 1331 and 1337, as this is a civil action arising under U.S. federal law, including federal antitrust statutes protecting trade and commerce against restraints and monopolies. The Court has supplemental jurisdiction over tyntec’s state law tort claims pursuant to 28 U.S.C. § 1367. 24. Defendant Syniverse resides in the Middle District of Florida and, accordingly, is subject to personal jurisdiction in this Court. 25. Venue is appropriate in the Middle District of Florida pursuant to 28 U.S.C. § 1391(b)(1) and 15 U.S.C. § 22, as this is the district in which the Defendant resides. IV. ADDITIONAL FACTUAL ALLEGATIONS A. The Relevant Market 26. The relevant product market is the market for ICV services. ICV services allow subscribers using one telecommunications provider’s network to send SMS and MMS messages to another telecommunications provider’s network. ICV services requires hardware and technical know-how. An ICV company must be able to provide robust and dependable ICV services. In 2015 alone, U.S. telecommunications subscribers sent 1.89 trillion SMS messages and 218.5 billion MMS messages. Therefore, ICV services are not reasonably interchangeable with any other telecommunications services. 27. There are high barriers to entering the U.S. ICV services market. These barriers include providing the technology necessary to create an ICV hub, signing agreements with telecommunications carriers, and entering into peering agreements with other U.S. ICVs. 28. The relevant market for ICV services is also highly concentrated. Currently, only three companies provide ICV services in the United States: Syniverse, SAP, and tyntec. 29. Although it is theoretically possible for wireless carriers to directly connect with one another instead of contracting for ICV services, no telecommunications carrier has attempted 8 723660991 to create such direct connections in the last ten years. Indeed, setting up direct connections between each telecommunications carrier would require substantially more contractual relationships between each telecommunications carrier. By partnering with an ICV, a telecommunications provider avoids these costs and simplifies SMS and MMS interconnectivity by enabling each carrier to maintain only a single relationship with an ICV. 30. The relevant geographic market is the United States and Canada (referred to herein as the "United States" or the "U.S."). While it is theoretically possible for a foreign ICV to enter the U.S. market for ICV services, no foreign ICV has successfully entered the U.S. market in the last ten years. B. Syniverse Has Monopoly Power In The U.S. Market For ICV Services 31. Syniverse has monopoly power in the U.S. market for ICV services, or, at the very least, a dangerous possibility of acquiring monopoly power in that market. Syniverse has at least a share of 70% or more in the U.S. market for ICV services. 32. Syniverse also has the power to exclude competitors and increase prices. As explained in more detail below, Syniverse is actively engaged in a scheme to exclude tyntec from the U.S. market for ICV services. C. The Development Of The U.S. ICV Market and The Established Bill and Keep Interconnection Practice 33. There are more than eighty-five wireless carriers operating in the United States, each of which is subject to the Communications Act of 1934, as amended (the "Communications Act"). 34. In the Communications Act’s nascent years, pioneering wireless operators employed varied technologies, the effect of which was to prevent interconnecting with a consumer subscribed to another carrier. Thereafter, as wireless communication caught on and 9 723660991 gained popularity, approximately in the 2001-2002 time period, these wireless carriers realized the economic importance of seamless interconnection with other carriers. The carriers came to the conclusion that all subscribers, no matter their carrier, ought to be able to communicate through text messages and otherwise with subscribers of other carriers. Without such interconnectivity, subscribers would be deprived of the full benefits of wireless services. The carriers recognized the benefits and efficiencies associated with uninterrupted interconnection among all wireless carriers and their subscribers. 35. At the same time, the carriers learned that achieving SMS and MMS interconnectivity presented serious technological and cost issues. To overcome these significant obstacles, ICVs emerged to develop and operate ICV services for the benefit of their telecommunications customers. As a consequence, a relevant market for ICV services in the United States developed and continues to exist today. 36. For more than fifteen years, ICVs have provided one another with peered connections, at no charge, through agreements that have been honored without interruption, and have been renewed automatically. 37. This course of dealing includes a reciprocal "bill and keep" arrangement for inbound messages from other ICVs and for outbound messages to other ICVs. As noted above, "bill and keep" refers to an arrangement in which neither of two interconnecting networks charges the other for terminating traffic that originates on the other network. Instead, each ICV recovers from its own subscribers the cost of both originating traffic that it delivers to the other network and terminating traffic that it receives from the other network. Under this longstanding approach, each ICV has earned its profits by charging fees to the carriers to which it provides interconnectivity. The telecommunications carriers pay the ICVs for their services but the ICVs 10 723660991 do not pay each other for connecting messages. This bill and keep model means that ICVs, such as tyntec and Syniverse, each bill their own carrier customers and keep all of the proceeds of that revenue. On information and belief, ICVs never have and currently do not share revenue with each other. 38. Peering without charge is the foundation upon which the ICV business has been able to develop. No ICV would be competitive if required to pay other ICVs for peering services while a competing ICV enjoyed services at no cost. The ICV owners built their businesses by investing millions of dollars in reliance on the mutually-beneficial and profitable effects of bill and keep peering. Indeed, each ICV became more valuable by being part of a larger mutually interconnected universe. 39. Currently, as a result of various acquisitions (discussed further below) there are only three ICVs operating in the United States: Syniverse, tyntec and non-party SAP. 40. The following graphical depiction provides a visual illustration of the relationships between these three ICVs and their telecommunications carrier customers: Syniverse Syniverse SAP SAP Customers Customers tyntec (ICV) tyntec Customers 41. As is evident from the above diagram, in order for each of the ICVs to effectively provide services to their telecommunications carrier customers, and ultimately the individual 11 723660991 mobile phone users, the ICVs must have direct connection to one another’s networks. tyntec’s customers cannot communicate with Syniverse’s customer base without access to Syniverse’s network through Syniverse’s peering services. This arrangement is mutually beneficial to both parties to the peering arrangement. For instance, Syniverse’s relationship with tyntec allows Syniverse’s customers to reach tyntec’s customers and thus improves the value of Syniverse’s service. D. ICV Competition, Evolution, and Acquisitions 42. Since ICVs began operating in about 2001, numerous ICVs have competed to provide interconnection services to telecommunications carriers in the United States. Over time, certain ICVs acquired other ICVs or their assets and continued their functions. 43. At its inception in 1987, Syniverse was owned by GTE and called GTE Telecommunications Services. Later, when GTE was sold to Verizon, the company was renamed TSI Telecommunications. Thereafter, the company was sold to a private equity group, had its name changed to Syniverse Technologies, went public, and went private again in 2011. 44. Syniverse entered the ICV market in or around 2004. On information and belief, Syniverse’s business has developed through various other acquisitions, including the 2006 acquisition of Interactive Technology Holdings, Billing Services Group’s financial clearing business in 2007, VeriSign, Inc.’s mobile messaging division in October 2009, MACH in 2013 (which acquisition, upon information and belief, occurred after Syniverse prevented MACH from entering the U.S. market itself), and Aicent in 2014. 45. On information and belief, Syniverse has invested millions of dollars in its ICV business. 46. On information and belief, non-party SAP entered the ICV market through its 12 723660991 acquisition of Sybase in May 2010. Prior to that acquisition, in November 2006, Sybase acquired Mobile365, which had been formed by the merger of Mobileway and Inphomatch in September 2004. 47. On information and belief, SAP has invested millions of dollars in its ICV business. 48. As noted above, in June 2016, tyntec, via its parent company tyntec Group Limited (f/k/a Phoenix Spring Limited) acquired Iris Wireless’ U.S. ICV business by virtue of its acquisition of the Peering Agreements. At this same time, tyntec also acquired Iris Wireless’ peering agreement with SAP (the "SAP peering agreement"), which together constituted substantially all of the assets of Iris Wireless. tyntec also took over Iris’s existing business. 49. tyntec has invested millions of dollars in its ICV services business, keeping the assets it acquired from Iris Wireless functioning in order to maintain, preserve and enhance the presence of a third "hub" in the U.S. ICV services market. 50. Today, as a result of the various acquisitions described above, there are only three ICVs left in the United States: Syniverse, SAP and tyntec. There are no suitable substitutes for ICV services available to the telecommunications carriers. There have been no new entrants into the ICV market in years and there are substantial barriers to entry. 51. The terms of the Peering Agreements, which have been in existence for over a decade, are consistent with the long-standing norm among participants in the U.S. ICV market, in that they involve a bill and keep revenue model whereby Syniverse and tyntec do not charge each other for carrying messaging traffic, but where Syniverse and tyntec generate revenue by billing their respective telecommunications carrier customers and keeping the proceeds. The Peering Agreements also contain automatic renewal provisions whereby the terms of the Peering 13 723660991 Agreements automatically renew for successive one year periods unless validly terminated. 52. The SAP peering agreement, which has also been in existence for years, and which tyntec acquired from Iris Wireless, likewise includes a bill and keep arrangement and an automatic renewal provision. 53. Notably, since tyntec’s June 2016 acquisition of the SAP Agreement, SAP (unlike Syniverse) has been cooperative with tyntec, has honored the terms of the SAP peering agreement, and has facilitated the Iris-to-tyntec transition so that there would be no interruption in the course of dealing that SAP and Iris (now tyntec) have enjoyed for years. 54. SAP, unlike Syniverse, is not attempting to terminate its mutually beneficial peering arrangement with tyntec. 55. On information and belief, Syniverse and SAP peer with each other on "bill and keep" and other terms that renew automatically. 56. Thus, presently, all of the three ICVs remaining in the U.S. (Syniverse, SAP and tyntec) peer with each other at no charge. 57. This arrangement has been beneficial to Syniverse because it enables Syniverse to offer its telecommunications carrier customers the capability to have their subscribers interconnect with subscribers of carriers that use the services of other ICVs. This also has been profitable to Syniverse because it enables Syniverse to collect substantial fees from the carriers with which it has contracts. In particular, Syniverse collects a fee from its carrier customers for each message sent from a subscriber of one of its carriers to a subscriber of another ICV’s telecommunications carrier customer. E. The Course Of Dealing Between tyntec and Syniverse 58. tyntec and Syniverse provide ICV services to different telecommunications 14 723660991 carriers. Thus, the subscribers of tyntec’s telecommunications carrier customers can reach the subscribers of Syniverse’s telecommunications carrier customers through the exchange of ICV services between tyntec and Syniverse. 59. The exchange of ICV services between two ICVs is known as a "peering" arrangement. ICVs "peer" with one another, without charging each other for providing reciprocal ICV services, through agreements that are continuous, uninterrupted and renewed automatically. The reciprocal connection that ICVs provide each other is referred to as a "peered connection" in the CTIA’s newly-published manual entitled "Messaging Principles and Best Practices" (formerly known as the SMS and MMS Interoperability Guidelines). 60. tyntec and Syniverse currently have a peered connection arrangement, the terms of which are governed by the two Peering Agreements that tyntec acquired from Iris Wireless: (1) the MMS Interworking Services Agreement Between Syniverse and Iris Wireless; and (2) the Wireless Peer-To-Peer Messaging Peering Services Agreement Between Syniverse and Iris Wireless, both dated April 7, 2015 (together the "Peering Agreements"). 61. As set forth in the Peering Agreements, the current course of dealing between tyntec and Syniverse (per the industry custom) includes the exchange of inbound and outbound SMS and MMS text messages (SMS stands for "Short Message Service," commonly called a text message; MMS stands for "Multimedia Messaging Service," which enables pictures, video, and audio to be sent from one device to another). Consistent with all customary peered connection arrangements, both tyntec and Syniverse derive revenue, not by directly charging each other for carrying each other’s messaging traffic, but by charging fees to the respective telecommunications carriers to which they provide interconnectivity. This is known as a "bill and keep" business model. 15 723660991 62. Syniverse and its predecessors have provided peered connection services to tyntec and its predecessor (Iris Wireless) on "bill and keep" terms, as contemplated by the Peering Agreements, since 2004 (i.e., more than twelve years). Indeed, the Peering Agreements were in existence even prior to Syniverse’s entry into the market in or around 2004. F. Syniverse Is Unilaterally Terminating Its Course Of Dealing With tyntec 63. On November 10, 2016, Syniverse first notified tyntec of its intent to terminate the Peering Agreements. In this letter, Syniverse stated that if tyntec "desires to receive messaging services from Syniverse after April 7, 2017, we will be happy to provide [tyntec] with our current standard message aggregator agreement," proposing to treat tyntec like a customer of Syniverse rather than a competing ICV. On December 14, 2016, Syniverse formally notified tyntec that it would no longer "peer" with tyntec on a bill and keep basis and would break with longstanding precedent by not renewing the terms of the Peering Agreements upon their expiration in April 2017. 64. tyntec has since learned, as noted above, that Syniverse will refuse to carry tyntec’s messaging traffic unless tyntec pays Syniverse fees for carrying that messaging traffic in the U.S.—fees that Syniverse does not charge to SAP in the U.S., and fees that SAP does not charge either tyntec or Syniverse in the U.S. 65. The fees that Syniverse seeks to charge tyntec are the sort of fees that Syniverse would charge a customer for carrying traffic. Indeed, the fees Syniverse has proposed charging tyntec are actually higher than the customer fees that would be acceptable to telecommunications carriers in that market. 66. Thus, Syniverse intends to fundamentally change the nature of its business relationship with tyntec by treating tyntec like (or worse than) a telecommunications carrier customer (which tyntec is not) rather than as a fellow ICV and peering partner. Charging these 16 723660991 unprecedented fees cannot be justified and will force tyntec out of the market. tyntec and Syniverse both provide the same services (ICV services) to the same customers (regulated telecommunications providers) and there is no justification for treating tyntec as an "aggregator." 67. Syniverse’s refusal to maintain a peered connection with tyntec would make it impossible for tyntec to remain competitive in the U.S. ICV market. 68. tyntec would disappear from the market altogether, thus enabling Syniverse to demand even higher fees from carriers, which would have only one other option, SAP— assuming that Syniverse does not then use the same tactic to eliminate SAP. 69. Syniverse’s specific intent is to unilaterally terminate a voluntary, beneficial, and profitable multi-year course of dealing in order to achieve an anticompetitive end—the destruction of tyntec—even at the risk of degrading Syniverse’s own service in the short run by jettisoning its connectivity with tyntec and the subscribers that tyntec delivers. 70. The result would be to leave telecommunications carriers in the United States with only two ICVs to compete for their business—Syniverse and SAP. And, if Syniverse eliminates SAP, telecommunications carriers would be left with no choice at all—only Syniverse. This would leave Syniverse with the unrestricted ability to raise prices in the long run. 71. tyntec has made reasonable requests that Syniverse reconsider its decision to terminate the Peering Agreements. tyntec’s CEO sought a meeting with Syniverse’s CEO to discuss renewal of the Peering Agreements, but this request was rejected. 72. Syniverse agreed to participate in a VP-level meeting with tyntec, on January 27, 2017, to discuss the Peering Agreements, Syniverse’s termination notice and the future of the tyntec/Syniverse business relationship ("January 27 Meeting"). 73. During the January 27 meeting, Syniverse representatives specifically stated that 17 723660991 Syniverse’s decision to terminate the Peering Agreements was rooted in the fact that Syniverse did not want tyntec to be a competitor in the ICV market. On information and belief, Syniverse does not want tyntec to have the ability to attract, and possibly convert, any of Syniverse’s existing customers by offering them ICV services at competitive prices. 74. Even before its attempt to terminate the Peering Agreements, Syniverse has, at every turn, made it difficult for tyntec to do business in the U.S. market. For example, after tyntec acquired the Peering Agreements from Iris Wireless, Syniverse took approximately five months to take tyntec "live" on the Syniverse network and neglected to provide tyntec the technical and other approvals it needed to bring telecommunications carriers and their customers on line. Similarly, when tyntec attempted to connect a new carrier, Syniverse employed delay tactics designed to frustrate tyntec’s ability to service its customers and to interfere with those customer relationships for its own benefit. For example, Syniverse has exceeded, for no legitimate reason, the contractual maximum number of days to connect a new tyntec customer and thereby improperly prevented the subscribers of tyntec’s customers from exchanging messages with the subscribers of Syniverse’s telecommunications carrier customers. 75. Syniverse is flexing its dominant market share muscle to drive a smaller competitor out of the ICV market, for the purpose and with the specific intent of reducing competition, achieving and maintaining monopoly power, and enabling itself to raise prices and foreclose competition. G. Syniverse’s Historical Pattern Of Similar Conduct Designed To Eliminate Competitors 76. Syniverse’s maintenance of monopoly power in the U.S. ICV market cannot be explained by Syniverse having a superior product, Syniverse’s business acumen, or historical accident. Instead, Syniverse’s maintenance of its monopoly position in the U.S. market for ICV 18 723660991 services is due to anticompetitive conduct, including delaying interconnections, refusals to deal, and other tactics alleged herein, designed to foreclose competition. In short, Syniverse is no "innocent monopolist." 77. For example, in July 2011, Syniverse demanded that Iris, which at the time had a much smaller share of the market, begin paying Syniverse 1.5 cents per text message for every message above a Syniverse-devised threshold. This proposed change would have reversed a long-established course of business among the ICVs, raised rival Iris’s costs, and destroyed the company’s ability to compete against other ICVs. 78. Meanwhile, Syniverse also spread the word among Iris’s customers that Syniverse would no longer honor its existing agreement with Iris. On information and belief, Syniverse also offered to provide free ICV services to Iris’s largest customer, Metro PCS, if Metro PCS would move its business from Iris to Syniverse. 79. Iris filed suit against Syniverse and, on September 8, 2014, after the case was transferred to this Court from federal court in Virginia, Judge Moody denied Syniverse’s motion to dismiss Iris’s claims under Section 2 of the Sherman Act, 15 U.S.C. § 2. 80. Subsequently, Iris Wireless’ case against Syniverse was settled, with Syniverse agreeing to renew its Peering Agreements with Iris on the same bill and keep terms that had been in existence for over ten years in the U.S. ICV market. 81. However, despite Syniverse’s agreement to renew the Peering Agreements, Syniverse’s predatory and anticompetitive conduct directed at Iris Wireless and its customers (discussed above) caused Iris’s business to falter. The impact of Syniverse’s conduct on Iris’s business was compounded by: (i) Syniverse’s termination of the peering agreements with Iris during the pendency of the litigation, which caused some of Iris’ customers to seek ICV services 19 723660991 from other providers, such as SAP; and (ii) Syniverse’s lack of cooperation following the litigation settlement, whereby Syniverse refused to restore interconnection for certain Iris Wireless customers, making it impossible for Iris to successfully "onboard" those customers. H. Syniverse’s Conduct Will Cause tyntec Irreparable Harm 82. As discussed above, tyntec invested millions of dollars in acquiring Iris’s Peering Agreements in order to revive and preserve the existence of a third hub in the U.S. ICV market. 83. Syniverse’s refusal to continue a "peered connection" arrangement with tyntec on customary bill and keep terms would destroy tyntec’s ability to compete against Syniverse or to compete in the ICV market at all. 84. As Syniverse knows, tyntec recently signed a contract to provide ICV services to Shell Communications ("Shelcomm"), a telecommunications carrier registered with the Commercial Mobile Radio Services Board and licensed with the FCC pursuant to 47 CFR §§ 20.9 & 22.501 et seq. Shelcomm is classified as a CMRS telecommunications provider under tyntec’s Peering Agreements with Syniverse. 85. If tyntec is unable to continue peering with Syniverse under the current terms of the Peering Agreements, tyntec will not be able to honor the terms of its contract with Shelcomm, and Shelcomm will have no choice but to do business with an ICV other than tyntec, namely Syniverse itself or SAP. 86. In addition, and as Syniverse is likewise aware, tyntec currently provides ICV services to the telecommunications company Flyp, Inc. ("Flyp"). Flyp is classified as a non-CMRS telecommunications provider under tyntec’s Peering Agreements with Syniverse. 87. If tyntec is unable to continue peering with Syniverse under the current terms of the Peering Agreements, tyntec will be unable to honor the terms of its contract with Flyp, and 20 723660991 Flyp will have no choice but to do business with an ICV other than tyntec, namely Syniverse itself or SAP. 88. tyntec recently signed a contract to provide ICV services to more than twenty (20) wireless carriers (the "Twenty Carriers") affiliated with TNS, a company that supplies service providers with networking, integrated data and voice services, and telecommunications network solutions. These Twenty Carriers include Cable & Cellular Communications, Vitelcom Cellular, Cellular Properties, Union Telephone, West Central Wireless, Viaero Wireless, Carolina West, Appalachian Wireless, Leaco Rural Telephone, United Wireless, Dekalb Telephone, Cross Wireless, Pioneer Cellular, Flat Wireless, Hawkeye Switching, Ice Wireless, Evolve Cellular, Thumb Cellular, and Lynx. tyntec plans to provide ICV services to the first of these carriers in May 2017 and expects to provide ICV services to all of the Twenty Carriers within the next 6-12 months. When fully active, the Twenty Carriers will send up to 160 million SMS messages and 12 million MMS messages each month. Each of these carriers is classified as a CMRS telecommunications provider under tyntec’s Peering Agreements with Syniverse. 89. If tyntec is unable to continue peering with Syniverse under the current terms of the Peering Agreements, tyntec will be unable to honor the terms of its contract with the Twenty Carriers, and the Twenty Carriers will have no choice but to do business with an ICV other than tyntec, namely Syniverse itself or SAP. 90. In addition to tyntec’s existing customer contracts, several telecommunications carriers have indicated their desire to purchase messaging services from tyntec and are negotiating contracts with tyntec. 91. If Syniverse refuses to honor the longstanding arrangement with tyntec, tyntec’s current and prospective customers will be forced to seek the services of other ICVs, namely 21 723660991 Syniverse itself or SAP, and at higher prices. If this occurs, tyntec will suffer irreparable and incalculable damage to its reputation in the ICV market and will lose the goodwill that it has built up and continues to cultivate with existing and prospective customers. 92. In sum: (i) Syniverse’s recent refusal to renew the Peering Agreements and its unwillingness to maintain a peered connection with tyntec on "bill and keep" terms; (ii) Syniverse’s contemporaneous statements to tyntec; and (iii) Syniverse’s prior, nearly identical, and ultimately successful effort to drive Iris Wireless from the ICV market all demonstrate that Syniverse’s goal is to drive tyntec, a smaller competitor, out of the ICV market, for the purpose and with the specific intent of reducing competition, achieving and maintaining monopoly power, and enabling itself to raise prices and foreclose competition. 93. As discussed above, Syniverse, which commands at least 70% of the ICV market, has used its monopoly power to destroy smaller competitors and decrease competition. Alternatively, to the extent Syniverse does not already possess monopoly power, there is a dangerous probability that Syniverse will achieve that power if left unchecked. 94. tyntec has no adequate remedy at law and will be irreparably harmed unless Syniverse is enjoined from refusing to continue the current bill and keep peering arrangement with tyntec. 95. The harm to tyntec is immediate because Syniverse is undermining tyntec’s ability to attract and retain carriers as customers. Further, if the Peering Agreements are allowed to expire on April 7, 2017, tyntec’s customers will lose the ability to interconnect with Syniverse’s customers and will be forced immediately—or even preemptively—to seek the services of another U.S. ICV. 96. The harm to tyntec is also irreparable, because there is no way fully to measure all 22 723660991 of the business that tyntec is losing as a result of Syniverse’s threats, and because tyntec’s entire U.S. operation will be destroyed if tyntec cannot peer with Syniverse on customary bill and keep terms. The only way to make tyntec whole is to prevent the harm from being inflicted in the first place. I. Syniverse’s Conduct Will Harm Competition 97. If allowed to continue, Syniverse’s refusal to deal will harm competition in the U.S. market for ICV services. tyntec is an actual competitive threat to Syniverse. Because tyntec is focused solely on providing ICV services, it can provide ICV services at a lower cost with better solutions and service; its goal is to win telecommunications providers from Syniverse and SAP by competing fiercely on services, solutions, and price. 98. If tyntec is excluded from the U.S. market for ICV services telecommunications, providers will be harmed because these carriers will have no choice but to do business with an ICV other than tyntec, namely Syniverse itself or SAP. In addition, a U.S. ICV that focuses on providing ICV services at a lower cost with superior solutions and services will be wrongfully excluded from the market, allowing Syniverse to increase its prices. FIRST CLAIM FOR RELIEF (Monopolization in violation of 15 U.S.C. § 2) 99. Plaintiff re-alleges and incorporates into this Count I the allegations set forth in paragraphs 1-98 above, as if fully set forth herein. 100. Syniverse has monopolized the market for ICV services throughout the United States. Syniverse’s conduct, alleged herein, has been undertaken to achieve and maintain such monopoly by, among other things, impeding and eliminating competition. Specifically: (a) Syniverse possesses monopoly power over a relevant market. The relevant market in this case is the market for ICV services in the United States. That market is highly 23 723660991 concentrated and protected by high barriers to entry. Syniverse has monopoly power because Syniverse has at least a 70% share of the relevant market. In addition, Syniverse has the power to exclude competition and increase prices in the relevant market. For instance, Syniverse is attempting to exclude tyntec from the U.S. ICV market by increasing tyntec’s peering costs to anticompetitive levels. (b) Syniverse has willfully acquired and maintained monopoly power in the U.S. market for ICV services. For instance, Syniverse has willfully maintained its monopoly power in the U.S. ICV services market by forcing the low-cost provider in the market, tyntec, out of the market. Syniverse is voluntarily terminating its long-standing, profitable, and mutually advantageous Peering Agreements with tyntec in order to exclude tyntec from the U.S. ICV market. (c) tyntec has suffered antitrust injury. tyntec and market-wide competition will be irrevocably harmed if Syniverse is allowed to unilaterally terminate its well-established course of dealing with tyntec. By forcing tyntec out of the U.S. ICV services market, Syniverse is destroying the market’s low-cost competitor. If tyntec is excluded from the market, customers will have fewer choices and Syniverse will be able to increase its prices without fear of losing business to tyntec. (d) There is no legitimate business purpose for Syniverse’s exclusionary and anticompetitive business conduct, and no purported justification would outweigh the considerable harm to competition caused by Syniverse’s conduct. For example, although Syniverse claims that tyntec’s SMS and MMS traffic is "out of balance," that is not true. Currently, tyntec’s SMS and MMS traffic to and from Syniverse’s telecommunications customers is in balance. 24 723660991 101. As a result, Syniverse has monopolized and is acquiring and maintaining monopoly power in the market for ICV services throughout the United States in interstate commerce in violation of Section 2 of the Sherman Act, 15 U.S.C. § 2. 102. As a direct and proximate result of the foregoing, tyntec has been injured in its business and property, is threatened with immediate and irreparable additional loss and damage, and will continue to be so threatened unless Syniverse is enjoined from refusing to continue peering with tyntec, from engaging in other practices designed to foreclose and purposefully exclude tyntec from the market, and from engaging in the other illegal conduct alleged herein. SECOND CLAIM FOR RELIEF (Attempted Monopolization in violation of 15 U.S.C. § 2) 103. Plaintiff re-alleges and incorporates into this Count II the allegations set forth in paragraphs 1-98 above, as if fully set forth herein. 104. Syniverse has attempted to monopolize the U.S. market for ICV services. Specifically: (a) Syniverse has engaged in predatory and anticompetitive conduct. Syniverse has unilaterally and voluntarily terminated its long-standing course of dealing with tyntec. Although tyntec is willing to continue its business relationship with Syniverse, Syniverse refuses to deal with tyntec on any terms other than those that will force tyntec out of the U.S. market for ICV services. As a result, Syniverse is offering tyntec a devastating choice. If tyntec accepts Syniverse’s terms, it will be forced to leave the market due to Syniverse’s anticompetitive pricing; if tyntec refuses Syniverse’s terms, it will be forced from the U.S. ICV market because tyntec will not have a peering agreement with the largest ICV in the United States. (b) Syniverse has the specific intent to monopolize the market for ICV 25 723660991 services throughout the United States. Syniverse’s conduct, alleged herein, has been undertaken to achieve and maintain such monopoly by, among other things, impeding and eliminating competition. During a January 27, 2017 meeting, Syniverse officials told tyntec that Syniverse’s decision to terminate its Peering Agreements with tyntec was rooted in the fact that Syniverse did not want tyntec to be a competitor in the U.S. ICV market. (c) There is a dangerous possibility that Syniverse will acquire monopoly power in the U.S. market for ICV services. Syniverse has at least a 70% market share in the U.S. market for ICV services. This market is highly concentrated and protected by high barriers to entry. In addition, Syniverse has the power to exclude competition and increase prices. For example, Syniverse is attempting to exclude tyntec from the U.S. ICV market by increasing tyntec’s peering costs to anticompetitive levels. (d) There is no legitimate business purpose for Syniverse’s exclusionary and anticompetitive business conduct, and no purported justification would outweigh the considerable harm to competition caused by Syniverse’s conduct. Although Syniverse claims that tyntec’s SMS and MMS traffic is "out of balance," that is not true. Currently, tyntec’s SMS and MMS traffic to and from Syniverse’s telecommunications customers is in balance. 105. Therefore, Syniverse is attempting to monopolize the market for ICV services throughout the United States in interstate commerce in violation of Section 2 of the Sherman Act, 15 U.S.C. § 2. 106. As a direct and proximate result of the foregoing, tyntec has been injured in its business and property, is threatened with immediate and irreparable additional loss and damage, and will continue to be so threatened unless Syniverse is enjoined from refusing to continue to peer with tyntec, from engaging in other practices designed to foreclose and purposefully 26 723660991 exclude tyntec from the market, and from engaging in the other illegal conduct alleged herein. THIRD CLAIM FOR RELIEF (Tortious Interference With Contract) 107. Plaintiff re-alleges and incorporates into this Count III the allegations set forth in paragraphs 1-13, 19-25, 33-41, 58-75, 82-89, 91 and 94-96 above, as if fully set forth herein. 108. Syniverse has committed the common law tort of tortious interference with contract. Specifically: (a) Syniverse is aware and has been aware at all relevant times that tyntec has contracts with different customers in the U.S. ICV market, including Shelcomm and Flyp the Twenty Carriers ("Customer Contracts"). (b) Syniverse’s intent in engaging in the anticompetitive conduct described herein, including its refusal to continue peering with tyntec on a "bill and keep" basis going forward is to cause the breach and termination of tyntec’s Customer Contracts. (c) If tyntec is unable to peer with Syniverse under the current terms of the Peering Agreements, neither tyntec nor its customers will be able to honor the terms of the Customer Contracts and tyntec’s customers will have no choice but to do business with an ICV other than tyntec, namely Syniverse itself or SAP. (d) Syniverse’s stated intent in terminating the Peering Agreements is to foreclose tyntec entirely from the market for ICV services and from competing for customers in that market. (e) There is no legitimate business justification for Syniverse’s conduct, which has the purpose and effect of excluding or destroying competition. (f) But for Syniverse’s interference, there is a reasonable likelihood that these telecommunications carriers would continue to purchase ICV services from tyntec pursuant to 27 723660991 the terms of the Customer Contracts. 109. As a direct and proximate result of the foregoing, tyntec has been injured in its business and property, is threatened with immediate and irreparable additional loss and damage, and will continue to be so threatened unless Syniverse is enjoined from refusing to peer with tyntec at no charge, from engaging in other practices designed to foreclose and exclude tyntec from the market, and from engaging in the other illegal conduct alleged herein. FOURTH CLAIM FOR RELIEF (Tortious Interference With Business Relations) 110. Plaintiff re-alleges and incorporates into this Count IV the allegations set forth in paragraphs 1-13, 19-25, 33-41, 58-75, 82-83, 90-91 and 94-96 above, as if fully set forth herein. 111. Syniverse has committed the common law tort of tortious interference with business relations. Specifically: (a) Syniverse is aware that its conduct, as described herein, has interfered and will continue to interfere with prospective business relations between tyntec and the carriers who have indicated their desire to enter into contracts with tyntec. (b) Syniverse’s intent is to foreclose tyntec entirely from the market for ICV services and to prevent tyntec from gaining any additional customers or business in the U.S. ICV market. (c) There is no legitimate business justification for Syniverse’s conduct, which has the purpose and effect of excluding or destroying competition. (d) But for Syniverse’s interference, there is a reasonable likelihood that these telecommunications carriers would purchase ICV services from tyntec. 112. As a direct and proximate result of the foregoing, tyntec has been injured in its business and property, is threatened with immediate and irreparable additional loss and damage, 28 723660991 and will continue to be so threatened unless Syniverse is enjoined from refusing to peer with tyntec at no charge, from engaging in other practices designed to foreclose and exclude tyntec from the market, and from engaging in the other illegal conduct alleged herein. PRAYER FOR RELIEF WHEREFORE, tyntec demands trial by jury on all issues triable of right by a jury and prays that judgment be entered: A. Enjoining Syniverse from refusing to peer with tyntec at no charge; B. Enjoining Syniverse from taking any action or threatening to take any action against telecommunications carriers that use tyntec’s services; C. Enjoining Syniverse from engaging in any other exclusionary practices that directly or indirectly foreclose tyntec from providing ICV services to carriers; D. Alternatively, awarding tyntec damages in an amount to be determined, and trebled as provided in Section 4 of the Clayton Act, 15 U.S.C. § 15(a); E. Awarding tyntec the cost of this suit, including a reasonable attorney’s fee, as provided in Sections 4 and 16 of the Clayton Act, 15 U.S.C. §§ 15 and 26; and F. Granting such other and further relief as the Court deems just and proper. 29 723660991 Dated: April 5, 2017 BURR & FORMAN LLP By:/s/Daniel P. Dietrich Ronald B. Cohn (Trial Counsel) Florida Bar No. 599786 Daniel P. Dietrich Florida Bar No. 934461 201 North Franklin Street, Suite 3200 Tampa, Florida 33602 Telephone: (813) 221-2626 Fax: (813) 221-7335 rcohn@burr.com ddietrich@burr.com Attorneys for Plaintiffs tyntec Group Ltd. and tyntec Inc. OF COUNSEL: Joseph De Simone (pro hac vice) Richard M. Steuer (pro hac vice) Michelle J. Annunziata (pro hac vice) MAYER BROWN LLP 1221 Avenue of the America New York, New York 10020 Telephone: (212) 506-2500 Fax: (212) 262-1910 jdesimone@mayerbrown.com rsteuer@mayerbrown.com mannunziata@mayerbrown.com Mark W. Ryan (pro hac vice) MAYER BROWN LLP 1999 K Street, N.W. Washington, D.C. 20006-1101 Telephone: (202) 263-3338 Fax: (202) 263-5338 mryan@mayerbrown.com 30 723660991 CERTIFICATE OF SERVICE I certify that on April 5, 2017, I electronically filed the foregoing with the Clerk of the Court by using the CM/ECF system which will send a notice of electronic filing to the parties of record. s/Daniel P. Dietrich Daniel P. Dietrich 31 723660991