Online bookseller Alibris has agreed to plead guilty and pay a $250,000 (US$) fine in order to retire federal charges that it intercepted Amazon.com internal e-mails and possessed unauthorized password files.
While the plea and fine may seem insignificant when compared with other recent court settlements, this case could possibly have implications on e-commerce privacy issues for years to come.
According to court documents filed Monday in Boston, Massachusetts, Alibris intercepted and stored more than 4,000 e-mails in an effort to gather intelligence on the marketplace.
Absence Of Malice
Alibris has openly claimed that the e-mail interceptions were innocent and only possible because the company also provided an e-mail service for other book dealers. Moreover, Alibris CEO Marty Manley contends that the information was never misused.
Still, prosecutors point out that such interceptions — regardless of the motive behind them — are clearly a violation of the Electronic Communications Privacy Act.
Compiled A Database Of Dealers
Meanwhile, a Justice Department filing in the case states that one of the purposes for Alibris’ interceptions was to “compile a database of dealers’ purchases and to analyze the book-selling for competitive advantage.”
While one of Alibris’ functions is to bring buyers and sellers together, it also sells items directly to consumers via the Internet by shipping hard-to-find titles from its mammoth warehouse in Sparks, Nevada. The company came into existence when the bookseller combined with Internet service provider Interloc, which had facilities in Greenfield, Massachusetts.
According to the government, it was at that location in January 1998 that employees changed the e-mail routine, allowing all e-mail messages from Amazon to its dealers to be intercepted.
Violation Of Privacy
While there is no evidence that any party suffered financial harm as a result of Alibris’ conduct, prosecuting assistant U.S. Attorney Jeanne Kempthome noted that the “violation of privacy is a material harm.”
Some analysts also point out that by pleading guilty to intercepting others’ e-mail, Alibris has unintentionally bolstered privacy advocates’ arguments that even more government regulation of the Internet is needed.
Alibris is a privately-held Silicon Valley startup that launched its Web site last year. It buys rare and hard-to-find books from traditional book dealers and sells them to such giants as Amazon.com and Barnesandnoble.com.
Alibris has also created a network of about 1,000 small, specialized dealers that upload their inventories to the company each night.
In May, venture capital firms led by Bedrock Capital Partners, Weiss, Peck & Greer Venture Partners, and Aberdare Ventures pumped $15 million into Alibris in a first round of funding.