Facebook User Agreement Imbroglio Recap (and Some Comments of My Own)

By Eric Goldman

I didn’t have a chance to blog on the Facebook user agreement amendment flap in real-time, but now that Facebook has rolled back its amendments and everyone is catching their breath, the Monday morning quarterbacking is proceeding in full earnest. Some of the articles that caught my attention:

* CNET News.com: “Facebook’s about-face: Change we can believe in?”

* InternetNews: “Experts: Facebook Must Rethink TOS Stance”

* EFF: “Facebook’s reaction is a tremendous victory for its users.” I guess that’s true, in the way that getting back to zero at a casino sometimes can be considered a win.

* Bill McGeveran powerfully (and with irony) demonstrates that Facebook’s terms weren’t all that unusual. Et tu, Consumerist?

Some of my own observations:

* When you’re a high-profile company living in the media fishbowl like Facebook, there is no such thing as a minor amendment to your user agreement.

* Facebook’s amendments–and the news reports about them–were confusing for two independent but often correlated problems. First, lay readers often misread user agreements, especially broad license grants that users mistakenly read as statements of ownership. This is a well-known and long-standing phenomenon; see, e.g., the flap over GeoCities’ user agreement from a decade ago. So initial news reports on Facebook’s amendments were garbled and perhaps overly dramatic.

Second, Internet lawyers often draft user agreements using legalese in ways that make the agreements indecipherable to lay readers…and, not infrequently, to other lawyers. Having drafted a lot of them in my life, I’m a pretty sophisticated reader of user agreements, yet it took me a fair amount of time to parse Facebook’s license terms to figure out what they were saying–and, even then, I wasn’t quite sure. In particular, the “perpetual” and “irrevocable” terms in the license agreement were in seeming conflict with Facebook’s promise in the same license grant to honor a user’s privacy settings. In other words, if a user can set the configurations to remove content from Facebook’s purview and Facebook will honor those instructions, then how is Facebook’s license grant irrevocable? Unless I’m missing something big, this looked to me like a drafting error by Facebook. (And check out Nancy Kim’s op-ed identifying this exact issue–in March 2008).

This suggests a drafting lesson we might internalize from Facebook’s hassles (Jonathan Zittrain makes a complementary point). We as Cyberlawyers are used to parroting the exact words from the applicable statutes and caselaw because it seemingly increases the precision of the agreement, but frankly I think Facebook and other Internet companies would do a whole lot better–both legally and in the court of public opinion–if it junked the legalese and actually tried to write license grants in real English.

* Partially obscured in the haze is the lurking question of whether Facebook can unilaterally amend its user agreement without providing any notice to users. I don’t even see this as a close question. From my reading of the precedents, I think the answer is pretty emphatically NO, both as a matter of contract law (and see more; but compare MySpace v. theglobe.com) and FTC law (see, e.g., the Gateway Learning case). Without a doubt, I wouldn’t want to be Facebook trying to defend the new incremental changes in court.

* I got a few inquiries about whether a lawsuit against Facebook would have been successful. As Ethan explained recently, there may be unexpected hurdles to any such lawsuits.

* Now that Facebook has stirred the hornet’s nest, it’s not clear that they can simply roll back to the prior version of the user agreement and put everyone back in the happy apple. Instead, having called attention to its licensing policies, Facebook will be lucky if the pre-amendment terms survive as those undergo critical and jaundiced scrutiny from users. David Kirkpatrick touches on this.

* No matter how Facebook resolves its agreement, this episode has been damaging to its trust relationship with its users. It gives users yet another reason to question whether Facebook is a site we can trust. For users who lived through the Newsfeed and Beacon episodes, this may be a three-strike situation. For others, the fracas is yet another wedge in the users’ relationship with Facebook. Trust is hard to earn and easy to lose.

Having said that, in the past couple of quarters, Facebook has been riding a strong network effects bull and seeing remarkable growth DESPITE Beacon. So Beacon clearly did not destroy users’ trust in Facebook. At the same time, if users fall out of love of Facebook due to loss of trust, they will scale back their involvement with Facebook, which ultimately could negate the network effects benefits they are currently experiencing. IMO, this is the real risk created by Facebook’s highly publicized problems.