Terms of Service are Today’s Lock-In

Every company would love to have customer lock-in; customers who can’t leave, and who continue to create revenue for you. The money just rolls in. Over the last decade, lock-in has evolved from shrinkwrap software to the online advertising world. Back then, customers were locked into Microsoft (and a few others) by file formats. Today we are instead locked into web services–especially social networks–by restrictive Terms of Service agreements. The battleground for customer freedom has changed from engineering to legal. Here’s my first-take assment of how things got started with file formats, and the strategy shift to the online world.

You could email your spreadsheet to a colleage in India, but they couldn’t read it without buying Excel. You were locked in to Microsoft by the engineering difficulty of reading their data format. Today you could authorize Facebook to scrape your friendlist and personal info from your MySpace profile, but they are legally disallowed from doing this. You are locked in to MySpace by the legal provisions of MySpace’s terms of service.

1990′s and Microsoft

I interviewed at Microsoft in Redmund the summer after graduating from college. They treated me like royalty, even giving me a rental car. I protested to the recruiter on the phone, “But I’m not yet 25!”  Bemusedly she explained, “Listen, we’re Microsoft. There won’t be a problem.”

I was offered a position on the Microsoft Money team. They had just cracked the file format of Quicken; the fruits of six months’ work by a team in India. That was an unusual position for Microsoft in the 90′s: they usually were the one’s setting the format standard. Back then it was said that 98% of the world’s documents were created with Microsoft products. And saved in Microsoft’s file formats.

File formats were the lock-in of the 90′s. You had to keep using Microsoft products because you had to work with everyone else, and they were using them too.

Today file lock-in remains an issue, but not nearly so important. Microsoft’s formats have been cracked wide open. My Mom reads attached Word documents in Gmail without realizing the format–she just clicks the “Read this” button.

Today and Social Networks

In today’s internet world, file formats don’t matter so much.  When was the last time you bought software because it was the only way to read or write some files? The online world has different frustrations. When I sign up for a new service, why can’t I point them to my MySpace page and say “Here’s my info, always look here for updates”?  Why can’t Outlook’s spam filter see who my friends are in Facebook, MySpace, and LinkedIn?  And what happens when today’s Facebookers are 70 and realize that all their life’s photos and thoughts and love letters are in one serivce, and there’s no way to hand these down to future generations?

This is my data. Why can’t I process it like files on my computer using whatever tool I choose? If I make a picture in Photoshop, Adobe can’t stop me from putting it in my Word document. If I put 2 years’ minutia of my life into MySpace, why can NewsCorp’s lawyers stop me from transferring it into Facebook, or downloading a backup copy for myself?

Unlike the file formats of yesteryear, there are no engineering challenges here. All the data is right there on the web pages. It doesn’t take a genius to program a server to download your Facebook page and scrape out your data: friends, interests, messages, photos, and the rest. Some have tried to build applications that do this. Robet Scoble was busted for testing one such attempt by Plaxo.

As a sometimes software engineer myself, the power of legal words are amazing. All of this innovation and user choice is eliminated by these short sentences:

MySpace Terms of Service

Prohibited activity includes, but is not limited to … (8) using the account, username, or password of another Member at any time or disclosing your password to any third party or permitting any third party to access your account [and your information];

Facebook Terms of Service

In addition, you agree not to use the Service or the Site to: … use automated scripts to collect information [even your own] from or otherwise interact with the Service or the Site;

Of course the picture isn’t nearly as cut and dried as I’ve made it out here. In a later post I want to work through the different mechanics–both financial and engineering–that run an ad-supported web service and push them to require these restrictions. But the takeaway here is that this problem will not be solved by engineering genius. There is no developer teams India working to crack the computer code that will give you freedom to switch social networks. Who will crack the legal codes of today, or how will they be forced open?

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