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12.15.2004
FTC Act: Failure To Courageously Act
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The big news out of the FTC's summit on P2P Wednesday was that several times due to raucous audience members it was in danger of turning into the food fight scene in Animal House. Still, there was wisdom to be heard from some of the panelists, including PFF board member Jim Miller, even though it wasn't clear that FTC officials wanted to hear it.
The FTC's Acting Director for the Bureau of Consumer Protection, Lydia Parnes, reiterated the unfortunate conclusion of her agency that P2P software providers don't appear to be violating the unfair and deceptive provisions of Sec. 5 of the FTC Act. She even seemed to rule out future action, saying the FTC doesn't believe that P2P providers have an affirmative duty to disclose the risks of their software.
I find that conclusion baffling. So do numerous members of Congress. And so does Jim Miller, who before becoming chairman of CapAnalysis was chairman of the FTC. His presentation on a panel titled "Government and Private Sector Responses to Protect Consumers Using P2P File-Sharing Programs" made it clear that the FTC can act, and that P2P providers are in clear violation of the law. But materials he had outside the FTC meeting room were even clearer, presenting a gift-wrapped enforcement case to the FTC against Kazaa.
We've noted here that Computer Associates recently called Kazaa the Number One spyware threat. Miller pointed out that Kazaa's "no spyware" claim on its web site is undermined by its saying spyware isn't installed "without your permission." Since you can't download the free Kazaa without the spyware, you're giving permission, but what the spyware does -- and the fact that you're forbidden to remove it or monitor it with third-party software -- is buried deep in a legalistic EULA of 60 on-screen pages and almost 6,000 words. That consent isn't informed.
On the same panel, super-slick attorney Adam Eisgrau, who represents 5 P2P companies, boasted about the new disclosures his members are planning. One disclosure, to be used on eDonkey (which is now being sued by MPAA, as Jim DeLong noted), will inform users that downloading copyrighted files without authorization "may be illegal." Well now. I'm imagining myself showing up as an 18-year-old freshman at the Delta house's toga party and being handed a beer by Otter, Delta's Pledge Chairman, while he says with a wink, "Remember, drinking alcohol underage may be illegal."
posted by Patrick Ross : 12/15/2004 04:20:12 PM
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