Daily Tech Snippet: Monday, May 18

• Alibaba sued in U.S. by luxury brands over counterfeit goods: A group of luxury goods makers sued Alibaba Group Holding Ltd (BABA.N) on Friday, contending the Chinese online shopping giant had knowingly made it possible for counterfeiters to sell their products throughout the world. The lawsuit was filed in Manhattan federal court by Gucci, Yves Saint Laurent and other brands owned by Paris-based Kering seeking damages and an injunction for alleged violations of trademark and racketeering laws. The lawsuit alleged that Alibaba had conspired to manufacture, offer for sale and traffic in counterfeit products bearing their trademarks without their permission. Friday's lawsuit marked the second time in less than a year that the Kering brands had sued Alibaba over the alleged sale of counterfeit products. An earlier lawsuit was filed in July only to be withdrawn the same month with the ability to refile it while the Kering units worked toward a resolution with Alibaba, according to court records. The lawsuit alleged that Alibaba and its related entities "provide the marketplace advertising and other essential services necessary for counterfeiters to sell their counterfeit products to customers in the United States." The lawsuit cited, for example, an alleged fake Gucci bag offered for $2 to $5 each by a Chinese merchant to buyers seeking at least 2,000 units. The authentic Gucci bag retails for $795, the complaint said. Alibaba has allowed for counterfeit sales to continue even when it had been expressly informed that merchants were selling fake products, the lawsuit said. The lawsuit seeks a court order that, among other things, would block Alibaba from offering or facilitating the sale of counterfeit products and unspecified damages that could include $2 per counterfeit item under a statutory regime.

• US E-Commerce Sales Are Surging - Call it the Amazon effect: Sales on e-commerce websites increased 3.5 percent in the first three months of the year from the previous quarter, reaching a record $80 billion worth of purchases, according to seasonally-adjusted figures released by the Commerce Department on Friday. Meanwhile, total retail sales declined 1.5 percent, the first quarterly drop in almost three years. On a year-over-year basis, online purchases soared a whopping 14.5 percent, compared with a 1.6 percent increase for total sales. While 7 percent might sound like just a sliver of the market, remember that there are still a lot of things you wouldn't think of buying online, such as gasoline, cars and restaurant meals. Within certain categories, such as apparel, the shift to the Internet has been faster, according to Poonam Goyal, an analyst with Bloomberg Intelligence. "Companies that generate the largest portion of their sales from online are apparel stores," Goyal said. "Their online sales are often more than 15 percent of their total sales, so the potential there is enormous.”

• Netflix Shares at All-Time High, Said to be in Talks to Enter China in partnership with Alibaba investee Wasu: Netflix Inc. rose above $600 a share for the first time after it was reported to be in talks with a Chinese media company backed by Jack Ma and other possible partners as it seeks entry into China’s $5.9 billion online video market. Netflix has held discussions with companies including Wasu Media Holding Co., according to people with knowledge of the matter, who asked not to be identified because the talks are private. Netflix plans “to be nearly global by the end of 2016,” Anne Marie Squeo, a spokeswoman, said in response to questions about a possible China partnership. Shares of Netflix, based in Los Gatos, California, climbed 4.5 percent to close at $613.25 in New York. A local partnership would be essential given the Chinese government’s strict controls over licensing for online content. Netflix wants a partner that has licenses for content on all devices -- including mobile phones, computers and set-top boxes, according to the people. China’s State Administration of Press, Publication, Radio, Film and Television has given Internet TV licenses to seven companies, including Wasu. Netflix would need to sort out content censorship regulations with Chinese authorities. Starting this April, new episodes of foreign programs -- including “Mad Men” and “The Simpsons” -- can’t be shown until after the shows’ seasons have ended, according to a government notice. Episodes need to handed in to censors for approval, and content deemed violent, sexual or offensive to the ruling Communist Party can be cut, according to notices. Wasu, one of the first companies in China to receive an Internet TV license from the government, has been working with Ma’s Alibaba Group Holding Ltd. to produce set-top boxes since 2013. Wasu operates cable TV and broadband networks in Hangzhou, where Alibaba is based. Wasu said in April last year it would sell a 20 percent stake to Alibaba Chairman Ma and fellow billionaire Shi Yuzhu.

• Lyft raises $150M at valuation of $2.5B; Carl Icahn invests $100M: Lyft Inc. raised an additional $150 million, led by an investment of $100 million from billionaire Carl Icahn, raising the stakes in the car-hailing service’s rivalry with Uber Technologies Inc. The fundraising will help Lyft in a battle for market share with the much larger Uber. A Lyft presentation to investors that was obtained by Bloomberg News in April showed mounting costs for marketing the service. Lyft projects a 512 percent jump in net revenue this year to $796 million. Lyft’s other investors include Japan’s Rakuten, China’s Alibaba and the Silicon Valley venture-capital firm Andreessen Horowitz. The San Francisco-based company had a fourfold increase in active passengers on 2.2 million rides in December 2014 but growth was beginning to slow, the presentation for investors said. The document was prepared for a $530 million fundraising round announced in March that valued the company at about $2.5 billion.

• Taiwan orders Alibaba's Taobao out for rule violation: Taiwan has ordered Alibaba's online marketplace Taobao to withdraw from the island within six months for violating investment rules required for a Chinese company, Chinese and Taiwanese media said on Thursday. Taobao has been fined T$240,000 ($7,860) and must withdraw or transfer its holdings from its operation in Taiwan, China's Xinhua news agency and Taiwan's Economic Daily News quoted the island's investment commission as saying. Taobao and the commission could not immediately be reached for comment. The commission falls under the Ministry of Economic Affairs and has authority to regulate Chinese investments in Taiwan. In March, Alibaba's B2B platform Alibaba.com was ordered to leave the island within six months and fined T$120,000 for a similar reason. Chinese investments in Taiwan are regulated strictly because Taiwan considers mainland China a political rival, even though trade and economic ties have expanded markedly since the late 2000s.

• A Look at the Business Model of Kijiji, a Flop in the US, but which Rules Online Classifieds in Canada: More than 12 million people visit Kijiji’s site in Canada every month, three times the amount drawn to Craigslist in the country. The service is used by 42 percent of Canadians, according to comScore, making it one of country’s 10 most popular sites. It has also eclipsed other companies’ online businesses, including Cox Automotive’s once dominant used-car site, AutoTrader. That success is a striking counterexample to the globalization of the web, in which services like Facebook and Google offer a single product worldwide. It also represents one of the few online brands that fizzled in the United States but found success elsewhere, as the social media pioneer Friendster has in the Philippines and Malaysia. Four years earlier, Ms. Bannister joined eBay in California and became director of category development, working to expand the online auction site beyond its original niche of collectible trinkets. When she returned to Canada, as director of product, she was put in charge of the features in the Canadian version of eBay. She soon found that the operation had a significant problem. “EBay Canada was doing a very good job of getting people in Canada to the website, but we were doing a terrible job actually getting them to transact on the website,” said Ms. Bannister, who is now a general partner at Real Ventures, a seed capital investment fund. “We did some things on the website to try to address it, but it didn’t really close the gap.” A fundamental problem for eBay in Canada, Mr. Shiau said, is that Canadians generally do not like auction-based pricing. On top of that, Ms. Bannister found that because Canada’s vast geography and low population density make shipping costs high and delivery times long, buyers of secondhand goods preferred to make deals in person. To Ms. Bannister, the answer for eBay seemed to be online classified ads. At the head office, however, the idea did not appear to be quite so obvious. At the time, about 10 percent of Canadians used Craigslist, a level many eBay executives thought meant that it was fully entrenched. Nevertheless, they gave Ms. Bannister some classifieds site software being developed for Europe along with a small amount of money to adapt the site and market the result. Listings swiftly grew. Making money, however, was a more gradual process. Among other things, the site did not even introduce banner advertising until it had become fully established. Today, Kijiji has three revenue sources. In addition to banner ads, the site sells more prominent positions within results and more elaborate displays for ads like photo galleries. Also, car dealers and housing rental companies pay subscription fees for their listings. Despite those fees, the autos section is hugely popular, with 4.6 million vehicles listed last year, said Scott Neil, managing director of Kijiji in Canada. This month, Kijiji attracted about 160 car dealers to an annual sales conference in Toronto. And in one measure of Kijiji’s success, Postmedia Network, the dominant newspaper publisher in most large Canadian cities, now uses the service to provide the used-car listings on its automotive websites.