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Giving In to Pressure: Hulu, Facebook Buckle

Giving In to Pressure: Hulu, Facebook Buckle

Hulu pulls content from Boxee ... Facebook changes Terms of Service, then changes them again after backlash ... FTC gives online advertisers a regulation ultimatum ... Microsoft offers bounty for Conficker creators, and more.

By ECT News Staff
02/21/09 4:00 AM PT

Maybe the people over at Hulu really are evil aliens trying to turn our brains to mush. Or maybe they're just beholden to the studios that sign their paychecks. Either way, Hulu's decision to take its content stream away from startup Boxee has users crying foul.

Boxee is an open source application that makes it ridiculously easy for users to view online content on their television sets -- too easy, apparently. Commenters on Boxee's blog, where the change was explained, vowed to turn to alternative outlets for their content -- and they're not talking about legitimate ones.

Hulu's CEO tried to put a positive spin on the whole episode by saying it's trying to blaze a new trail, yada yada yada. ... Here's what Hulu's CEO, Jason Kilar, actually said: "While we stubbornly believe in this brave new world of media convergence -- bumps and all -- we are also steadfast in our belief that the best way to achieve our ambitious, never-ending mission of making media easier for users is to work hand in hand with content owners.

Uh, Jason, that's not your hand the studios are holding. It's your throat.


Listen to the podcast (11:53 minutes).

About-Facebook

There must be something about Mark Zuckerberg that just brings out the bully in people. Every time he makes any changes to Facebook, tens of thousands of users band together to try and push him around on his own network. Two or three users string together ad-hoc special interest groups, and thousands more click on a link to join the crusade and register their supreme outrage.

Hey, click rage is a lot easier than the old torch-and-pitchfork routine. And half the time, Zuckerberg gives right in to it. Happened with News Feeds. Happened with Beacon. Now it's happened with Facebook's Terms of Service document.

OK, maybe rolling over when your users speak up in disgust isn't exactly like giving in to bullies -- but can you imagine Steve Ballmer being swayed so easily?

Anyway, earlier this month, Facebook's legal team sat around and drafted a new version of the TOS.

What was wrong with the old TOS is anyone's guess, but the new one contained legalese that made it appear Facebook was claiming eternal ownership of everything users posted. All your photos, all your videos, all your text, all your base are belong to them.

That's how it looked to a writer at The Consumerist blog, anyway. That blog entry got a lot of people mad at Facebook, and Zuckerberg had to quickly speak up and tell everyone that they were not claiming ownership of that content at all.

All the new terms meant was that when you delete your profile, all the stuff you post and write on other people's profiles might still stay there, and since Facebook's still hosting those profiles, the content will have to live on in its servers. Think of it this way: If you deleted your email account today, would you expect all the emails you've sent to everyone over the years to disappear from their inboxes? They would not.

The explanation was apparently not enough to calm users down, though, so a day later, Facebook reverted to its old TOS until it can figure out a way to explain a fairly simple situation in language that will justify its lawyers' salaries. After all, one of them used to work for Alberto Gonzales at the DoJ, and that brand of skeez does not come cheap.

Data Ultimatum

While government meddling is once again becoming socially and politically acceptable, it's still not the alternative online advertisers would prefer. However, the FTC's latest message to them was clear and blunt: Start regulating the way you collect and handle people's personal data or we will. One commissioner, Democrat Jon Liebowitz, said, "a day of reckoning may be fast approaching."

According to the Center for Democracy and Technology, that day of reckoning is long overdue -- it's been working for a decade to bring accountability to online advertiser behavior. The industry apparently has now heard the message, and it promises it'll change.

But it may not be that simple. Once you've tasted the sweet nectar of private data, it's a tough habit to kick.

Worm Bounty

Microsoft says it will shell out 250 grand to anyone who gives it information leading to the arrest and conviction of the creators of Conficker, aka Downadup.

The Windows worm has been spreading wildly around the world. Along with posting the bounty, Microsoft has organized a group of technology industry leaders and security researchers to launch a coordinated global response. It's unclear what Conficker's goal is.

Michael Argast, a security analyst at Sophos, told us that so far its activity seems limited to spreading, but that's no reason to shrug it off -- the creators can do pretty much whatever they want to once they get into a machine. He said, "If they want to delete all your data, or send it to Russia, or cause your machines to download Seti@Home and search for aliens -- whatever -- they can do it."

So now we get to wait for the worm to turn, and wonder whether a quarter of a million dollars is enough to get anyone on the inside to rat out a crony.

Vista Suit Has No Class

Believe it or not, Vista has actually given Microsoft a reason to celebrate. A court has ruled that the so-called Vista Capable lawsuit does not merit class action status.

A few years ago, when Microsoft was first trying to push its current operating system onto the public, it allowed computer makers to slap stickers on their new PCs that advertised their ability to run Windows Vista. The problem was that some of those computers were pretty wimpy; they could only run the most basic, stripped-down version of Vista out there. People who bought them felt bamboozled, duped AND hoodwinked, so they banded together to go after Microsoft with a class action lawsuit.

That status was initially granted, but this week U.S. District Judge Marsha Pechman took it away. She ruled that it wasn't warranted, since the complaints against Microsoft were not common to every consumer who bought a computer with a Windows Vista Capable sticker on it. So if you want to sue Microsoft over how horrible Vista is, you're now on your own -- and Microsoft likes that because you alone probably don't have the time or money to retain your own lawyer and go after Redmond for a few hundred bucks.

The ruling wasn't a complete win for Microsoft, though. It also wanted a summary judgment in the case, which it did not get. Also, the discovery process revealed some pretty embarrassing exchanges between Microsoft and some of its hardware partners. And the denial of class action status sure doesn't improve Vista or make anyone forget it ever happened.

The MicroStore?

Microsoft is going retail. The software maker says it's going to open a handful of brick and mortar stores in locations yet to be determined. To spearhead the move, it hired David Porter, previously of Dreamworks and, before that, Wal-Mart.

First thought on everyone's minds was Apple. Microsoft's rival has had success in selling hardware and software directly to the public -- can Microsoft get there too?

It's looking at a pretty different situation. Apple stores sell Apple hardware. Microsoft stores would sell ... I dunno, Zunes, Xboxes, a bunch of Windows PCs? And what about their channel partners -- Best Buy, Staples, Office Depot? Aren't they going to have something to say about the new competition? It's all a mystery for now -- Microsoft hasn't divulged many details.

Jailbreaking Jail

If Apple had its way, you'd be hanged for treason for jailbreaking your iPhone. However, since we do live in a somewhat free country, you can only be sued for copyright infringement under the Digital Milennium Copyright Act. Doesn't that make you feel better?

The Electronic Frontier Foundation doesn't like it one bit, and it disagrees with Apple that jailbreaking an iPhone should be grounds for landing you in legal hot water of any kind.

The EFF's position is that you bought the thing, and you should be able to do what you want with it. So it filed an appeal to the copyright office for an exemption under the DMCA.

"EFF is asking the Copyright Office to step in and disarm Apple, preventing them from using the DMCA as a club against their own customers," said EFF technologist Peter Eckersley. Of course, Peter is missing the point that Apple customers will happily endure the clubbing, just as long as they can get their hands on those beautiful and intuitive devices.

Sirius Rescue

Sirius XM scored a $530 million loan from DirecTV owner Liberty Media just in the nick of time. The satellite radio company was on the brink of bankruptcy with vultures circling in the sky.

In return for its massive loan, Liberty gets a 40 percent stake and membership on the Sirius board, for what that's worth, which may turn out to be not much. The same scenario could unfold the next time Sirius XM's creditors come a'calling -- it still has quite a sizable chunk of debt on its books.

And it still has long-term commitments to pay ridiculously large amounts of money to people like Howard Stern and Martha Stewart -- and to the National Football League, Major League Baseball and NASCAR -- even though they haven't done much to lift the company's bottom line.

EchoStar holds a lot of Sirius XM's debt, and it planned to buy it at a bargain basement price as soon as it toppled into bankruptcy. Now it looks as though that won't happen, but EchoStar will get paid -- with DirecTV's dollars. Not the fish it was angling for, but a pretty good catch, nonetheless.

High Gear

Verizon Wireless is moving ahead with the buildout of its 4G wireless network. The system, which goes by the name "Long Term Evolution," will be very, very fast.

Verizon picked Alcatel-Lucent and Ericsson to supply most of the equipment for the network. If everything goes as planned -- and Verizon has been pretty good about hitting deadlines in the past -- then commercial LTE services could become available in the U.S. as early as 2010. That means way faster downloads -- something in the neighborhood of 50-to-60-Mbps-per-second -- as well as faster uploads and way-better video streaming.

Since Verizon plans to enlarge its coverage area, it could also mean some rural areas that currently have no wireless broadband available will finally get to join the 21st century.

Charges Dismissed

A judge has dismissed the most serious charges against The Pirate Bay's founders.

The Swedish government is prosecuting a copyright-infringement case against the four owners of the BitTorrent tracking site. On the second day of the trial, however, prosecutors dropped a bombshell, abandoning their charges of illegal distribution of copyrighted materials. Now, the defendants are accused only of making copyrighted material available for download, a much less serious offense.

If the case against them disintegrates, The Pirate Bay's owners could create a safe haven in Sweden for the creative redistribution of music and video.

Signs of Life

If ailing companies looked like sick people, Sprint would be wrapped in bandages with at least one limb in traction and an assortment of tubes connecting it to life support machines. And every time the doctors came around, they would look at the chart and shake their heads.

Until one day -- say the day the patient's Q4 results came back from the lab -- when their eyes would light up, and they would peek under those bandages and see just a faint tinge of pink in their patient's skin.

And that would be enough to start everyone cheering. In fact, Sprint's share price soared all the way to a towering high of $3.49 on Thursday after the company reported that its customer exodus had slowed to a mere 1.3 million losses for the quarter. And it only lost $1.6 billion. That was really, really good news, because during the same quarter last year, it lost $29.3 billion.

So it looks as though the patient may come around, but it's not likely to be dancing any jigs for a while. Like everyone else these days, Sprint can expect a slow recovery -- at best.


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