Why have things gotten out of hand? Well with the EULA companies are seeking to put too many restrictions and conditions on use that there is precedent to have them thrown out. One case that was noteworthy in the early 2000s was one of Borland. Borland decided to put in their EULA a condition that allowed them to actually enter your home and check to make sure you only had their compiler software installed on one system. This little gem was found by someone that decided to wade through the lengthy document and then complained about it. The complaint turned into a law suit and Borland was forced to change their EULA.

We all have seen how companies are changing their T&C (also called privacy policies, data usage, and many other names). They are changing the rights that users have while using their services. The biggest push is to try and gain more rights over users’ personal information (for advertising and sale), but there is also a move to protect the companies by slipping in arbitration clauses.

An arbitration clause is one that is intended to prevent court cases. If you agree to something with an arbitration clause you have to take those steps before you can attempt a lawsuit against the company in question. In the US if you attempt to by-pass this you will often have your case thrown out completely by the courts. This limits the legal recourse that a user has to get compensation for any perceived or actual damages they feel they are owed.

We have already seen companies like EA and Sony put arbitration clauses in their T&C and EULAs. On top of those they have managed to slip in wording that officially prevents class action suits. A Single person may file a civil suit (after arbitration fails), but cannot combine their grievances with other people that are having the same issue. Class action suits can be a nightmare for a corporation, but are often good for consumers as they are covered by different rules and also provide them to larger damages if they prevail.

It appears that Microsoft is preparing themselves for some rough legal times with the launch of Windows 8 as they are also changing their EULA and T&C to include forced arbitration and rule out the possibility of class action suits. According to Microsoft Assistant General Counsel Tim Fielden;

“When a customer in the United States has a dispute about a Microsoft product or service, many of our new user agreements will require that, if we can’t informally resolve the dispute, the customer bring the claim in small claims court or arbitration, but not as part of a class action lawsuit. Many companies have adopted this approach, which the U.S. Supreme Court permitted in a case it decided in 2011. We made this change to our terms of use for Xbox LIVE several months ago, and we will implement similar changes in user agreements for other products and services in the coming months as we roll out major licensing, hardware or software releases and updates.”

Fielden added, “We think this is the right approach for both Microsoft and our U.S. customers. Our policy gives Microsoft powerful incentives to resolve any dispute to the customer’s satisfaction before it gets to arbitration, and our arbitration provisions will be among the most generous in the country.”

Now we are not sure how removing the threat of a class action lawsuit makes Microsoft want to resolve a dispute before arbitration, but it is also important to remember that there is legal precedent to get around this type of EULA. Although the case they mention does allow for businesses to rule out class arbitrations that 2011 case was a narrow victory and (5 to 4) and could be overturned if someone argued that the 10^th Amendment to the Constitution could be applied to the original ruling. Of course we have to wait and see what Microsoft is doing, but we are guessing they are preparing themselves for potential failures of their cloud services. As we have told you Windows 8 will be a major push to put you into the cloud. The cloud is not a safe or secure place. It is a place where a single penetration can result in the loss of large amounts of data which could affect hundreds (or in some cases thousands) of users. This is why Microsoft is changing their EULA for Windows 8 and other services. They are planning to protect themselves from the litigation they know is to come.

More than anything else we have seen, this move concerns us about the new operating system and what might be happening with the data many will trust to Microsoft.

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