One of the internet's greatest strengths -- the easy transfer of information -- is being challenged. Disputes over who has access to data and how it can be used are not new, but a legal spat between Southwest Airlines (NYSE: LUV) and a start-up called Southwest Monkey could send the debate in a new direction. The outcome could have far-reaching implications for the future of big data, who gets to control it, and even trending technologies like artificial intelligence (AI).
Continue Reading Below
One of the perks at Southwest Airlines is a feature that allows customers to rebook their fares at a lower price if fares later change. The difference in savings can be used toward future flights. The catch is that flyers have to monitor fares on Southwest's website for price changes.
Getting that discount can be a hassle, so a third-party website called Southwest Monkey was started in November 2017 by two friends working in the tech industry. The service "scraped" data from Southwest Airline's website and notified subscribers of airfare changes for flights they had already booked, charging $3 when savings amounted to more than $10. Southwest Monkey didn't make it through the first month before the airline sent a cease-and-desist notice.
Southwest and some other airlines don't allow third-party travel companies like Priceline Group (NASDAQ: PCLN) and Expedia (NASDAQ: EXPE) to post or book airfares on their behalf. In the case of Southwest Airlines, customers can do that only from the Southwest proprietary website. While Southwest Monkey clearly violated those terms, Southwest Airlines is suing to completely shut down not just the monitoring service, but also remnants of Southwest Monkey's website that explain their month-long existence and the ensuing disagreement.
In the lawsuit, the airline's lawyers say that legal action is being pursued because of trademark infringement, and to prevent Southwest Monkey and anyone else from ever restarting a similar operation. It's an interesting move from a company like Southwest, whose advertising often plays on the word "transparent" when referring to its fees. The company also recently settled a class action lawsuit for $15 million over alleged price collusion with other U.S.-based airlines.
Continue Reading Below
I'm unclear on Southwest's motive here. The airline has been an industry leader for years, winning customers with easy booking and no-hassle fares. Its rise to fame has been giving power back to consumers, not restricting them. In my mind, Southwest Monkey was doing the airline a favor by giving customers another reason to choose them; but I digress.
While Southwest's actions can be argued for or against, my interest in this case goes beyond booking tickets and data monitoring websites for discounts.
This isn't a story about Southwest ...
This is a story about information, access to it, and how that will shape business and consumerism in the future. More specifically, with all of the growth in recent years in big data and the efficient dissemination of it using software like AI, this is about who, if anyone, should be allowed to control it.
Many people have been critical of big data and AI because they are disruptors, eliminating humans from the equation and replacing jobs with "machines." Big data and AI can be of help, though, too. Travel fee aggregators like Priceline's Kayak.com help travelers find the best deal. In short, big data is a win for consumers, and easy access should be allowed. Free access to information has helped many a 21st century business grow. Think Alphabet's (NASDAQ: GOOG)(NASDAQ: GOOGL) Google, Facebook (NASDAQ: FB), and Amazon (NASDAQ: AMZN).
In exchange for that access, many businesses have clauses embedded in user agreements that allow them to monitor what users are looking at and clicking on. All of that feeds into product development and advertising. In the Southwest Airlines case, when data collection is flowing the other direction -- back to the consumer -- the brakes are being applied.
The way this case is resolved has obvious implications for consumers. Should business be allowed to control and limit the way consumers access public information? And given the success of businesses built on information sharing, why would any business even want to control public data?
Regardless of the outcome, this debate has repercussions for investors. The businesses that have embraced the information age have done very well, and those reluctant to change, not as much. Thus, my message here is less "Shame on you, Southwest" and more "Be aware of what your investments are doing with data." Making information easier and more accessible is a winning strategy for winning loyal clientele in the 21st century.
10 stocks we like better than Southwest Airlines
When investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.*
David and Tom just revealed what they believe are the 10 best stocks for investors to buy right now... and Southwest Airlines wasn't one of them! That's right -- they think these 10 stocks are even better buys.
Click here to learn about these picks!
*Stock Advisor returns as of January 2, 2018
John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. Nicholas Rossolillo owns shares of Alphabet (C shares), Facebook, and Priceline Group. The Motley Fool owns shares of and recommends Alphabet (A shares), Alphabet (C shares), Amazon, Facebook, and Priceline Group. The Motley Fool recommends Expedia. The Motley Fool has a disclosure policy.