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Is this going too far or is it inline?  Should TripAdvisor be accountable for comments posted by its users?  Read the below article posted on Tnooz today and tell us what you think.

It isn’t often that you get a lot of candor from TripAdvisor about the hazards of user-generated content, but parent company Expedia says TripAdvisor “faces potential liability” for content users post in reviews, blogs, comments and social media.

Expedia isn’t saying there is any immediate litigation in the offing, but warns “there is no guarantee that the company [TripAdvisor] will avoid future liability and potential expense for legal claims based on the content available on TripAdvisor’s websites.”

If TripAdvisor doesn’t successfully defend itself from such legal claims, it could face liability for “defamation, libel, negligence, copyright or trademark infringement or other legal theories” based on a variety of laws in the U.S. or abroad, Expedia says.

In 2010, there was talk of hotels preparing a defamation lawsuit against TripAdvisor, but it hasn’t materialized so far.

The disclosure about potential liabilities came as part of an Expedia Inc. financial filing in connection with its proposed spinoff of TripAdvisor into a public company. The transaction, subject to shareholder approval, would be completed before the end of 2011.

Like Expedia, a new, publicly traded TripAdvisor would be controlled by Barry Diller, who would be the chairman and senior executive of both Expedia and TripAdvisor. Expedia Inc. president and CEO Dara Khosrowshahi would be a TripAdvisor director, as would Stephen Kaufer, TripAdvisor’s president and CEO.

The Securities and Exchange Commission filing had some interesting tidbits about the Expedia-TripAdvisor relationship.

Expedia says it is TripAdvisor’s largest customer and the $171 million [$166 million for CPC and $5 million for display] that Expedia spent in 2010 to advertise on TripAdvisor accounted for 31% of TripAdvisor revenue.

The two companies have negotiated a host of agreements to run for a year after the spinoff, and Expedia notes it plans to reduce its ad spend on TripAdvisor sites 2% to 5%.

Other risks for TripAdvisor cited by Expedia include a reduction of traffic because of Google’s development of Google Places and the possibility that TripAdvisor’s entry into the vacation rental market may not be successful. In this regard, Expedia obliquely references HomeAway:

Furthermore, a larger competitor exists in the vacation rental space, with significantly more users and listed properties, and new competitors with significant financial resources are continually emerging. If property owners and managers do not perceive the benefits of marketing their properties online or marketing their properties with several intermediaries, then the market for TripAdvisor’s services may not develop as expected, or it may develop more slowly than expected, either of which would slow the growth of TripAdvisor’s business and revenues

lg.php.gifposted on Tnooz by Dennis Schaal


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