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PeopleBrowsr v. Twitter: The Arguments On Each Side — And What’s At Stake

is data a utility?Yesterday, a San Francisco court gave PeopleBrowsr, an provider of Twitter analytics services, a temporary restraining order against Twitter.  The court ruling forces Twitter to maintains PeopleBrowsr’s full access to Twitter’s firehose of data.

This is a first, small victory for the plaintiff in a case that could become a defining moment in the evolution of the data-driven web. There are many issues at stake in the case, but it begs one over-arching question:  is data a utility, a resource to which access should be regulated and protected?

The uneasy relationship between Twitter and the third-party developer community has been well documented. Twitter has changed its guidance over the years, moving downstream into the mobile and desktop client markets, and changing the terms around API access, all of which have impacted a variety of third-party developers who had built business models based on Twitter’s initial assertions that it was in favor of an open ecosystem.

The PeopleBrowsr case is the first time that a Twitter partner has taken a stand against Twitter. How is the company making its case — and what is Twitter’s counter-argument? Here’s a summary of both sides’ arguments, based on a read through both sets of filings the companies have made so far, and a conversation with PeopleBrowsr CEO Jodee Rich.

PeopleBrowsr: The Complaint

The PeopleBrowsr argument for the injunction has four parts. The company is making the case that, by cutting off access to its full firehose,

  1. Twitter is intentionally interfering with PeopleBrowsr’s ability to deliver on contracts to provide analytics services to a variety of clients, since those services are dependent on firehose access.
  2. Twitter is intentionally interfering with PeopleBrowsr’s “prospective economic advantage,” specifically prospective new client relationships that Twitter knows about because PeopleBrowsr shared that information in a variety of meetings.
  3. Twitter is violating its clear statements to the market, over the course of several years, that it would maintain an open ecosystem and access to its data. (Here’s a fun new term I learned: “promissory estoppel” — a legal term that means a promise has been made, but there is no enforceable contract. Wikipedia says the elements of a promissory estoppel claim are: (1) a clear promise, (2) reliance, (3) substantial detriment, and (4) damages measured by the extent of the obligation assumed and not performed. Do you think that fits the state of the Twitter developer market?)
  4. Unfair competition, under a California code, by using its control of the data to gain access to the analytics market.

PeopleBrowsr's services are based on it having full access to the Twitter firehose

Yes, PeopleBrowsr’s contract with Twitter had a 30-day termination without cause clause. But PeopleBrowsr’s complaint states ”This is wrong for two reasons. First, Twitter contracted to provide an open ecosystem, and Twitter cannot terminate for reasons inconsistent with this obligation. Second, the termination clause does not allow Twitter to terminate for an illegal purpose: to interfere with PeopleBrowsr’s business relationships and restrain competition.”

This is the essence of PeopleBrowsr’s argument: cutting off access will catastrophically hurt PeopleBrowsr’s business, and Twitter has no right to do so because it would be in violation of the guidance it has been giving the market over the years, and because it is using its position in the market to gain an unfair competitive advantage for itself.

PeopleBrowsr CEO Jodee Rich told me that “The market has been dealing with uncertainty for a very long time. Twitter needs to understand that investors and stakeholders have to feel that there is a stable market. We need long-term contracts that don’t restrict our business, and that don’t dictate the terms on how the data is used.”

The Pipeline Cracks

The PeopleBrowsr filings include a declaration by Jodee Rich in which he describes an increasingly testy relationship between the two companies over the last year.  In 2011, Twitter began to say that it intended to reserve Firehose access for “Twitter-driven” partnerships. In April 2011, Rich requested authorization to state that PeopleBrowsr is a “Twitter Firehose Partner,” as three other companies were already doing, but was refused.

He then describes a series of meetings at which PeopleBrowsr was asked to share confidential business information such as customer lists and product roadmaps, purportedly to explore a continuing relationship.

In a November 2011 meeting with Ryan Sarver and Doug Williams, “Williams stated that if the company’s relationship was to continue, Twitter would have to have a “closer relationship” in which Twitter told PeopleBrowsr where to focus its efforts. I responded that we wanted to be a good partner, but could not run our business effectively if Twitter dictated its direction.”

In May of 2012, Williams “advised me that PeopleBrowsr should plan to transition off the Firehose and seek access to a portion of the Firehose data through Twitter’s resale partners Gnip or DataSift. The only stated reason for the termination was that PeopleBrowsr was no longer a strategic “fit” for Twitter. Williams acknowledged that terminating Firehose access would make it impossible for PeopleBrowsr to continue to provide the products it was contractually obligated to deliver, and could put PeopleBrowsr out of business entirely,” and in July, PeopleBrowsr received its termination email.

PeopleBrowsr did explore contracting with Twitter’s authorized resale partners for access to the data, holding teleconferences with both DataSift and Gnip to discuss their data options. “Though both services stated they had access to the full Firehose, they also stated that Twitter would not authorize them to provide the full Firehose to PeopleBrowsr. At best, they could provide a fraction of the Firehose data.”

Rich makes the utility argument in his declaration. Twitter describes itself as an “information utility,” and it is just that,” he writes.

“PeopleBrowsr, like other businesses using Twitter data, depends on that data just as much as electricity or water. Without it, PeopleBrowsr does not have essential data it needs to continue in business. Twitter controls an essential input for PeopleBrowsr’s and others’ businesses and can eliminate competition by restricting access to that input.

Through Twitter’s partners Gnip and DataSift, developers can obtain larger amounts of Twitter data, with limited historical access. Gnip and DataSift cannot provide access to all of Twitter’s data, however, without explicit approval from Twitter, which has never been granted.”

Twitter’s Rebuttal

Twitter home page

Twitter’s arguments against the restraining order are very simple: “Contract 101.”

It answers PeopleBrowsr’s complaint primarily on the strength of the contract it had in place, arguing that injunctions are not available in contract actions, and that the contract is an integrated document – meaning no alleged “promises” made outside the contract carry any weight.  Additionally, the agreement “expressly bars any liability caused by excercise of the [Agreement's] termination provision.”

As far as PeopleBrowsr’s claims that Twitter is interfering with its existing client contracts, specifically with the Department of Defense, Twitter says that PeopleBrowsr entered into those contracts after its agreement with Twitter had already expired, and after Twitter had already indicated it would not renegotiate on the same terms.

PeopleBrowsr knew from day 1 that the contract would end on July 2011, and its own declaration details how Twitter clearly communicated it did not intend to renew the contract after that point. ”If, in that context, PB chose to enter into contracts with third parties that required or represented that it would in fact succeed in negotiating a special deal with Twitter, PB cannot lay that choice at Twitter’s feet. If PeopleBrowsr made promises it could not keep, that is between it and the parties to those agreements.”

Twitter goes on to claim that PeopleBrowsr is itself is in breach of the agreement, falling short on payments that it owes Twitter by $550,000.  And for the claim of unfair competition to stick, Twitter argues, PeopleBrowsr would have to be a competitor, not a customer.

Twitter, the document says, “cannot be forced into forever business relationships on terms of PeopleBrowsr’s choosing.” It is no longer offering the product that PeopleBrowsr was buying, and cannot be forced to do so.

UPDATE: On December 3, Twitter shifted its position, arguing the case was based on federal antitrust law.

So What Happens Next?

The victory for PeopleBrowsr is short-term. Temporary restraining orders are usually granted until the court is ready to decide on a preliminary injunction, which would then last until the case is decided. The hearing to discuss the injunction is scheduled for January 8.  Jodee Rich told me that the case could last for months, or even years — which would mean more uncertainty for the market that has already seen a lot of turmoil.

In a discussion of the case inside a Facebook group of social marketers, marketing strategist Neil Glassman wrote,  ”Has Twitter taken advantage of its clients? You betcha. Is Twitter’s business plan without a robust third-party ecosystem better than with one? Time will tell. Will the typical Twitter user care? Ay, there’s the rub.”

So – what do you think? Does PeopleBrowsr have a case?

And regardless, what do you think of the notion that we should be thinking of data as a utility — a resource that’s too valuable to risk having access controlled or restricted?  And should users — and ultimately Twitter’s advertisers — care about any of this?

  • http://twitter.com/TedRubin Ted Rubin

    Certainly an interesting test case for not only Twitter but others who control access and those building businesses around that access.

    • http://therealtimereport.com/ Tonia Ries

      I hadn’t thought of it from that perspective – but it would apply to other industries, too, wouldn’t it? There was a story in the WSJ today about a woman with a heart implant – who didn’t have legal access to the data from her own implant. Meanwhile the manufacturer has the right to resell the data to Insurance companies …

      Data access and ownership it’s going to be a long conversation.

  • http://dannybrown.me/ Danny Brown

    Here’s the biggest thing at stake, and one that Neil touched on – does the average user care? Maybe not at the minute. BUT… if you continue to limit who has access to your data, you (by definition) limit the way that data can be used. When you do that, you end up with a boring ecosystem that no-one uses.

    Twitter might want to think about that before cutting ties with those that make the information really actionable…

    • http://therealtimereport.com/ Tonia Ries

      It’s so hard to know how this is going to shake out, Danny. I have always loved Twitter for its simplicity and flexibility – the same way I loved Legos as a kid, the idea that you could do anything or build anything with it. They are moving away from that in an attempt to create a more pre-packaged experience in the hopes of attracting even broader, more mainstream users. Maybe they’re right.
      But I still think that, rather than trying to be more like Facebook, they should be more like Twitter – make it more easy for the user to customize their stream, etc.

  • http://www.proservicesks.com Frank Woodman Jr

    I don’t think that PeopleBrowsr has a case that they will win in court. Contract law is very clear, a written contract is always, unless it’s shown to be illegal or improper in some way, superior to any verbal agreement. Especially when the contract is explicit in saying that any verbal implied agreement outside of what is written isn’t enforceable. And it appears that just such wording is in Twitter’s contracts.

    But this story does have a much larger issue and that is the nature of how companies like Twitter deal with other companies. In that area PeopleBrowser has a definite point as Twitter has done to them what they’ve done to many others and cut off access they were lead to believe would be there going forward. And in that regard Twitter beyond any doubt in my mind deceived and mislead PeopleBrowsr as they did most of the third party developers that they used in the beginning to build the business they now deny them access to.

    And while I see no way PeopleBrowsr can win in court on either of these issues I certainly hope that Twitter is seen as having been arbitrary, unfair, deceptive, and devoid of any moral grounds for how they have treated most all of their third party developers including PeopleBrowser.

    As long as businesses feel that they can do anything in the name of profits and be allowed to get away with it we will see actions such as Twitter has taken. I can only express to Twitter my opinion that they had better be right about the direction they are taking with such actions as if at some point you need the help or assistance of third party developers or outside companies I would doubt you will find them willing to help.

    So enjoy your win Twitter but remember this in only a court victory and not a victory in the arena of public opinion. And at some point that loss of the public’s trust in how you as a company fall short in the area of fair business practices will come back to haunt you. And even if you’ve protected yourselves with clever contracts all while leading others into believing you would be there for them in the future when you had no intentions of doing so the public will not be deceived. For while Twitter is a great service and one I love to use you as a company are devoid of any idea of what make up improper business dealings even though you’ve so far avoided violating any laws.

    • http://therealtimereport.com/ Tonia Ries

      great comment, Frank. I’m afraid, however, that until there is a viable alternative to Twitter, they may not need to be all that concerned about the opinions of a small number of developers and social media geeks…

    • http://dannybrown.me/ Danny Brown

      I just want to say this is a brilliant comment, Frank, and if i could favourite it a hundred times, I would. :)

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