When does a competitive advantage become unethical?

A brief but violent storm blew through portions of the IT world in early May, but was downgraded to huffing and puffing, when one of the parties to the dispute shrugged and the other blinked. Most of the animus in the brouhaha came from observers in the apparently tight-knit world of PDA aficionados.

Despite the short-lived nature of the controversy, it did leave ethical questions dangling. To wit, when does seizing competitive advantage cross the line into unethical business practices? The answer, as you might suspect, isn't as clear-cut as it first seems.

The situation in a nutshell, for those who haven't been following, involves two companies that make similar calendar applications for the Palm operating system. Pimlico Software was just about to launch its DateBk5 application when rival iambic registered the domain names DateBk4 and DateBk5.

Initially, attempting to go to either datebk4.com or datebk5.com would take viewers to the iambic Web site. When the news hit a Palm-related message board, the readers there reacted negatively and iambic backed down, pointing the addresses to blank pages. This still didn't satisfy complainers, and eventually iambic surrendered the two domains and apologized for registering them in the first place.

Ordinarily, iambic's action in surrendering the domains would render the controversy moot, but the whole mess has left open the question of whether the actions were unethical, as some people on the message board have claimed. Clouding the issue for many people was the fact that the proceeds from Pimlico products go to support a gorilla refuge charity.

First, we should dismiss the gorilla charity connection, which is a red herring as far as the ethical considerations are concerned. iambic is a business trying to make a profit. As such it is allowed to use whatever ethical business practices will give it a competitive advantage -- regardless of how its competitors choose to use their earnings. The question is whether the practices are ethical, not how the competitor was spending its money.

To get to the bottom of the core ethical questions, it's always best to start someplace where we feel we're on solid ground. Had iambic tried to cybersquat on Pimlico's business name, which it didn't, it would have been easier to say the action was unethical and was liable to run into difficulty in the courts. In fact, clicking on pimlico.com takes you to a race track. You need to go to pimlicosoftware.com to reach the calendar company.

Had iambic tried to disguise its Web site to make buyers think they were dealing with Pimlico, which again it didn't, the ethical decision would be much easier and much quicker. The verdict here would be that the whole process was misleading, and that the company was operating under false pretenses. It wasn't.

What iambic did was register domain names that were clearly available, despite the fact that Pimlico had plenty of time to register them. By directing those sites to the company site, iambic was, I imagine, hoping to attract customers interested in a date book application and offer them an alternative.