It Gets Sticky

Ethically, the answer is yes. Legally, it’s no. That’s because Flickr’s is a contract of adhesion. According to West’s Encyclopedia of American Law, an adhesion contract is:

A type of contract, a legally binding agreement between two parties to do a certain thing, in which one side has all the bargaining power and uses it to write the contract primarily to his or her advantage.

An example of an adhesion contract is a standardized contract form that offers goods or services to consumers on essentially a “take it or leave it” basis without giving consumers realistic opportunities to negotiate terms that would benefit their interests. When this occurs, the consumer cannot obtain the desired product or service unless he or she acquiesces to the form contract.⁵

Adhesive contracts, also known as boilerplate and standard form contracts, are the most common in business and comprise nearly all the contracts that users encounter on the Web. Sites call these “agreements,” “click wrap,” “terms of service,” and similar names. Lawyers also call them “click wrap” and “browse wrap.” (Both of those are online names for the “shrink wrap” licenses that came with boxed software in the days before software was downloaded or lived in “the cloud.”)

What makes these contracts adhesive is that they nail down the submissive party while the dominant party is free to change whatever it wants. Friedrich Kessler, who popularized “contracts of adhesion” in a landmark article by that name in the July 1943 edition of the Columbia Law Review, explains how these contracts came to be:⁶

The development of large scale enterprise with its mass production and mass distribution made a new type of contract inevitable—the standardized mass contract. A standardized contract, once its contents have been formulated by a business firm, is used in every bargain dealing with the same product or service. The individuality of the parties which so frequently gave color to the old type contract has disappeared. The stereotyped contract of today reflects the impersonality of the market … Once the usefulness of these contracts was discovered and perfected in the transportation, insurance, and banking business, their use spread into all other fields of large scale enterprise, into international as well as national trade, and into labor relations.⁷

Half a century later, that same perfection spread across the commercial Web as well.

Let’s look at a couple of examples, starting with Google Accounts (which includes Gmail, personalized Web history, iGoogle, and Google Checkout):⁸

2. Accepting the Terms

2.1 In order to use the Services, you must first agree to the Terms. You may not use the Services if you do not accept the Terms.

2.2 You can accept the Terms by:

(A) clicking to accept or agree to the Terms, where this option is made available to you by Google in the user interface for any Service; or

(B) by actually using the Services. In this case, you understand and agree that Google will treat your use of the Services as acceptance of the Terms from that point onwards.

I’ve italicized the part that matters. It translates to use = agreement.

Then, there is this, also from Google:

19. Changes to the Terms

19.1 Google may make changes to the Universal Terms or Additional Terms from time to time. When these changes are made, Google will make a new copy of the Universal Terms available at http://www.google.com/accounts/TOS?hl=en and any new Additional Terms will be made available to you from within, or through, the affected Services.

19.2 You understand and agree that if you use the Services after the date on which the Universal Terms or Additional Terms have changed, Google will treat your use as acceptance of the updated Universal Terms or Additional Terms.

I call this the “Vogon clause.” In Douglas Adams’s The Hitchhiker’s Guide to the Galaxy, Earth is destroyed without warning by Vogons (an ugly species of alien bureaucrats) to make way for a hyperspace express route, the plans for which, the Vogons explain, have been available for the last fifty years at the local planning department on Alpha Centauri.⁹

Adhesion contracts are also absurd in a more basic way: the dominant party—the one providing all the terms—can change terms whenever it pleases, while the submissive party has no choice but to acquiesce or go away. Thus, the contract is Velcro for the vendor and Super Glue for the customer. This is why, for example, Apple can change its fifty-five-page Terms of Use for iPhones every few weeks, and customers’ only choice is to click “accept.” And, since use = agreement, there’s no reason for the customer to look at the agreement, unless doing without the service is a legitimate option. For most customers, it isn’t.

And so far, we’re just talking about terms of service. Privacy policies are just as bad, if not worse.

The PR in Privacy

For nearly all Web sites and their services, privacy policies are ass-coverage for the company and PR for the customer or user. For example, Linden Lab’s privacy statement, titled “Protection and Disclosure of Your Information,” “requires” the new entity to follow the old privacy policy; in the next sentence, it says your personal information can be used in ways “contrary” to the policy, provided you receive prior notice.¹⁰ One assumes that would be on the Vogon model.¹¹

Here is why West’s Encyclopedia of American Law says all this fudging is okay:

There is nothing unenforceable or even wrong about adhesion contracts. In fact, most businesses would never conclude their volume of transactions if it were necessary to negotiate all the terms … ¹²

In the Internet Age, that reason has been reduced to an excuse. But it’s an excuse that works, as long as we continue to believe there are no alternatives.

The “old type contract,” Kessler says, “reflects a proud spirit of individualism and of laissez faire. Contracts were constructed to manifest “genuineness and reality of consent,” which harmonized with the ethics and ideals of “small enterprisers, individual merchants and independent craftsmen, dedicated to free enterprise.”¹³ He adds,

With the decline of the free enterprise system due to the innate trend of competitive capitalism towards monopoly, the meaning of contract has changed radically.¹⁴

In other words, “genuineness and reality of consent” doesn’t scale, and stopped scaling as soon as mass manufacture, mass sales, and mass marketing became pro forma for big business—more than a century ago. Explains Renee Lloyd, an attorney and alumnus fellow of Harvard’s Berkman Center,

The industrial revolution introduced a new conundrum for contract law, because the business model of mass–everything required an efficient and standard legal mechanism to support it. So we got Kessler’s contracts of adhesion—not because they were good, but because they were the only thing that worked. In other words, we had to abandon some of contract’s core principles, just to get along in the industrialized world, where a successful company might have thousands or millions of customers.¹⁵

Adhesion contracts-as-laws should be deeply offensive to everybody, as they were to Kessler. But they are also deeply normative. This was the situation that Kessler addressed in 1943. Once power became concentrated in large companies, so did one-sided and coercive contracts that were free in name only.

And yet, Kessler said, the problem by 1943 was even more subtle and pernicious than that:

Society, by proclaiming freedom of contract, guarantees that it will not interfere with the exercise of power by contract. Freedom of contract enables enterprisers to legislate by contract and … in a substantially authoritarian manner without using the appearance of authoritarian forms.

Standard contracts in particular could thus become effective instruments in the hands of powerful industrial and commercial overlords enabling them to impose a new feudal order of their own making upon a vast host of vassals.¹⁶

And vassals we are.

Still, our acquiescence to contracts of adhesion doesn’t mean that all adhesive contracts stand up in court. Says West’s Encyclopedia of American Law, “Many adhesion contracts are unconscionable; they are so unfair to the weaker party that a court will refuse to enforce them.”¹⁷

This has not happened yet on the commercial Web. In fact, contracts of adhesion got a big thumbs-up in ProCD v. Zeidenberg, which was decided by Judge Frank H. Easterbrook in 1995.¹⁸ In this case, ProCD sued Matthew Zeidenberg for breach of its shrink-wrap contract, which restricted sale of ProCD information. It argued that while Zeidenberg did not “manifest assent” by clicking a statement to agree with the contract terms, the information about the proposed license agreement appeared in three places: the outside of the package, the text of the license itself, and the text that displayed each time the software was loaded. Based on these facts, Easterbrook concluded that Zeidenberg was bound by the terms of the license. The court further held,

Shrinkwrap licenses are enforceable unless their terms are objectionable on grounds applicable to contracts in general (for example, if they violate a rule of positive law, or if they are unconscionable). Because no one argued that the terms of the license at issue here are troublesome, we remand with instructions to enter judgment for the plaintiff.¹⁹

Thus, ProCD validated contracts of adhesion in electronic transactions. For better and worse, it also paved a smooth legal path for e-commerce as we know it today.

Matters of Unconscience

So, was Flickr behaving in an unconscionable way toward Deepa Praveen? Here are Flickr’s terms:²⁰

5. FLICKR’S RESERVATION OF RIGHTS

Flickr expressly reserves the right to immediately modify, delete content from, suspend or terminate your account and refuse current or future use of any Yahoo! service, including Flickr pro, if Flickr, in its sole discretion believes you have: (i) violated or tried to violate the rights of others; or (ii) acted inconsistently with the spirit or letter of the TOS, the Community Guidelines or these Additional Terms. In such event, your Flickr pro account may be suspended or cancelled immediately in our discretion, all the information and content contained within it deleted permanently and you will not be entitled to any refund of any of the amounts you’ve paid for such account. Flickr accepts no liability for information or content that is deleted.

6. INDEMNITY

You agree to indemnify and hold harmless Flickr, and its subsidiaries, affiliates, officers, agents, or other partners, and employees, from any claim or demand, including reasonable attorneys’ fees, made by any third party due to or arising out of your use of and access to Flickr pro, your violation of the TOS, these Additional Terms or the Community Guidelines, your violation of any rights of another person or entity, or your violation of any applicable laws or regulations.

These terms might be considered unconscionable on their face if they were uttered by, say, a neighborhood camera store. But the situation is different for a company hosting more than 5 billion photographs for 51 million registered users,²¹ and accumulating 3,000 new photos every minute.²² A company operating on that scale isn’t built for holding customers’ hands, much less for making judgment calls on every uploaded photo. As a big company with deep pockets, Yahoo is also a fat target for lawsuits. So, given the immensity of the company’s exposure risk, being able to delete accounts quickly and thoroughly seems like a prudent stance to take, even in the face of peeved customers.

So, you might think, even if that’s a good excuse for Yahoo, it shouldn’t be for smaller companies. Yet clearly it is, because contracts of adhesion are now pro forma for companies of all sizes operating on the Web. I’ve looked at dozens of these things, and colleagues of mine (including many lawyers and law professors) have looked at thousands. The terms are all pretty much the same. Since searches for “privacy policy” now bring up more than a billion results, we’re talking about a maximally entrenched problem—and one that relatively few have bothered to challenge, in court or anywhere else.²³ The Electronic Frontier Foundation in February 2011 listed just twenty-five such cases.²⁴ None of them would encourage Deepa—or anybody—to become number twenty-six.

It’s pointless to challenge these contracts so long as three conditions persist: (1) only one side gets to write the agreements, (2) the agreements need to cover all conceivable possibilities, and (3) the other side’s only choice is to agree or walk away, which is nearly impossible in a networked world.

It’s No Context

The scope of a contract is contained by its context. When we’re at home, that’s a context. When we’re at work, that’s a context. When we’re shopping, that’s a context. When we’re driving, that’s a context. When we rent a canoe, a tuxedo, or a ladder, those are contexts. That’s why most contracts in the physical world are straightforward, easy to understand, and not built to screw one party or the other. Take a typical equipment rental agreement. It says who is responsible for what and covers such basics as who pays, how much, and when and where the equipment should be returned. In contexts like these, freedom of contract is still alive and well.

In mass markets, however, the context is needing to sell the largest quantity of products to the largest number of customers. Here it is easier and safer for company lawyers to write contracts that equate use with agreement, dump all conceivable risk and liability on the user or customer, release the vendor from all but the most obvious and unavoidable responsibilities, reserve the right to change any term at any time, and to post notice of the change on a Web page almost nobody watches.

Thus, the context-less nature of mass markets in the physical world finds an ideal match in the context-less nature of the Web. This is why nearly all the boilerplate contracts of adhesion for Web-based companies and services look pretty much like what I said in the last paragraph, regardless of a company’s size.

But the story doesn’t end there. Networked markets are massive only in their geometries. Activity within them is still end-to-end, any-to-any, involving millions of separate and distinct individuals. And the Net is open to boundless new developments as well. So there is nothing to stop individuals from acquiring more tools and more power, including the ability to assert their own terms, as equals with sellers. In fact, those tools are in the works right now, and we’ll visit progress in chapter 20.