Last week, a federal judge disclosed plans to issue a preliminary injunction that would prevent auction portal Bidder’s Edge, Inc. from gathering information off industry leader eBay’s Web site.
While the full impact of U.S. District Judge Ronald M. Whyte’s ruling will not be known until the court issues a written order, many analysts feel the move could have a sweeping effect on e-commerce. The injunction could help settle the heated debate over whether information posted on the Net should be regarded as proprietary — and thus subject to fees — or be freely available to any party for unrestricted use.
The disagreement between eBay and Bidder’s Edge escalated from a simple scrimmage to a free-for-all shortly after eBay filed a lawsuit last December, which charged that the Burlington, Massachusetts-based Bidder’s Edge had violated the federal Computer Fraud and Abuse Act by using information from eBay’s site.
In February, Bidder’s Edge filed a counterclaim against eBay alleging that the online auctioneer had attempted monopolization, interfered with contractual relations, and utilized unfair practices.
To make matters worse — from eBay’s perspective — the Bidder’s Edge suit came less than a week after the U.S. Justice Department (DOJ) began investigating the auctioneer to determine whether it was engaging in anti-competitive behavior when it attempted to block price comparison software from searching its site.
The DOJ probe is still in its preliminary stages. Investigators have met with Bidder’s Edge and AuctionWatch.com — two of the smaller auction firms that have been barred from eBay’s site — but there is no indication whether formal action against eBay will be taken.
Since then, however, such similar services as AuctionRover.com have opted to sign a licensing agreement with the Palo Alto, California-based eBay. Under the agreement, auction aggregators are free to gather information in return for paying eBay a fee.
An Open Net
Meanwhile, Bidder’s Edge vigorously denies eBay’s allegations and contends that the online auctioneer has no right to block admittance to its site or charge such a fee.
“In addition to the legal issues involved, there’s a bigger issue we’re concerned with, and that’s the openness of the Web,” said James Carney, chief executive of Bidder’s Edge. “That openness is part of what makes the Web special, and why it has grown so explosively. eBay wants to build a wall around its site and maintain strict control over the person to person auction business, which it dominates. If allowed to prevail, eBay will set a precedent that could have potentially disastrous implications for every search engine on the Web.”
According to some analysts, companies that refuse to pay eBay a licensing fee for the right to search its site are little more than parasites.
Additionally, eBay — which has had its fair share of crashes — has pointed out that the millions of queries generated by multiple search engines could have the potential to slow down its site.
Nonetheless, Bidder’s Edge contends that being cut off from eBay is tantamount to being cut off from 90 percent of the auction action — and that no one should be forced to pay for access to information on a Web site that is open to the public.
Money for Nothing
The Bidder’s Edge argument reminds me of the controversy that arose several years ago when local non-pay TV stations demanded a fee from cable companies for including their programming in cable packages.
At first, many cable companies refused to pay, arguing that the local programming was available to the public at no cost. However, the local channels argued that cable TV operators were benefiting from programming funded by their advertisers. Eventually, the non-pay channels won their cases and cable TV companies were forced to pay a fee for including local programming as part of their offering.
In this David versus Goliath story, the giant definitely deserves to prevail. While it is true that eBay does not charge the public for perusing its site, it is also true that the information is provided for the express purpose of facilitating online transactions that generate fees for eBay.
When a company such as Bidder’s Edge uses eBay’s information to promote its own site, it is actually leveraging another company’s assets for its own profit — a practice very similar to the sleight of hand that cable companies attempted with local TV programming.
After cutting through the Bidder’s Edge smokescreen about open access, it becomes clear that this controversy is less about preserving a free Internet than hitching a free ride.