I Agreed to What? The Surprising Rights Companies Claim in Terms of Service

I Agreed to What? The Surprising Rights Companies Claim in Terms of Service

Some legalese is silly—ever heard of the zombies clause?—but clicking okay can subject you to surprising licensing agreements and forced arbitration

By Adam Tanner

Imagine if you entered a restaurant and the manager asked you to sign a contract blocking you from suing the business if everyone falls ill, and barring you from writing a bad online review. The agreement might even spell out what happens if zombies invade.

You might dine elsewhere or just go back home.

Fortunately, restaurants don’t try to impose demands like that (well, not usually). Yet we routinely agree to similar restrictions by clicking “yes” to long and tangled agreements on websites or simply by using software and gadgets. And yes, one tech powerhouse even includes a clause about reanimated corpses.

Even if you’re distrustful of all that turgid legal prose, you may still be surprised by some of the clauses in terms of service and end-user license agreements, including the ones spelled out below. A number of them are odd but relatively harmless. In other cases, these agreements try to take away important consumer rights.

That Thing You Bought? We Still Own It.

Sometimes the terms of service tell you that a manufacturer effectively still owns the product you just carried home and unpacked. That’s because the company says you bought a license to use its technology, not the object itself. 

“It’s simple: If you buy a product, you should own it—and these licensing arrangements interfere with consumers’ ownership rights,” says Maureen Mahoney, a senior policy analyst at CR who works on ownership and right-to-repair issues. “This can hurt competition, which stifles innovation and could cause consumers to face higher prices in the marketplace.”

In many cases, consumers don’t realize they’re actually buying a license to use something. “From the consumer perspective, it feels underhanded and deceptive,” says Leslie John, a professor of business administration at the Harvard Business School.

Such licensing arrangements are common with software—including the software that runs our phones, computers, and even our cars. But sometimes they exist for physical goods as well, such as for cartridges for the SodaStream sparkling water makers that sit on millions of kitchen counters worldwide.

“SodaStream or its content providers grants you a limited, nonexclusive, nontransferable, non-sublicensable license to access and make personal and noncommercial use of the SodaStream Services,” the company says in its legal terms. “The Cylinders will remain at all times the sole and exclusive property of SodaStream.”

What exactly does that mean? “You don’t buy the SodaStream device, you actually license it from a company,” says Daniel Kahn Gillmor, senior staff technologist at the ACLU’s Speech, Privacy, and Technology Project. 

The company strongly discourages you from using another company’s gas cylinders in your device. And you don’t, it seems, have the right to refill SodaStream’s own containers on your own, though many YouTube videos purport to tell you how. Refilling the bottles yourself takes some know-how; you have to use the right hardware and make sure to use beverage-grade carbon dioxide.

Safety might be a reason for the legal language. Or it could simply be aimed at maintaining the company’s profits. SodaStream appears to make more money from refills than selling the core device, according to financial statements from before PepsiCo bought the company in 2018 in a $3.3 billion deal. 

You see that same kind of “razor-and-blades” approach to business in printers, where you can buy a cheap one for under $100 but then spend that much every year on ink cartridges.

SodaStream’s CEO, Eyal Shohat, who formerly served as the company’s chief legal officer, didn’t respond to requests for information on why SodaStream imposes those legal restrictions on its customers, nor did other company officials. 

One company that failed to turn a restrictive razor-and-blades business strategy into financial success was Juicero, a Silicon Valley startup that made a $700 internet-connected juicing machine. The machine worked only with Juicero’s proprietary fruit and vegetable packets, which sold for $5 to $8 apiece. Juicero went out of business in 2017 not long after the Bloomberg news agency posted a video showing that a user could easily squeeze juice out of the packets without the expensive machine. 

“That company folded because it was a ludicrous proposition, like the whole point of juicing is to use actual fruit, not a repackaged thing,” Kahn Gillmor of the ACLU says. But silly products aside, the proliferation of licensing agreements can harm consumers. “The point of the licensing agreement is to make sure that the proprietor of the system is the one in control, not the user.” 

Courts have sometimes made judgments against companies with restrictive licensing models. For example, in 2017 the Supreme Court ruled that outside companies had the right to refill Lexmark printer cartridges despite the company declaring otherwise.

“Generally, courts are hesitant to treat a transaction like a license when it looks like a sale to the consumer,” says Aaron Perzanowski, a Case Western Reserve law professor and co-author of a book on how companies are trying to change traditional models of ownership. “One important exception is software, where some courts, unfortunately, have been convinced a particular copy of a program can be licensed but not sold.”

We Have Rights to Your Photos

Companies such as Meta (which owns Facebook and Instagram) and Twitter claim the right to reuse what you post on their social media sites.

“You grant us a nonexclusive, transferable, sublicensable, royalty-free, and worldwide license to host, use, distribute, modify, run, copy, publicly perform or display, translate, and create derivative works of your content,” Facebook posts in its terms of service. “This means, for example, that if you share a photo on Facebook, you give us permission to store, copy, and share it with others (again, consistent with your settings).”

Instagram has nearly identical terms.  

It makes sense that Facebook or Instagram can share your photos with other users; after all, that’s pretty much what the platforms are for. But does the language also mean that Facebook could hand out copies of your photos on a street corner if the company wanted to? You might think Meta would provide a straightforward, reassuring “no” when asked about that. But instead, a spokeswoman, Dina El-Kassaby, pointed us to other sections in the terms of service:

“You own the intellectual property rights (things like copyright or trademarks) in any such content that you create and share on Facebook and other Meta Company Products you use. Nothing in these Terms takes away the rights you have to your own content. You are free to share your content with anyone else, wherever you want.

“However, to provide our services we need you to give us some legal permissions (known as a ‘license’) to use this content. This is solely for the purposes of providing and improving our Products and services as described in Section 1 above.”

That covers a lot of ground. The TOS makes it clear that “improving” its products includes using anything you post to help the company develop “artificial intelligence, machine learning systems, and augmented reality,” among other new technologies. You might not mind that, but then again, a cute story you post about your toddler is probably intended for family and friends, not for a team of engineers working on a new metaverse project for Facebook.

Twitter’s terms of service say the company can freely reuse content you post: “By submitting, posting or displaying Content on or through the Services, you grant us a worldwide, non-exclusive, royalty-free license (with the right to sublicense) to use, copy, reproduce, process, adapt, modify, publish, transmit, display and distribute such Content in any and all media or distribution methods now known or later developed.” The company didn’t respond to requests for comment. (Like many websites that welcome reader comments on articles, Consumer Reports retains the right to use anything you post on our site in our own user agreement.)

These companies may have benign intentions when it comes to your photos and posts, but consumer advocates and many researchers still object to language in the terms of service. “More broadly, these companies know they are in a position to dictate terms that most users will never read and have no power to resist,” Perzanowski says. “So even if they have no immediate need for these licenses to user content, there is very little risk in demanding them.”

Don't Compare Us to Our Competitors

You might object to the claim that you don’t own the technology in a computer you bought. But how about a clause saying people can’t evaluate it and let others know what they think? Yet that’s not uncommon in the tech industry.  

“You must not, and must not allow any third party to … publish or provide any Software benchmark or comparison test results,” the computer chip maker Intel says in its software terms of use. “Violators will be prosecuted to the maximum extent possible.”

William Moss, an Intel spokesperson, says that the language is to protect the company from inaccurate reviews of the company—and that the company hasn’t enforced it recently. “We typically work with people, such as reviewers, who run benchmarks to ensure that they are following appropriate procedures and parameters for benchmarking Intel products so that the results are accurate,” he says. “This is a standard practice in the industry.” (Consumer Reports buys and tests computers and other products with Intel processors throughout the year. We do not coordinate our testing with Intel or any other chip or device maker.)

Many other tech companies have similar language. 

Some lawyers think that these clauses—which have been around since the 1980s—may now be illegal, thanks to a 2016 consumer rights law. The language is mostly about discouraging tough reviews, according to Steve Shillingford, a consumer privacy advocate and CEO of DeepSee, which applies machine learning to automate business practices. 

“They want to look big, they want to look ominous. They want to scare people away from doing that,” he says.

We Know You Won’t Read Our TOS, But the Zombie Clause Still Applies

The terms of service for Lumberyard, an Amazon game engine now being run largely by the Linux Foundation, says that certain developer restrictions will be lifted in case of “a widespread viral infection transmitted via bites or contact with bodily fluids that causes human corpses to reanimate and seek to consume living human flesh, blood, brain or nerve tissue and is likely to result in the fall of organized civilization.”

One can imagine company lawyers having a good laugh devising this zombie clause, which has been in the terms of service for years, generating occasional headlines and lots of chuckles on Reddit. Most people probably never notice the language—good evidence that they rarely wade through any of the documents they agree to online. 

“I think that if they have something important to say, they should say it in a way that is accessible to people, and putting in the joke clauses isn’t really the way to do it,” says Lorrie Faith Cranor, a professor at Carnegie Mellon University and former chief technologist at the Federal Trade Commission who sits on CR’s Digital Lab advisory council. And that goes for all sorts of joking in these documents, she says. (Of course, it’s all fun and games until something eats your brain—and the Centers for Disease Control and Prevention once ran a disaster-prep campaign in case of a zombie apocalypse.)

One other clause you’ll see from tech companies might seem far-fetched, but it’s actually deadly serious. Apple is one of a number of tech companies whose terms bar “the development, design, manufacture, or production of nuclear, missile, or chemical or biological weapons.” Such language doesn’t seem to make much sense in the iTunes end-user agreement, unless perhaps would-be bomb makers have iTunes playing in the lab as they work. But Apple also uses the language for many other products and services, including its macOS Monterey (PDF) and macOS Server (PDF) operating systems. 

An Apple spokesman declined to comment on the record about that clause. But you can find essentially the same language elsewhere in tech industry agreements, including from VMware, which provides cloud computing services to businesses. The clauses are serious, says VMware spokesman Michael Thacker, and are aimed at complying with U.S. government rules on exporting certain items. “Our Terms of Service include this to ensure that our end users are aware of this contractual obligation to comply with the prohibitions outlined within the Export Administration Regulations,” he says. 

A spokesman for the Bureau of Industry and Security, which oversees export controls at the Department of Commerce, said the Export Administration Regulations (EAR) generally don’t specify such wording, instead leaving it up to individual companies to determine the best way to comply with the rules.

You Can’t Ever Sue Us 

Legalese about zombies and nuclear weapons are unlikely to affect you personally, but other language you agree to could have serious implications. Many terms of service agreements say you can’t sue the company if there’s ever a dispute, but instead have to bring the disagreement before an arbitrator. They may also bar you from joining others in a class-action lawsuit.

A 2019 study found that of the largest 100 U.S. companies, 81 had imposed arbitration agreements on customers, and 78 include language barring class-action lawsuits. The study calculated that at least 826 million consumer arbitration agreements were in force as of 2018, and probably many more.

Companies often prefer arbitration because they hope for more favorable treatment than they’d receive in court, says Perzanowski, who is also associate director of the Spangenberg Center for Law, Technology & the Arts. They especially seek to avoid class-action suits.

“State and federal courts allow for class-action suits, where claims from hundreds, thousands, or even millions of consumers can be resolved in a single case,” he says. “That changes the economics of litigation by making it much more efficient for consumers to assert their rights and by opening firms up to massive damage awards for their wrongdoing. Arbitration typically avoids that by making each consumer pursue their case individually.”

AT&T includes a fairly typical clause in legal language: “You agree that, by entering into this Agreement, you and AT&T are each waiving the right to a trial by jury or to participate in a class action.” An AT&T spokesman declined to address why the company sought to eliminate the possibility of class-action lawsuits but maintains that arbitration is actually good for consumers. “Arbitration is a faster, less expensive, and more efficient way of resolving disputes than traditional lawsuits in court,” he says.

Arbitration clauses steer disputes outside the court system on their own, but adding an anti-class-action clause may provide companies with additional legal cover. “I can’t say for sure, but I think the strategy here is to add another layer of protection from class actions. So if a court were to invalidate the arbitration clause, as sometimes happens, there’d be an independent restriction on class actions,” Perzanowski says.

Consumer Reports has lobbied for an end to forced arbitration clauses.

One company moving away from these restrictions is Amazon, which last year removed its arbitration clause and now says that any disputes should be settled in courts in King County, Washington. Other companies include a tiny bit of wiggle room in their terms. Sony PlayStation says you agree to arbitration for any dispute beyond small-claims court and forgo participation in class-action lawsuits—unless you write a snail mail letter to Sony to opt out within 30 days of buying the gaming device.

Yes, We’re Serious About the Rules

Making sense of all these rules is obviously complicated. One chart comparing how long it would take to read terms of service agreements back in 2020 found it would require more than an hour to make it through Microsoft’s documents and more than half an hour for Apple’s or Zoom’s.

“They’re designed not to be read by being super-long and super-small, fine print, and structurally disorganized with important terms buried in fine print,” says Adam Schwartz, senior staff attorney at the Electronic Frontier Foundation. “And people just click yes, because they want to get to what they want to do, whether it’s communicating with friends on social media, or searching for a car rental, or e-commerce.”

Because user agreements are so complicated, it makes little sense to read them, says Matthew Zeidenberg, a clinical associate professor of computer science at New York University. “It’s not rational for the consumer to read all of those rules,” he says. “They’re long, and since the probability of being involved in litigation or arbitration is so small, it doesn’t make economic sense to spend time reading those rules.”

“It makes economic sense for the vendor to spend money to pay lawyers to develop those rules, because they have thousands of customers,” he says. “But you know, for one customer, it doesn’t make any economic sense for them to use that mental energy.”

Consumer Reports is an independent, nonprofit organization that works side by side with consumers to create a fairer, safer, and healthier world. CR does not endorse products or services, and does not accept advertising. Copyright © 2022, Consumer Reports, Inc.

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