Bits and Bytes for July 1, 2004

  |  July 1, 2004   |  Comments

Affinity Engines sues Google; AOL wraps up Homestore deal; and PriceGrabber tries to grab the spotlight with pop-up, spyware ban.

Affinity Engines Accuses Orkut of Stealing its Code

Affinity Engines, a company that operates social networking sites for university alumni, has filed suit against Google, accusing the search player of re-using its proprietary code in the Orkut service.

The suit accuses Google, Orkut.com and Orkut.com's author, Orkut Buyukkokten of misappropriation of trade secrets, breach of contract, fraud and deceit, and unfair competition, among other things.

The dispute has its origin in Buyukkokten's work with Affinity Engines when he was a Stanford student and immediately afterward. He was a co-founder of the company, Affinity Engines says, but left to join Google, maintaining a position on the smaller company's board of directors.

Affinity Engines claims that when it declined to expand into open social networking -- closed affinity sites are its specialty -- Buyukkokten took code he had written for Affinity Engines and modified it for Google. Google launched its Orkut social networking site in January. As evidence, Affinity Engines cites numerous bugs that allegedly appear both in its proprietary software and in the Orkut site.

"[Google founder Sergey] Brin publicly referred to Buyukkokten as having 'a prototype' of a social networking product which could be 'cleaned up' in 'a few months,'" Affinity Engines said in its suit. "This Google 'prototype,' which was owned and was the property of AEI, was used by Google and Buyukkokten in order to develop Orkut.com in a very short time."

Google spokeswoman Eileen Rodriguez said, "Affinity Engines has not provided any evidence to Google that their source code was used in the development of Orkut.com.

"We have repeatedly offered to allow a neutral expert to compare the codes in the two programs and evaluate Affinity's claims, but Affinity has rejected that offer. We have investigated the claims made by Affinity Engines thoroughly and concluded that the allegations are without merit," Rodriguez said. Affinity Engines wants a judge to put a stop the alleged practices, and potentially even give it control over the Orkut Web site. The company is also seeking compensatory and punitive damages.

Homestore and AOL Renew Deal

America Online has renewed a deal to feature Homestore.com's content on its real estate-related properties, proving it can hold on to at least some of its dot-com era customers -- even if the relationship has been quite rocky.

Financial terms of the deal weren't disclosed, but it is said to "reduce Homestore's traffic acquisition costs." The previous deal had called for Homestore to make quarterly cash payments of $3.75 million to AOL, totaling $22.5 million.

"Our ongoing relationship with AOL has proven to be valuable to our customers, and we are pleased to be working with them moving forward," said Prem Luthra, senior vice president of Homestore.

The renewal comes at the expiration of a re-structured agreement between Homestore and AOL in January of 2003. That re-structuring occurred amid a rocky period for both companies, in which both were under Securities and Exchange Commission scrutiny involving their accounting for advertising deals.

PriceGrabber Takes Stand

Hoping to capitalize on consumer ire against pop-ups and spyware, comparison shopping engine PriceGrabber has taken a public stand against the controversial advertising practices.

The company, in an open letter to its customers, said it wouldn't display pop-up or pop-under advertising on its site. It also said it wouldn't run ads that install hidden, ad-supported programs on users' computers or support them by advertising PriceGrabber through such services.

"A site like PriceGrabber that attracts active shoppers could make substantial money by engaging in these practices," the company wrote on its site, "but we have consciously and consistently refused all such advertising in favor of a better user experience."

The company has also developed a logo that like-minded Web site owners can post on their sites, declaring them to be pop-up free. PriceGrabber is hardly the first to take such a stance. AOL long ago phased-out third-party pop-up advertising on its service, as did women-oriented site iVillage.

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Janis Mara

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