Could a long-running feud in the local Web community finally be coming to an end?
LiveUniverse Inc., an Internet company founded by entrepreneur Brad Greenspan, recently lost on appeal an antitrust lawsuit filed against MySpace, the Santa Monica-based social networking site owned by News Corp.
Greenspan, who was the principal investor in MySpace when it sold to News Corp., has had a litigious history with MySpace and Intermix Media Inc., the now-defunct company that owned MySpace when News Corp. purchased it for $580 million in 2005.
Greenspan made roughly $40 million from that deal. But he has also alleged that it was unlawful and defrauded shareholders, calling it “one of the largest merger and acquisition scandals in U.S. history” given the explosive growth of the Web site. He’s made his case in the press and on a Web site, Freemyspace.com, but has yet to find a judge who agrees with him.
Now, Greenspan’s lawsuits appear to be running their course. The Ninth Circuit Court of Appeals in San Francisco decided last month to dismiss LiveUniverse’s antitrust lawsuit against MySpace.
In that case, LiveUniverse charged that MySpace violated antitrust laws by removing links in MySpace profiles to vidilife.com, a video hosting site akin to YouTube.com that is owned by LiveUniverse. LiveUniverse lawyers contended that MySpace effectively had a monopoly on the online social networking market and that its actions prevented fair competition.
MySpace said it removed the links because it had received complaints that vidilife.com contained copyright-infringing videos and pornography. MySpace attorneys also argued that MySpace wasn’t obligated to help a competing social networking site by linking to it.
A federal judge dismissed the lawsuit in Oct. 2007, finding that the company failed to prove that MySpace’s actions violated antitrust laws or that they had harmed LiveUniverse’s business. The recent decision in the Ninth Circuit affirmed that dismissal.
It is unclear whether LiveUniverse will try to appeal to the U.S. Supreme Court. A representative from LiveUniverse could not be reached, and the lawyer who represented LiveUniverse before the Ninth Circuit Court did not return a request for comment.
David Singer, a partner at Hogan & Hartson in Los Angeles who represented MySpace in the case, said LiveUniverse tried to make an argument that wouldn’t make sense when applied to businesses in the real world.
“It’s like if Wal-Mart was forced to have a moving sidewalk in its store to Target,” he said. “No one would argue that should happen, and there would never be a lawsuit over it. It was just because this was on the Internet that they thought they could get away with it.”
This is the second blow to Greenspan’s battle against MySpace in recent months. In early November, a state court of appeals dismissed a 2006 lawsuit Greenspan filed over the sale of Intermix. In that decision, the court found that contrary to Greenspan’s claims, Intermix shareholders were fully informed of the terms of the company’s sale.
While Greenspan’s feud with Intermix didn’t directly enter into LiveUniverse’s lawsuit against MySpace, Richard Stone, another partner at Hogan & Hartson who also represented MySpace, said he suspected it played a role. “He’s never gotten over what happened at Intermix or its merger with News Corp.,” Stone said.
Greenspan did not return a request for comment. Neither Singer nor Stone said they were aware of any other lawsuits by Greenspan or LiveUniverse against MySpace.