Groupon Threatens Legal Action Against DealShelve

This last week, Dealshelve, the Malaysian based daily deals aggregator, received a letter from Karl Chong, CEO of Groupon Singapore (Beeconomic Singapore) asking Dealshelve to remove all Groupon deals from their site by July 6, 2011 or face legal action.

This last week, Dealshelve, the Malaysian based daily deals aggregator, received a letter from Karl Chong, CEO of Groupon Singapore (Beeconomic Singapore) asking Dealshelve to remove all Groupon deals from their site by July 6, 2011 or face legal action.

The bulk of the letter stated:

Groupon possesses substantial and valuable goodwill and reputation in Singapore. The use of Groupon deals are not authorized for display on your site.

YOU HAVE UNTIL 5PM WEDNESDAY JULY 6TH TO TAKE DOWN ANY USE OF GROUPON’S
DEALS FROM YOUR SITE. If by 5pm July 6th, you have not completed this, our next step will be to take formal legal action.

Please email me at [deleted] to confirm that you will cease use of Groupon’s deals immediately. If we don’t hear from you, we will assume you wish to continue to use such proprietary information and we will immediately proceed with legal action.

Dealshelve co-founder Addy replied to Groupon’s letter in hopes of changing Mr. Chong’s mind. The aggregator site feels they had the right to link to the popular daily deal site. “We also reassured Groupon that no profit is being made from our site by having their deals listed. In fact, we may very well be sending more traffic to their site at no cost.”

Dealshelve lists Groupon because of their high ranking (#2) in daily deals, drawing users to their site. “We do take our cut from sites that do provide affiliate program.” Addy added, “We certainly hope Groupon would be able to reconsider their request.”

Dealshelve isn’t a profit making website yet. At the moment, the site is focused on building their user base. The co-founder hopes they can create a similar platform like Yipit Data for Asian market. “We are looking into generating [a] group buying report that we can sell to group buying sites.”

If Dealshelve honored Mr. Chong’s request, then it would set a precedent for other daily deal aggregator sites, placing Groupon in the power of being able to demand any daily deal aggregator to stop linking to Groupon sites.

Mr. Chong’s request is out of the ordinary in that it is quite common for a website to link to other websites. As a matter of fact, it is greatly appreciated by most website owners. It’s kind of the game we play on the internet – I will link yours if you link mine. Some sites are even willing to pay for a link. I don’t know the going rate to pay for a link, but I was once offered $15.00 a month to link a site from one of my sites.

So, what’s the beef with Mr. Chong?

Groupon will occasionally request deal aggregators to omit their deals from their feeds. The daily deal company seems to think there are many benefits to being a Groupon subscriber, deals only relevant by private emails and not available by aggregators.

The internet is a very cool place to operate as a business because there are very few regulations. It’s an ideal environment to be able to create a business and grow without too much attention on laws of limitation of what you can and cannot do.

If Dealshelve was a site that sold degraded products or illegal products, Mr. Chong’s letter would have merit. As it stands, his request is overboard. Addy says that Groupon has not taken any legal actions yet, even though the deadline stated in the letter has passed.