Last Thursday, the Department of Justice (DOJ) filed a Civil Antitrust Lawsuit against Bazaarvoice Inc. (Austin, TX), challenging the company’s acquisition of competitor, PowerReviews Inc. The DOJ said that the $168.2 million transaction substantially lessened competition in the U.S. Product Ratings & Reviews market; thus resulting in higher prices and diminished innovation.
However, Bazaarvoice expects to win the anti-trust case because, as Bazaarvoice Executives stated, the DOJ doesn’t understand the complexities of the Product Ratings & Review market; a major reason as to why they don’t understand how easy it is for many tech companies to offer similar services.
Indeed this claim brings up an important question: can you own the market on an “open source” service that anyone (and everyone these days) has to offer?
According to Bazaarvoice documents filed with the U.S. Securities and Exchange Commission (SEC), the company provided the DOJ with extensive documents, data, and information demonstrating that the acquisition of PowerReviews was pro-competitive and did not result in a lessening of competition.
“We spent more than six months explaining that there is robust and ample competition in the market for Social Commerce Engagement Tools. We disagree with the DOJ’s decision to ignore that evidence,” stated those filed documents.
PowerReviews, according to its website, offers a number of Social Commerce Solutions including: Customer Reviews, Customer Q&A (featuring SEO drivers), Facebook-Powered Social Enhancements, Twitter / LinkedIn / Google+ Social Enhancements, and Social Analytics Reporting.
The company’s premier product is its Customer Review Engine, which goes beyond star ratings and comments to include customer opinion on the pros, cons and best uses of products, as well as make recommendations to friends. Reviewers can also add images or videos highlighting the use of products. PowerReviews optimizes customer reviews for Google search to draw shoppers directly to product pages.
While these abilities sound impressive, and strengthened Bazaarvoice’s already robust Review Management Software, many experts say this does not create a beast that will go unchallenged. These days, nearly every marketing firm worth its weight is tackling the Social Media and Review Management sectors. Advancements in online communities, content sharing and particularly development with Open Source Code allows nearly anyone to break into online programming.
“The barriers to entry when it comes to coding today are lower than they have ever been, especially when you’re building on an idea that already exists on the web,” said Speak Social Director of Development & Design, Scott Carlson. “Almost anything you want to create can be found through open source code.”
A simple Google search for jQuery Star Rating came up with simple code to place a star rating system on a website; and finding it took all of 10 seconds. In addition, WordPress offers many great plugins for comments and content sharing.
Give these tools to any new tech company, and you might be blown away by the competitive results. What’s unfortunate for Bazaarvoice is that – in addition to the DOJ – its own people may not know just how easy it is for a lot of tech companies to nip at their review-managing heels.
In its complaint, the DOJ cited a comment by Erin Defosse, Bazaarvoice’s Vice President of Strategy, stating that “there really isn’t a market … it is [Bazaarvoice] or PowerReviews.” This is simply untrue. There are a lot of companies that can offer things beyond coding – like content creation, influencer building, and customer engagement.
Beyond keeping up with the drama of this investigation (which might include why Bazaarvoice CEO Brett Hurt abruptly left the company just over two months ago), there is an important lesson to take away from this story.
It requires more than placing fancy star rating systems, or robust comment forms, to generate a consistent conversation about your brand. As you saw in PowerReviews’ list of services, Social Media enhancements and analytics were a large part of what they offered. We promise you that while this new partnership may dominate revenue taken in from clients looking for review management, it in no way overshadows the many companies across the nation that have all developed methodologies for harnessing the power of Social Media.
Take this from someone who has successfully executed Social Media Marketing Content and Strategies for a company in its third year of business, Bazaarvoice offers Social Media “stuff,” as a lot of companies do. Nothing is proven, everything has worked for someone, and we’re all still in the game.
Perhaps a better solution – rather than the DOJ asking Bazaarvoice to spend their excess capital on creating a company exactly like themselves – could be asking Bazaarvoice to invest that money in the startups popping up all over the world that are taking on the complicated task of finding real ROI in New Media and a proven method for marketing through Social Media.
The DOJ’s idea asks Bazaarvoice to do nothing more than add a name to the free market, a new company that still brings the profits back to Bazaarvoice. The other solution supports research into New Media, small business development, and job creation … and just might add something new to the world.
I guess the only question is how badly the DOJ is looking to solve a real problem?