Estimated reading time: 8 minutes
Editor’s note: Today we introduce a new section to the blog: law 2.0 with Jose Manuel Pérez Marzabal, a lawyer who specializes in the internet and e-commerce at MTNProjects. He is also a visiting professor at BES La Salle and a teaching consultant at Universitat Oberta de Catalunya (UOC). He has a Master’s in International Law (LL.M.) from WWU Münster and a Diploma in Advanced Studies in International Law and Economics from the University of Barcelona. Welcome Jose
The web 2.0 phenomenon has had an enormous impact since it became popular in 2004. In the media, we have seen news about its critical mass, the flotation of one of the best known platforms and the infringement of user privacy. However, little public relevance had been given to the issue of its terms of service (TOS) until first Pinterest and more recently Instagram had to modify their terms of service due to copyright issues and those regarding licenses of use of the user’s photographs.
This post briefly analyzes the specific issue of the general terms and conditions of companies that provide social network services. We refer to the general terms and conditions (GTC) as opposed to the terms of service, as the former is more suitable and comprehensive of the magnitude of the predisposition effect of rules for general agreements.
The expansion of networks and applications in social environments poses a large number of legal questions for which an easy solution is difficult to find. Regardless, the increase in legal protection in the assessment and compliance of GTC is essential to create stability in the management of electronic transactions and will help facilitate the development of businesses in social environments.
This modern negotiating technique adapts to the dynamics of networks and applications in social environments thanks to its general, abstract, uniform, rapid and massification aspects. Similarly, the economic interests and risks of their business models also facilitate the management of contracts. The company draws up the terms that are not left to the contingencies of each user, which at the same time allows probabilities and costs to be calculated, thus achieving a better organization of its resources and investments according to its customer base.
The GTC also give the company a better negotiating ability compared to the user, either by including unfair terms, the exemption from liability, passing risks to users or imposing excessive burdens; powers and prerogatives with no correlation to the terms received in a context of bilateral markets; in particular, in the scope of networks and applications in social environments that depend on data processing, including user segregation techniques and adopting presentation methods, which reduce the number of users who read the GTC, at least until contracting through intelligent agents and other technologies expected in the near future.
The GTC are presented under the premise take it or leave it. The fact is that should users actual read the GTC, they are unable to understand the legal implications. In practice, a common clause establishes that the parties confirm that they have understood the provisions stated here in their entirety, prior to accepting them.
More experienced companies in risk analysis and management can more efficiently assess the safeguards of the expectations of risk, and the legal obligations to be conveyed to the consumer -the exact allocation of these risks minimizes the costs of the service on offer-, and optimize the exploitation of user data for advertising based on interests or context. In other words, companies standardize risk, reduce costs and optimize the forms of exploiting users to create their GTC.
In substantive terms, the GTC of companies that provide social network services should include, inter alia, aspects such as advertising of commercial brands on the platform, the level of service, security measures, handling of personal data and geolocalization, intellectual property of the user-generated content (UGC), and exclusions from liability.
We should take into account that GTC refer to assumptions that de facto are unlikely to occur, the majority of users have no direct knowledge of the practices of the companies. Technologies such as data mining, or its evolution, popularly known as “big data”, allow service providers to manage their businesses with less exposure to uncertainty in certain areas.
Access to information regarding user behavior and the sporadic monitoring of their browsing could contribute to a more reliable assessment of their demand, and even allow market segregation. Preferences of users are no longer the most difficult variable to apprehend in the potential demand of a product and become the object of capture in those goods and services more adjusted to the commercial possibilities offered by the network, through “conversations” with users.
Thanks to the reduction in transaction costs and the disintermediation of the internet, networks and applications in social environments not only allow the company value chain to be optimized, but also the exploitation of business models associated to the same in a global market. Recessions are opportunities and the current situation we are living should be a magnificent opportunity for companies, both multinationals and SMEs, to reconsider their competitive strategy for the network society.
Post published under the Creative Commons Attribution-Non-Derivative works 3.0 Spanish license. It may be copied, distributed and broadcast provided that the author is cited; derivative works are not permitted. The full license can be consulted on http://creativecommons.org/licenses/by-nd/3.0/es/deed.es.