On Sunday, a New York Times piece reported that over the years, the classified ads giant Craigslist has quietly threatened to take legal action against numerous startups that have piggybacked off its data to create applications. Said the story, Craigslist has “dug an effective moat by cultivating an exaggerated image of ‘doing good’ that keeps its customers loyal, while behind the scenes, it bullies any rivals that come near and it stifles innovation.”
Bullies rivals? Stifles innovation? Never one to miss a fight, Techcrunch founder-turned-investor Michael Arrington quickly weighed in. “None” of the piece’s points “make sense,” he wrote at his blog, Uncrunched. “Not to generalize,” wrote Arrington, “but a lot of people who come to Silicon Valley from the East Coast have an odd way of looking at success, more jealousy driven than anything else. I thought [Times reporter Nick] Bilton broke that stereotype, but the more I read of his stuff the more I wonder.”
Not to generalize, but Arrington’s reaction typifies an attitude in Silicon Valley that criticizing entrepreneurs or startups should be off-limits. That’s unfortunate. Bilton’s point – I think — was simply that Craigslist has come a long way since its founding by cuddly programmer Craig Newmark; like many once beloved startups, it’s now a company that’s not afraid to throw its weight around.
Surely, Bilton’s observations about Craigslist don’t come out of thin air. Just yesterday, a tech entrepreneur noticed that Craigslist has altered its terms and conditions to establish itself as the “exclusive licensee” and copyright owner of every ad posted at its site, meaning the company is claiming ownership over any content its users post. Craigslist may be trying to prevent other Web sites and applications from capitalizing on its users’ data, but at what cost? For a company that used to portray itself as a transparent entity that put it users’ interests first, Craigslist’s decision to co-opt its users content calls to mind the old truism that power corrupts.
And Craigslist is hardly alone in keeping one foot on the neck of potential challengers. Consider the story of entrepreneur Dalton Caldwell, who claims that last month, he presented an app that he’d been building on Facebook Platform to Facebook execs. As Caldwell reports in an open letter to Mark Zuckerberg posted yesterday, he hoped the “outcome of this meeting would be executive-level support for my impending product launch.” Instead, the execs suggested that Caldwell join Facebook and hand over the app or watch it perish. “I didn’t want to believe your company would stoop this low,” wrote Caldwell in his letter. “My mistake.”
Outsiders have similarly misjudged Twitter, which recently and abruptly announced it will begin limiting the ways that third-party developers can use its data stream. The news immediately sent shivers down the spines of entrepreneurs who rely on that feed, and it should have. Even Mike McCue — founder of the popular reader app Flipboard and a Twitter board member – revealed yesterday that he’s giving up his seat in a move widely believed to be tied to increased competition from Twitter. (Business is business.)
Silicon Valley became a great source of innovation in large part because it challenged convention, and we shouldn’t scorn writers like Bilton because they question the conventional wisdom that entrepreneurs are heroes. Let’s face it: Craigslist, Facebook, and Twitter are no longer the same cute startups that convinced consumers to part with their personal information. Today, they’re social media behemoths that are doing their level best to crush any competition that crosses their path. In the face of this much market power, it isn’t just fair to wonder whether innovation is at stake. It may be more necessary than ever.