Category: legal

  • Instagram’s blues and the question of trust

    Instagram’s blues and the question of trust

    “I’m opting out” is one of the milder reactions to Instagram’s changes to their terms and conditions.

    Since the photo app was bought by Facebook for a billion dollars – and marking the high water point for Silicon Valley’s greater fool model of investment – observers have been waiting to see how Mark Zuckerberg’s team would integrate the service and get a return on their substantial investment.

    Now we know. Under the new terms, Instagram will inject sponsored posts and advertising into users’ information feeds.

    There’s nothing really unusual in this, almost every ‘free’ online service has something like this in order to make money. The Atlantic’s Alex Madigral makes the point that companies will continue to sell and use our information for as long as we won’t pay for software.

    What’s really interesting about this is the angry reaction to the changes, showing how people are losing trust in Facebook and, more worryingly for all social media services, how people are beginning to value their private information.

    Once people understand the value of their personal data, and the time they spend creating content for these services, the economics of social media services starts to change which in turns hurts the business models of Facebook and others social media sites.

    We’re still in the early days of social media and the business models that underpin them are evolving quickly. Instagram’s current problems are another lesson for users, advertisers and entrepreneurs.

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  • Are executives taking privacy seriously?

    Are executives taking privacy seriously?

    In an article for Business Spectator on Lord Justice Leveson’s Sydney speech last week, I looked at the commercial aspects of privacy, an area that was overlooked in the reporting of the two Australian lectures by the British jurist.

    Privacy is a serious issue which is also being overlooked by boardrooms, possibly because it’s often conflated with IT security and so it’s seen as a technology problem and, to be honest, executives see it as being a bit ‘soft’ and airy-fairy.

    Sony’s humiliations in 2011 with a series of embarrassing privacy breaches that left the company’s reputation in tatters show the real and embarrassing risks in not taking privacy seriously.

    The UK prank phone call scandal is another example of poor privacy policies which have real world impacts on both the hospital’s patients and staff, whether the management there is held to account or even learns any lessons remains to be seen.

    In California, the US state with the strongest privacy laws, Delta Airlines is being sued over its smartphone app’s policies however the state itself isn’t immune from serious breaches.

    Giving away social security numbers opens up all sort of identity theft opportunities although any privacy breach exposes the victims to potentially serious consequences, some of that pain is going to be passed onto those who give the information away.

    The worry for businesses is that in the absence of serious action by governments and the private sector, the evolution of privacy law is going to take place in the courts with unpredictable and inconsistent results.

    As we now have the tools to gather, store and process huge amounts of data about our customers and staff, we also have an obligation to protect it. This is something managements need to understand and take seriously.

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  • Are bloggers immune from the law?

    Are bloggers immune from the law?

    Last week Lord Justice Leveson of the British inquiry into the culture, practice and ethics of the press gave his first public speech since handing down his report to the UK Parliament.

    In this speech, Lord Leveson claimed that bloggers and social media users have an advantage over traditional media channels because they don’t respect the law. This is nonsense and detracts from the importance of the UK inquiry.

    Speaking to the Communications Law Centre in Sydney last Friday, Lord Leveson gave his perspectives on how privacy is evolving as the media struggles with a 24 hour news cycle and the rise of the Internet.

    One particular point he made was how the differing economics of traditional media and internet channels affected moral judgements.

    “online bloggers or tweeters are not subject to the financial incentives which affect the print media, and which would persuade the press not to overstep society’s values and ethical standards.”

    This view seems flawed – the reason for the UK inquiry into the ethics of the press was because the reporters at some of the nation’s top selling newspapers were overstepping society’s standards. They were doing this in the pursuit of profit.

    At the other end of the scale, Leveson’s implication is that because most bloggers and social media users aren’t making money from their operations this makes them more prone to flaunting the community’s laws and morals.

    What that view overlooks is that those bloggers, Facebook posters and Twitterers don’t live in magical castles sipping the fragrant, rainbow coloured milk of bejewelled unicorns – they have day jobs that pay for their online activities which often makes them far more aware of societal norms than those locked in the hyper-competitive and insular world of professional journalism.

    Later in his speech Leveson expanded on this theme with a comment about the jurisdiction of bloggers and their servers.

    The established media broadly conforms to the law and when they do not they are potentially liable under the law. In so  far as the internet is concerned there has been and, for many, there remains a perception that actions do not have legal consequences. Bloggers rejoice in placing their servers outside the jurisdiction where different laws apply. the writ of the law is said not to run. It is believed therefore that the shadow of the law is unable to play the same role it has played with the established media.

    This view is clearly at odds with reality as again it was the widespread failure of the ‘established media’ in conforming to UK law made Leveson’s inquiry necessary.

    Bloggers and other internet users being somehow immune to legal consequences is a clearly not the case.

    A good example of this are the various British computer hackers and webmasters who’ve found themselves facing extradition to the US for actions which are either not illegal in the UK or would face minor penalties.

    Probably the best example of Internet users facing the full force of the law is the persecution of Paul Chambers who was prosecuted and convicted for making threats against an airport in an innocuous tweet that the local police and airport management thought was irrelevant.

    The force of the law that was thrown against Mr Chambers was impressive compared to the somewhat reluctant efforts of bringing charges against the dozens of journalists, editors and crooked policemen exposed by the Leveson inquiry.

    At the heart of the difference between the traditional media and the online communities is a power and economic imbalance. Despite the declining fortunes of newspapers, they are still politically powerful, influential and well resourced. Which is a good reason why prosecutors, police and politicians are reluctant to hold them account for their excesses.

    On the other hand the vast bulk of bloggers are not; they don’t have a masthead to hide behind or a large, well funded legal team to defend them which actually makes them an easier target for litigation and criminal charges.

    Some bloggers may believe they are immune from the law, but the reason for that is because they are ignorant of the legal system’s reach. Some of them will pay for that ignorance.

    The idea though that bloggers and social media users have some legal advantage over traditional media outlets because of their comparative poverty and location of their servers is simply wrong.

    If anything the advantage is firmly in favour of those working for big business. This is the real lesson of the UK media scandals of the past two years.

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  • Transferring risk to the customer

    Transferring risk to the customer

    AirBnB is one of the poster children for the “collaborative consumption” model of internet businesses where people can put their spare resources, in this case rooms, out into the marketplace.

    Like most web based businesses though the customer service is poor and the proprietors try to push responsibility for the platform’s use back onto the site’s users.

    A good example of this is an article this week in the New York Times where AirBnB hosts risk fines and eviction for breaching their leases or local accommodation laws.

    When Nigel Warren rented out his New York apartment while he was out of town, he returned to find he was facing eviction and up to $40,000 in fines. Fortunately he avoided both but AirBnB did little to help him except to point him in the direction of the terms and conditions which required him to obey all local laws.

    The New York Times asked AirBnB for comment and received corporate platitudes about how their service helps struggling home owners but no real response to the risks of falling foul to local government, landlords, building owners or insurance problems by sub-letting their residences.

    Failing the customer service test is not just AirBnB’s problem, Vlad Gurovich was scammed by a buyer on eBay and now he finds PayPal is chasing him for outstanding money.

    This is a pretty typical problem for PayPal and eBay customers – as Vlad has found, the various seller protections often prove to be useless when dispute resolution favours scammersand PayPal’s philosophy of shutting down accounts unilaterally and without appeal exposes sellers to substantial risks.

    Interestingly, PayPal’s president David Marcus claimed earlier this year that he was trying to change this culture within the company. It seems that’s not going well.

    PayPal, eBay and AirBnB are alone in this of Soviet customer support model – Amazon, Google and most web2.0 businesses have this culture.

    In many ways it’s understandable as dealing with customers is hard. In the view of the modern business world, cutting deals is glamorous while looking after customers is a grubby, low level task that should be outsourced whenever possible.

    Pushing the risks onto users also makes sense from a business perspective, that makes the billion dollar valuations of these services look even better.

    For the founders of these services, none of this is a problem. By the time the true costs and risks are understood, the founders have made their exit and the greater fools who bought the businesses have to deal with the mess.

    While the greater fools can afford to carry the costs, the real concern is for users who may found themselves out of money and out of a place to live.

    That’s why the founders of these businesses need to be called to account for their ethical lapses.

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  • Beware the business trolls

    Beware the business trolls

    “A psychopath will enter everyone’s lives at one time. When yours arrives, your job is to get them out of your life as quickly as possible.”

    That little gem was handed down to me before the internet gave everyone a global megaphone to entertain themselves with. Today it’s likely a dozen psychopaths a week could enter your life through the web or social media.

    One of the manifestations of this ability for anyone to post to the web regardless of merit or sanity has given rise to the phenomenon of “trolling”, of which there has been much recent media attention.

    At its most basic, trolling is about getting attention. The troll hopes to get a reaction from something outrageous they’ve said or done. In that respect they aren’t too different to radio talk back hosts or SmartCompany editors.

    Business has its own types of trolls: the ‘squeaky wheel’ who hopes that by making a complete pain of themselves you’ll succumb to their unreasonable demands; the perennial tyre kicker who wastes your sales staff’s time; or the late payer who enjoys toying with you and your accounts people but has no intention of ever paying the bill.

    The effects of these business trolls can be just as debilitating as an online troll, with the added bonus that they distract you and your employees from getting work done.

    Sometimes the business owner makes the mistake of taking things personally. This often happens when a bad debtor upsets us so much we make it our life mission to get what we deserve to be paid.

    Hundreds of hours and thousands of dollars later we surrender and accept we were never really going to get that relatively trivial sum.

    The worst of all the business trolls is the recreational debtor. These business psychopaths take delight in ringing up debts they have no intention of paying and then treating your attempts to get the money back as a type of game where they will thoroughly mess with your mind.

    These are the people to get out of your life as quickly as possible. It could be writing off the debt, giving them the refund or just kicking them out of the store.

    So beware of the business trolls, they are as likely to appear in your outstandings file as on your Facebook page.

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