One of the greatest aspects of the online market is that the emergence of a monopoly in the online realm is virtually impossible.
Or so I thought.
It all begins with the search engine. Although there is seemingly infinite competition in each niche market online, in order to go shopping on the Internet you generally need a search engine to guide you in the right direction. In the “offline” world, one would call this the YellowPages, a directory of businesses listed under certain categories.
Thanks to advertising systems implemented within search engines, a system like the YellowPages is possible online. Google, for example, offers an AdWords system where any company can have paid advertisements that appear when a certain keyword is searched.
If you search “Geico” on Google, for example, Mercury and AAA ads appear on the right. Geico, however, saw this is as an infringement on trademark law and took it to a federal judge stating that potential customers who would search for Geico were being misled or steered away.
Huh? Whoa, whoa, do not pass go, do not collect $200.
Did Geico seriously think that an ad labeled “Mercury Car Insurance: Get A Free Quote Now!” was misleading? Sure, it might have steered customers away, but how is it any different than the YellowPages? Nowhere in the ad does it even use the Geico trademark.
The judge threw Geico and Google out and told them to reach a settlement.
Either a creepy old man with a top hat runs the legal department at Geico or they are attempting to create a monopoly by not allowing any competitors to advertise in their space.
The CafePress Bully
Cal Poly graduate Mike Sobczyk recently started ShirtADay.com, an online T-shirt company that also uses Google’s AdWords. Sobczyk used the keyword “CafePress,” which is an online marketplace, as one of his AdWords since anyone interested in CafePress might want to buy one of his shirts.
He received a cease and desist order a few days later from CafePress stating that they would sue him if he did not stop using their trademark as an AdWord.
“I didn’t feel we were doing anything wrong.I wasn’t claiming to be them and I wasn’t trying to mislead people,” Sobczyk said. “All I wanted to do is target people who are looking for CafePress and show them ShirtADay.”
Sobczyk hadn’t done anything wrong when it came to the law. If he had put CafePress in his AdWords advertisement or anywhere on his site, he would have been breaking trademark law by using their trademark to promote his site.
Although CafePress was acting as foolish as Geico in terms of common sense, if Sobczyk went to court with them, ShirtADay would have been knocked off the market from legal fees alone, regardless of what the judge ruled.
“They realize they really can’t do anything about it, but because they’re so much bigger, they feel they can bully us around and it’s not going to hurt them financially,” Sobczyk said.
Sobczyk decided to ignore them. CafePress wouldn’t give up the fight, however, and continued to send legal requests that cost ShirtADay $20 per request for their host to process. As the bills started to stack up, Sobczyk had no choice but to submit.
“We decided to abandon that marketing strategy, because we weren’t getting any sales from those ads,” Sobczyk said. “We found that other ads were performing better and decided to focus more on those.”
Sobczyk could have found himself stuck in court for years. American Blinds & Wallpaper Factory, Inc. has been battling Google in court for the same reasons as CafePress since 2004. The judge, however, refuses to throw the case out unlike judges who came before him.
Should businesses be able to do this? Are they really trying to protect their trademark’s copyright? Are the companies that use AdWords really trying to mislead people?
“CafePress essentially doesn’t want anyone encroaching on their market and to me it’s a monopolistic approach to making sure you don’t have any competition, making sure no one can advertise in your space,” Sobczyk said.
The only reason CafePress continues to get away with it, Sobczyk said, is because it’s financially not worth it to fight back.
“For a while there were other sites advertising under my name and I don’t care; that’s the way the world works, that’s the way marketing works,” he said.
Do CafePress, Geico or American Blinds really think that you can create laws that prevent you from targeting certain market audiences? Perhaps Sobczyk is right when he calls it a “monopolistic approach.”
As Google remains in court with American Blinds well into the case’s third year, one has to wonder if one judge’s ruling could help bring about monopolies online.
“I don’t know if you can monopolize the entire online world for that area, but they’ve definitely monopolized that small niche and they’re not going to let anyone else in,” Sobczyk said. “If anyone is going to arise with a similar business plan, they’re not going to let any of their customers be aware of it.”
As Sobczyk put it, CafePress is trying to make their own aisle in a grocery store rather than be on the same aisle as ShirtADay (even if ShirtADay might be on the bottom shelf with the Oatie-O’s).
Google has already abandoned searching a Web site’s meta tags, or snippets of code which store keywords that search engines look for in every site to help filter them. Could they soon be forced to abandon their own AdWords system as well?
The only hope for keeping competition alive online is by allowing search engines to create an advertising space the way Google AdWords does. As there is no online mall to browse several stores or a popular directory for online businesses, companies like ShirtADay can go practically unnoticed without being allowed to advertise in such a space.
Unfortunately, there isn’t much we can do but sit back and watch confused judges throw out each case. Eventually, however, one case will go in favor of Geico or American Blinds and the online market may begin its endless trek around the monopoly board.