CDK Global has been accused of systematically bogarting the market for dealership management services by California-based rival Tekion, with the latter having launched a lawsuit alleging that CDK is intentionally attempting to curtail any legitimate competition by withholding data.
If true, the broader ramifications of this would be that CDK Global had intentionally forced retailers to pay higher prices while keeping useful information from them — likely resulting in those costs trickling down to consumers while ensuring it maintained the lion’s share of the dealer services market. But it’s easy to accuse someone and significantly more difficult to prove malfeasance.
“CDK's technology is outdated. Instead of innovating and competing fairly, CDK has resorted to unfair and anticompetitive business tactics to protect its dominant market position, including holding dealers’ data hostage to stop them from switching to a platform of their choice. In some cases, CDK has even sued its own customers over access to their data,” Tekion founder and CEO Jay Vijayan stated as part of the legal announcement. “We have decided to stand up to CDK’s illegal practices to preserve fairness and competition in the automotive retail ecosystem.”
CDK Global is certainly one of the largest players in terms of information technology and digital marketing for the automotive, trucking, and heavy equipment industries. If it has wheels, CDK likely had some involvement in marketing the product and accumulating/sharing data in regard to inventory management, consumer data, sales histories, service records, parts supplies, financing, and much more.
Despite being based in Texas, CDK is a multinational corporation. It just happens to do the brunt of the business inside North America — something that has not gone over well with rivals, some of which have launched lawsuits resembling Tekion’s in the past.
CDK was sued, in conjunction with DMS supplier Reynolds and Reynolds, by data integration service provider Authenticom in 2017. The claim made was that CDK had violated antitrust laws by intentionally blocking any third-party access to its data systems. However, the CDK settled the case in 2020 by offering an undisclosed amount of money to Authenticom.
But this is not the only such instance, according Reuters ' coverage of the Tekion suit:
CDK faces other antitrust claims. A U.S. judge in July [2024] said software vendors that create apps for dealer management systems can sue the company as a class for allegedly restricting access to data and causing them to pay hundreds of millions of dollars in overcharges.
In August, CDK said it would pay $100 million to settle a nationwide class action by retail auto dealerships claiming they overpaid for the company’s dealer management systems. CDK has denied the claims and did not admit wrongdoing.
The business was also at the center of the 2024 ransomware attack that took most of its dealer services offline. CDK paid $25 million in cryptocurrency with access being blocked for roughly two weeks. Since dealers rely on these management systems quite heavily, the downtime had a significant impact on the market. This is especially true considering how widely CDK was used in North America.
Tekion likewise provides data analytics for leaders and has started pushing artificial intelligence and cloud-based computing as part of its services. While not nearly as large as CDK, Tekion has been making inroads with certain dealer networks and has managed to snag a large franchise from its larger rival at the start of 2024 via a pilot program. But it accused CDK of withholding information to make that happen.
A judge in Georgia ordered CDK to provide Tekion with data needed for the program to get off the ground. While it only impacted four dealerships, the relevant franchise owns 158 locations spread across 15 states. It would have been a major client for Tekion. But the businesses asserted that rival CDK was intentionally undermining the deal.
Tekion is now seeking damages and an injunction that would require CDK to forcibly turn over dealer data within a set timeframe. The lawsuit stipulates that the business has endured “economic harm, including loss of revenue, loss of market share, and increased costs and expenses” at the hands of CDK. The claim is that the company has engaged in anticompetitive practices and is attempting to use its size as a form of monopolization.
While CDK is the bigger fish here, there are signs that it’s losing ground. New legislation has been passed in states which requires companies like CDK to grant third parties unrestricted access to its data. The company actually attempted to fight this in some states, specifically Arizona, and ultimately lost.
There have likewise been allegations that CDK’s management software is outdated and incomplete. But this seems to stem primarily from rivals like Tekion, which are promising the moon with cloud-based solutions and artificial intelligence — both of which are double-edged swords and are sometimes used as meaningless buzz phrases to generate positive attention for novel products.
While it's always hard to know who to root for in stories like this, it remains abundantly clear that data brokering can be a dirty business.
[Images: Svitlana Hulko/Shutterstock; K-FK/Shutterstock]
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