Amazon Gives Up on Competition, Free Markets
|February 26, 2004||Posted by Staff under Archive, Progress Report, The Progress Report|
Amazon Gives Up on Competition, Free Markets — Seeks Privilege Instead
Loss-making Amazon turns to bullying
For some time it has disturbed us to see some corporations turn away from providing goods and services, choosing instead to seek special privileges (economists call it “rent-seeking”). You have probably heard of amazon.com. That company applied for patents and recently received them for (a) the concept of getting someone else to offer links to products selling on your web site, and (b) the concept of clicking a link to buy something (as opposed to filling out a lot of information over and over when they already have it on file).
Yes, this is ridiculous. It is also very serious. Amazon now appears to be legally able to ban others from using these concepts, or can charge them rent for doing so.
It’s hard to find a story summarizing this situation, but here is a recent article from the Irish Times that helps a lot.
by Karlin Lillington
MAYBE it’s those continuously absent profits that have warped the company’s attitudes. Whatever the cause, book-to-kitchen-sinkseller Amazon seems to be manifesting some serious corporate personality defects. In short, Amazon is acquiring the attitude and intentions of an Internet bully.
This week, Amazon stunned and angered Web users by copyrighting its affiliate programmes technology. This programme allows website owners to earn a small commission by linking to the Amazon site, thus steering potential customers in Amazon’s direction.
Many sites, such as music seller CDNow and Pets.com, use the same basic affiliate programme technology.
This isn’t the first time Amazon has thrown its considerable weight around.
Last year, it took out a patent on its “One-Click” technology, which allows a registered customer to buy items at a single mouse-click by accessing stored purchaser details. Amazon immediately filed suit against its main book-selling competitor, BarnesandNoble.com, for patent infringement. Barnes and Noble uses a similar system.
That suit is still pending, but in the meantime, Amazon has managed to get an injunction against BarnesandNoble.com to desist from using the technology until the suit is decided. What a bully.
Amazon says it doesn’t yet know what it will do with its new patent, which could allow it to charge all other sites for using the technology, or force them to develop different programmes. Indeed, patent lawyers quoted this week believe Amazon competitors will have significantly to alter their existing affiliate programmes to avoid a clash with Amazon’s copyright. Many of these copyright specialists clearly were startled that the US patent office issued copyright protection for either of these technology systems.
Amazon’s comments, especially in light of its odious OneClick activities, are utter tosh. Why else would the company patent this process, except to benefit from it? One doesn’t need to be a five-star general to see that the copyright offers two strategic advantages to Amazon in its battle for customers.
First, the company could license its technology and beef up its non-existent profit margins by raising revenue from other companies that wish to use it. Or, the company could retain sole control of the selling advantage it gains through the use of these technologies.
Either way, the company is narrowing the scope of how online retailers can provide better service to customers. More insidiously, the company is selfishly demolishing some of the basic fabric of the Web – the founding concept that most technologies are shared and become the basis of new developments and positive gains for all.
Now, if Amazon could realistically claim that it had developed a highly unique technology – outstanding intellectual property for which it deserves recognition in the form of copyright protection – one could grant that it might have a case. But that does not, even by a long stretch of the imagination, seem to be the situation. As industry commentator and programmer Dave Winer argued in an angry column this week: “On a brilliance scale of one to 10, the Amazon affiliate idea is a zero. It’s a repurposing of multitier marketing, and has been in wide use for decades. All they did was apply that idea to the Web.” As another industry analyst said this week: “Are they going to patent air next?” He believes the patent will be challenged quickly in court.
The greed of Amazon points to a larger issue. In recent months, many commentators and industry figures have expressed concern that the US patent office lacks the expertise to evaluate the uniqueness of technologies submitted to it. Companies have rushed to copyright technologies either in the hope that they’ll be able to impose licences, or out of fear that they might miss out on this potential revenue-stream competition-crushing trend of the future – especially as the Web remains a largely unprofitable place for retailers.
More broadly, there are general fears that a proliferation of copyright will stall the development of new technologies and the growth of the Web’s capabilities, as programmers and companies become enmeshed in a legal tangle of licences and obligations.
Two points seem appropriate here. First, the US courts established back in the 1980s that most technological developments build on general, unpatentable concepts widely applied, refined, reused, and integrated. This point was firmly made when the courts famously rejected Apple Computer’s claim that with the Windows operating system, Microsoft, had stolen Apple’s unique “look and feel”. If Amazon’s patents are challenged, precedent seems to dictate that it will lose. But must we really introduce an additional, unhappy element of litigation, and stifle innovation except in the case of those with large bank balances and smart lawyers?
Second, the Internet owes most, if not all, of its initial development to a community-based spirit of making things possible. Historians have noted that had early Net pioneers copyrighted their contributions to the Net’s development, they could be extraordinarily wealthy – yet they chose not to.
Alternatively, they might have made nothing because, over time, others likely would have tried to work around their patented solution. Happily, the Net’s architects seem uniformly to have agreed that certain aspects of technology cannot or should not be patented because they build on widely-understood concepts and/or because they advance general knowledge and capabilities.
In the face of this ideological tussle underlying the Amazon patents, the growing interest in “open-source” software such as the Linux operating system represents an extraordinary back-to-the-future spirit. Open-source programmes are unpatented, and their computer code is placed into the community domain for further development (see www.opensource.org for more information). As the Web grows almost grotesquely commercial, harking back to the community-mindedness that built the Web is at the very least, Quixotically admirable. But don’t underestimate the power of community. As Microsoft clearly fears in the case of Linux, the open-source movement may well shatter some of the increasingly selfish economies of the Web and help end Amazonian-style patent profiteering.
Karlin Lillington is a frequent writer on technology subjects. We think he got “copyright” confused with “patent” a couple of times, but you get the main point.
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