PeopleBrowsr Gets Temporary Restraining Order Against Twitter For 'Felony Interference With A Business Model'

from the someone-else's-bitch dept

Thu, Nov 29th 2012 4:04pm — Mike Masnick

For years, we've seen so many legal disputes that could be jokingly described as arguing "felony interference of a business model" -- a term coined by Steven Bellovin a while ago as shorthand for lawsuits that are much more about a company who bet on the wrong business model, than any actual legal wrongs. Normally, this relates to legacy companies upset at upstarts who win through the disruptive judo of taking a totally different approach. But it can be seen in other arenas as well. We've also talked, for example, about how odd it is that some companies appear to base their entire business on what some other company does -- and they seem wholly unprepared for a situation in which the company they are 100% reliant on changes. As venture capitalist Fred Wilson has summarized, a good company can't be someone else's bitch.

Both of those concepts seem relevant given the news that a startup called PeopleBrowsr has successfully obtained a temporary restraining order against Twitter for changing how it doles out access to its "Firehose" (i.e., the raw stream of all public tweets). As has been covered widely, over the last few months, Twitter has really clamped down on some of its more open practices lately. I actually agree with many people that I'm not sure this is a smart long-term business move, but I can't see how it could possibly be a legal violation. Yet, that's what PeopleBrowsr appears to be claiming. Of course, its Firehose offering has long been an offering that companies had to work out a deal with Twitter to get access to, so even then it was never fully "open."

As part of the changing business strategy, Twitter has cut off many of its "Firehose" partners, including PeopleBrowsr. In response, PeopleBrowsr sued arguing that this change has a negative impact on PeopleBrowsr's business (apparently true), and thus it must be illegal. The company highlights how it has all sorts of highly valuable deals with other companies because of its analytics of Twitter's Firehose.

PeopleBrowsr's products are highly valuable to its users, who utilize them to extract relevant information from the massive Twitter stream, as well as to organizations marketing their messages or brands. PeopleBrowsr has entered into valid contracts including: (1) a three-year, $3 million contract with defense contractor Strategic Technology Research, (2) a long term, $400,000 contract with Cadalys to build a customized Kred application, (3) a long term, $300,000 contract with Radian6 to incorporate Kred into its products, (4) a long term, $400,000 contract with Badgeville to incorporate Kred into its products, (5) a contract with Mashable to power its mRank product through PeopleBrowsr's API, and (6) a contract for at least one year with DynamicLogic, worth at least $75,000. PeopleBrowsr has business relationships that are likely to ripen into new business with firms including Dell Computer, Demand Media, Ogilvy, Bell-Pottinger, and CBS Interactive, among others.

It is not difficult to understand why PeopleBrowsr is upset that Twitter decided to end the relationship, even as PeopleBrowsr claims to pay over $1 million a year to Twitter for access to the Firehose. The key argument that PeopleBrowsr makes, is that Twitter has, in the past, made various statements concerning its embrace of an open platform that allows others to build on top of their work. But I'm not sure why that's actually relevant here. PeopleBrowsr obviously knew that Firehose wasn't completely open since it signed two separate licensing agreements with Twitter (according to its own filing). In fact, they explicitly note that the agreement has a termination provision, so PeopleBrowsr had to know it was a possibility. In addition, most of the statements about openness that PeopleBrowsr cites, are vague statements about the importance of openness. Even the specific comments about keeping Firehose open are things like an engineer noting that he's "fighting to keep access to the Firehose and other API's as open as possible," which should have clearly indicated to PeopleBrowsr that the entire company was not in agreement, and there was a very real chance that it would not remain so open.

In the end, it really seems like the problem is entirely PeopleBrowsr's for building a business in which it relied almost entirely on a single relationship, and did not set up the contract to ensure that relationship would not go away. Again, I'm not sure that Twitter's strategy here is smart, but it's difficult to see how it's illegal. The problems seem entirely self-created by PeopleBrowsr. It even seems to admit that it bet its entire business on this fact, without securing a contract that they knew would last.

The Firehose is an essential input for PeopleBrowsr's business. PeopleBrowsr's products function by creating a comprehensive view of Twitter activity, and a mere sample of Twitter's data is not sufficient to provide the sophisticated analytics PeopleBrowsr's clients have contracted for.

All that says is that perhaps they shouldn't have put things in their client contracts that they really couldn't promise they'd have access to -- or they should have put together a much more solid agreement with Twitter in the first place. While PeopleBrowsr may have won a temporary injunction, preventing Twitter from turning off its access to Firehose for the time being, it seems like a massive long shot to think that it can possibly win this lawsuit. Yes, it sucks that the one partner you bet your business on is changing its own ways of doing business, but that's what happens when you bet your business model on being someone else's "bitch."

114846303 Rich Declaration PB v TW Restraining Order 28 Nov 12 (PDF)114846303 Rich Declaration PB v TW Restraining Order 28 Nov 12 (Text)

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Filed Under: business models, contracts, firehose, interference
Companies: peoplebrowsr, twitter

27 Comments

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silverscarcat (profile), 29 Nov 2012 @ 4:19pm

So...
People Browser is copying Twitter and when Twitter changes, People Browser complains about it?

Sounds legit.
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sheenyglass (profile), 29 Nov 2012 @ 4:49pm

Glancing at the court docs, it looks like their complaint is based on a theory of reliance (i.e., PeopleBrowsr reasonably relied on Twitter's representations). Sounds like a bit of a longshot, but on its face it doesn't seem frivolous if the allegations are true (Twitter made statements publicly and privately to PeopleBrowsr that the platform would be kept open and the termination provision would only be used if PeopleBrowsr misbehaved).
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That One Guy (profile), 29 Nov 2012 @ 5:03pm

Well this could be interesting...
If this actually goes through, I think I'll start up a business entirely focused on being paid 1 million, each month, from each major film and music studio, with the reasoning being that it's my business model.

Should they refuse, then I can drag them to court for interfering with, and causing harm to, my business! It's a win-win situation!

On a more serious note, can we get a drug-test on whatever judge made this ruling, I'd love to find out what you have to be on to accept the idea that if one company depends entirely on another, and the second company does something the first one doesn't like, that the first actually has any right to order the second about.
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Papafox, 29 Nov 2012 @ 5:09pm

PeopleBrowsr founder has form
By way of background, the founder of PeopleBrowsr is an Australian named John David 'Jodee' Rich. Jodee has a very mixed business reputation in Australia. On one hand he is admired for identifying the computing market at a very early stage. However, later he founded One.Tel, one of the more high profile corporate failures in Australian history. One.Tel failed due to management incompetence - a screwed up billing system caused cash flow failure. A lot of small investors were burnt and Jodees' reputation was trashed.

The Sydney Morning Herald has a good article covering Jodee and PeopleBrowsr.
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Difster (profile), 29 Nov 2012 @ 5:13pm

Tweeters?
Are they going to also sue individual Twitter account holders when people stop Tweeting since they rely on a high volume of tweets?
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out_of_the_blue, 29 Nov 2012 @ 5:19pm

Bitchin' re-write, Mike. 3 times, evidently you like the phrase.
Even pointed it up in the sub-head. Chicks love the dirty words, especially those that refer to them as dogs. Professionals too. It's so hip and edgy, shows sympathy with the proletarians.
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Anonymous Coward, 29 Nov 2012 @ 5:32pm

Twitter should make the changes they were going to, but leave the old firehose online exclusively for PeopleBrowsr. Except change every tweet headed their direction to "PeopleBrowsr sucks", or add "Also, PeopleBrowsr sucks" to the end of every tweet.
They want the hose? I say hose 'em.
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That One Guy (profile), 29 Nov 2012 @ 5:37pm

After reading though the arguments presented in their filing(which was actually surprisingly legalese-free), it looks like twitter may have been threatening to cut off their access due to them not playing ball by both potentially threatening the business of some of twitter's other 'partners'(which, if the descriptions were correct, were more like companies being run all but totally by twitter), and PeopleBrowser not being willing to become one of said 'partners' themselves.

Looking at it that way, twitter seems to have been attempting to just get rid of a competitor, by either absorbing them, or removing that which they needed to stay in business, something PeopleBrowser only realized a little too late.

Decidedly shady actions on twitters part, but really, for PeopleBrowser to put themselves in a position that they are totally dependent upon another company, with the other company knowing it, and to then be surprised that the other company attempts to start calling the shots... they really only have themselves to blame for that.
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fb39ca4 (profile), 29 Nov 2012 @ 6:15pm

Well, they accepted the risk of being reliant on Twitter's data feed, and now that an inconvenient change is being made for them , they run crying to the government.
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Anonymous Coward, 29 Nov 2012 @ 6:46pm

Re: Bitchin' re-write, Mike. 3 times, evidently you like the phrase.
What's that bug up yer bum mate?
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Anonymous Coward, 29 Nov 2012 @ 6:49pm

Sucks to be them, but I really don't see how this is Twitters problem.

PeopleBrowsr sell a product manufactured from materials supplied by Twitter... Twitter have terminated that agreement and will no longer be supplying those materials. How should any government or court be able to force them to continue the supply.

By any reasonable standard it falls to PeopleBrowsr to find a new supplier. If the government want to controll Twitter they should just buy it (and watch everyone leave and join some new site)
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Anonymous Coward, 29 Nov 2012 @ 7:10pm

Re: Tweeters?
Are twitter users Tweeters or Twits?
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G Thompson (profile), 29 Nov 2012 @ 8:10pm

The only point in that whole claim by PeopleBrowser (disclaimer: I have had business dealings with Mr Rich in the past) that has any merit in the slightest is point 4.

4. PeopleBrowser built its business in reliance on Twitter's Promises of Open Data Access [emphasis added]

The alleged promises if proven could fall under estoppel, though this would still not prevent Twitter from totally stopping the feed in its entirety as long as it was equitably done to all. Not just to some individuals, though there could be a reasonableness clause that twitter has done what they provided and due to market and other strategic concerns that at the time could not be reasonably foreseen they can now not honour the promise they originally provided.

I can't see this ending well for PeopleBrowser in any instance.

All the rest of the claims are basically trying to stop twitter doing what it is legally able to do and that PeopleBrowser might be seriously butthurt in the process.. Boo bloody hoo! (And that is the Ego of Rich to a tee!)
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PopeRatzo (profile), 29 Nov 2012 @ 8:46pm

entitlement mentality
This is part of the new belief in the corporate world that society owes them profits, no matter how weak their business model or how poorly they are managed.

They are so used to our laws being tilted in their favor that they have come to believe that society must indemnify them against any risk (though of course, they believe that any success came purely by their own cleverness and "hard work").

We need to get used to this new corporate entitlement mentality, because we're going to see it taken to even more ridiculous levels.
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Anonymous Coward, 29 Nov 2012 @ 8:49pm

So why is Twitter turning this off?
According to the filing, PeopleBrowsr is paying Twitter over one million dollars per year for access. I'd like to know why Twitter thinks it's in their interest to turn down that money.

The only reasons I can think of are monopolistic in nature. Someone thinks they can make more money if they are the ONLY ones with access to the full Twitter data. I can't imagine this being a good thing.
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Anonymous Coward, 29 Nov 2012 @ 10:50pm

Re: Re: Tweeters?
The latter!
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Anonymous Coward, 29 Nov 2012 @ 10:51pm

Re: Re: Bitchin' re-write, Mike. 3 times, evidently you like the phrase.
See pink.

Oh look its out of his ass attacking Mike again.
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anon, 30 Nov 2012 @ 2:05am

NOOOOO
Bad move on twitters behalf, I agree with the court case, you cannot provide a service that many build businesses around then remove that service for no reason other than you want to do what those businesses were doing.
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anon, 30 Nov 2012 @ 2:08am

Re:
People are already leaving twitter , so i am wondering if this is not a move to try to stop the leaking of customers to other sites.
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Anonymous Coward, 30 Nov 2012 @ 5:00am

Re: NOOOOO
"you cannot provide a service that many build businesses around then remove that service"

Really?
IANAL either, but an obvious question to ask might be whether there was any sort of contract in place which defined said service and term thereof.
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Anonymous Coward, 30 Nov 2012 @ 5:33am

I thought "Felony Interference With A Business Model" was just a joke. Now it seems our justice system is the a joke.
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anon, 30 Nov 2012 @ 5:34am

Isn't this just Microsoft -> Novell all over again? Why is it wrong for Microsoft to do this but ok for Twitter? Twitter was even getting paid, Microsoft wasn't.

Will you feelings about this change when Twitter launches their own replacement services for PeopleBrowsr? It's a great business model (for twitter): have innovators take the risk to develop the market, kill them by turning off the tech they depend on, then fill the market void with your own replacement product.
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Anonymous Coward, 30 Nov 2012 @ 6:10am

Re:
Twitter was even getting paid

From Twitter's Response (p.17):

The terms of the Agreement call for PeopleBrowsr to make the greater of (a) monthly payments, which increase by $5,000 each month, or (b) payments based on a percentage of revenue. In the Spring of 2012, PeopleBrowsr announced its view that the contract included a "cap" on monthly fees at $100,000. When Twitter pointed out that the Agreement clearly contained no such provison, PeopleBrowsr agreed, and made increasing payments through April, 2012 ($120,000). PeopleBrowsr then again reneged, and unilaterally reduced its payments for May, July, and August to $100,000. Thus through August 2012 PeopleBrowsr is at least $100,000 in arrears, and PeopleBrowsr has not made its September and October payments at all. By the time the extended termination date of November 30 arrives, PeopleBrowsr will owe Twitter $550,000.

(Footnotes and citations to the record omitted; emphasis added.)
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Anonymous Coward, 30 Nov 2012 @ 6:18am

Re: So why is Twitter turning this off?
PeopleBrowsr is paying Twitter over one million dollars per year for access. I'd like to know why Twitter thinks it's in their interest to turn down that money.

From Twitter's Response (p.17):

The terms of the Agreement call for PeopleBrowsr to make the greater of (a) monthly payments, which increase by $5,000 each month, or (b) payments based on a percentage of revenue. In the Spring of 2012, PeopleBrowsr announced its view that the contract included a "cap" on monthly fees at $100,000. When Twitter pointed out that the Agreement clearly contained no such provison, PeopleBrowsr agreed, and made increasing payments through April, 2012 ($120,000). PeopleBrowsr then again reneged, and unilaterally reduced its payments for May, July, and August to $100,000. Thus through August 2012 PeopleBrowsr is at least $100,000 in arrears, and PeopleBrowsr has not made its September and October payments at all. By the time the extended termination date of November 30 arrives, PeopleBrowsr will owe Twitter $550,000.

(Footnotes and citations to the record omitted; emphasis added.)

All this shouting about the amount Twitter is getting paid! Where's the $550,000 that PeopleBrowsr owes?
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elpookie (profile), 30 Nov 2012 @ 9:08am

PeopleBrowser
For PeopleBrowser this is going to be an expensive lesson on the cost of failing to plan ahead. Reliance on supply on the basis of generalized statements re: future conduct on part of a supplier is a really bad strategy. That being said, other options are available to PB but I do not see the necessary basis in the current paperwork. Looks like Twitter just added to its retail analytics business. Thanks PB
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Shane Roach, 2 Dec 2012 @ 12:15pm

Lawsuits are not primarily about legality.
While modern legal code is loaded down with artificially created torts in lieu of actual criminal law where business is concerned, a lawsuit is not on its face an accusation of crime. This looks to be a nuanced situation where the people at PeopleBrowser spent a lot of money setting up a service reliant upon Twitter. The disagreement here is whether or not Twitter misrepresented its intentions when taking money from PeopleBrowser, most likely. It has nothing to do with PeopleBrowser accusing Twitter of breaking the law. Page 6 of the document begins to spell this out.

You can't just take someone's money while promising a future relationship, then change your mind and keep the money. Whether or not Twitter actually did this is the issue at hand, not whether or not it was legal.
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Shane Roach, 2 Dec 2012 @ 12:19pm

Re: "Only themselves to blame"
Is this not TechDirt? I mean, do we not constantly see how, because of intellectual property abuse, people are FORCED to rely on a limited number of outlets for certain types of information?

If Twitter lied in order to get money from this company, they are liable. Period. It has nothing to do with PeopleBrowsr's service.

If they find out their contract sucked, they may turn around and sue their law firm, but barring that, let this one ride because it is totally legit.
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