The Web3 space was all about decentralization and empowerment of creators, right? The ensuing lawsuit between Zora, the Etsy of Ethereum tokens, and Deloitte, the Big Four multinational professional services network, seems ethically wrong. Here’s a look at why that’s the case. Here’s why this is not simply a trademark dispute. It’s a sad example of how political power imbalances can quash new innovation in this still nascent industry. It’s more complicated than just having “Zora AI” compete against Zora’s principal business. It’s an age-old question — can the Goliaths crush the Davids before they even have a chance to try to take on the giants?
Will Web3 Be Truly Decentralized?
We all know the story: small, scrappy startup disrupts the established order. What do you do when that little startup gets hit by a heavy legal barrage from a company with a bottomless war chest? Once popularizing on the wave of NFT frenzy, Zora today exists, in part, as an optimized social media platform, settled on Coinbase’s Base layer-2 network. It has accused the restaurant of trademark infringement. Deloitte’s all-in on “Zora AI.” Perhaps the most ironic twist is that this suite of AI agents is intended to support client workforces.
Think about that for a second. Deloitte, a consulting powerhouse with over $58 billion in revenue, is making plays to dominate the market. At the same time, it’s profiting from the favorability earned by a one-twentieth the size upstart unicorn. Could this be a harbinger of things to come? Will Web3 become yet another sandboxed environment for incumbents to do their usual thing? They can all too often simply co-opt the innovations of smaller companies by leveraging their legal resources.
At first glance, one might dismiss this as just another big business dispute. Consider this: Zora claims it was a client of Deloitte since 2022. Talk about a betrayal of trust, right? The emotional response is a very human, immediate reaction of moral outrage at the injustice, the unfairness that we perceive. This isn’t only a corporate transaction that soured. That’s a possible breach of fiduciary duty and a flagrant violation of ethical business conduct. It’s akin to your medical provider taking your medical history and using it to develop a rival product – a deep violation of trust.
Protecting Innovation or Stifling Competition?
Deloitte claims there is no chance of consumer confusion, pointing to the distinct nature of the services and respective audiences. Is that really the point? The concern among folks on the ground is the chilling effect this may have on other Web3 startups. If a company like Deloitte can simply adopt a similar name and potentially capitalize on the brand recognition of a smaller player, what incentive do innovators have to even try to build something new?
The lawsuit highlights a critical tension. We cannot afford to stifle innovation by closing off our intellectual property. Meanwhile, we must strike a balance in fostering a competitive environment, where innovation is supported and encouraged. Nkrumah’s philosophy of reconciling freedoms and wants is illuminating in this moment. Zora has the freedom to build and protect its brand, but what about the needs of Deloitte's clients and the potential benefits of their AI platform? That’s a super complicated question and it doesn’t have easy answers.
Look at the bigger picture. What will happen when the next revolutionary Web3 concept is created? Or, will it be quickly hijacked by interests from big corporations aiming to turn a profit? So, this isn’t just about Zora. This is about the basic fairness and opportunity of the digital age. We need to be wary of a future where innovation is dictated by the size of your legal budget, not the quality of your ideas.
The Future of Web3's Open Source Ethos
Web3 embodies the best of an open-source ethos. That builds value and provides the opportunity for anyone to chip in and help lay the foundation for its long-term growth. This lawsuit exposes a potential flaw in the system: the vulnerability of smaller players to the might of corporate giants.
The surprise isn’t any one thing, it’s the total, breathtaking, ridiculous gall of it. For context, Zora sent a letter to Deloitte before the launch of “Zora AI” demanding that they change the name. This wasn’t a case of innocent oversight, this was a conscious choice to move forward in full knowledge of the obvious conflict. This begs the question: what kind of message does this send to the Web3 community?
This scenario is a reflection of the challenges that smaller enterprises in developing economies regularly contend with, as multinational companies tend to exercise disproportionate influence and control. It's a reminder that the principles of fair competition and ethical business practices are not just abstract ideals; they have real-world consequences. If Web3 is ever to fulfill its promise as a genuine democratizing force, we need to do it. Let’s keep these underdogs safe, and make sure they have a level playing field to compete.
The decision in this pending lawsuit will have consequences reaching well beyond California. It will send a signal to the entire Web3 ecosystem about the importance of intellectual property protection and the willingness of the courts to level the playing field. Here’s the thing—the uncomfortable truth. Decentralization and empowerment are not an inevitable outcome, we need to continue to struggle to make them so.
We need to ask ourselves: what kind of Web3 do we want to build? Is innovation stifled by naked self-interest vs true creativity and collaboration? Or is it the latter, the property of giants, who leave the Davids in their wake pulverized underfoot? The answer, I hope, is clear. The awe and wonder of Web3's potential hinges on our ability to create a fair and equitable ecosystem for all.
