This latest lawsuit is the second class-action Nike is fighting at the moment. Owners of RTFKT NFTs bringing the class action suit allege that their digital assets have substantially devalued. This legal challenge further paints the picture of the challenges Nike has faced since their entry into the Web3 world. Adidas has taken much smarter steps and produced much greater impact. The situation has prompted some to describe Nike's NFT endeavors as a "mishegoss," further highlighting the brand's struggles in this emerging market.
Earlier this month, Nike formally joined the lawsuit. The lawsuit has been framed as those lucky enough to have fingers on RTFKT NFTs making claims about the worthlessness of their investments, which have crashed in value. According to the plaintiffs, it was precisely this inaction, or failure to act, that caused the devaluation. This tortuous argument sounds a lot like an old case against DraftKings. In that case, plaintiffs claimed NFT devaluation, resulting in a $10 million settlement.
This lawsuit takes place within the general collapse of the NFT market. After hitting peak market volumes and prices earlier in the decade, the NFT boom has since cooled down dramatically. This decline has impacted numerous NFT projects and investors, making it a challenging environment for companies navigating the Web3 landscape.
Since then, even Nike’s overall approach to Web3 has been criticized as inferior to Adidas. While Nike grapples with legal and reputational issues, Adidas continues to release new NFTs and engage with the Web3 community. The more popular assessment claims that Adidas has “posterized” Nike. They compare it to Michael Jordan’s legendary dunk over Patrick Ewing to show how awesome the Web3 version looks compared to the original.
The last time NFT mania struck three years ago, corporate brands sped ahead in droves. They welcomed the new creative possibilities and potential revenue streams it brought. Popular consumer brands, such as Gap and PacSun, followed suit with Nike and released non-fungible tokens, aiming to leverage the growing Web3 trend. Art collectors pumped hundreds of millions of dollars into NFTs, stoking the hype with real cash. Salesforce even considered releasing an NFT platform for its customers. While a significant step on its own, this move reflects the increasing demand and interest for this technology. Salesforce’s NFT platform concept has received significant backlash on social media. This backlash underscores a rising skepticism about the value and sustainability of NFTs.
Nike’s current Web3 situation is a warning to any brand taking their first steps into the Web3 world. The NFT market has been unpredictable and unstable, despite all the initial excitement and investment. Nike’s experience illustrates how important it is to think ahead. Educating and connecting with the community and understanding these risks in this constantly evolving space is what it’s all about. Between the lawsuit and the further bad press around RTFKT NFTs, Nike’s brand reputation has surely been damaged. These strange issues lead us to very important questions about the company’s Web3 strategy.
Depending upon whether or not the Sweeney lawsuit succeeds against Nike, the outcome could have wider implications throughout the NFT industry. Should the ruling go in favor of the plaintiffs, it would set a dangerous precedent for all future NFT devaluation lawsuits. This result is likely to fuel more market investigations and challenge regulation on the ground. Should Nike win the case, it may provide a renewed sense of confidence to those companies already investing or considering investing in Web3. This move will not fully assuage concern regarding the myriad risks posed by NFTs.
Nike’s and Adidas’ Web3 strategies illustrate the importance of being dynamic. Their approaches all highlight just how important it is to be responsive in this fast paced, rapidly evolving market. Adidas' continued release of new NFTs suggests a commitment to experimentation and engagement with the Web3 community, while Nike's struggles highlight the potential pitfalls of a less agile approach. The Web3 landscape is as dynamic as it is exciting. Brands need to judiciously design their strategies and be nimble to adapt to an ever-changing landscape of market realities and consumer mood.
