September 29, 2022

Ninth Circuit Ruling in MDY v. Blizzard

The Ninth Circuit has ruled on the MDY v. Blizzard case, which involves contract, copyright, and DMCA claims. As with the district court ruling, I’ll withhold comment due to my involvement as an expert in the case, but the decision may be of interest to FTT readers.

[Editor: The EFF has initial reactions here. Techdirt also has an overview.]

District Court Ruling in MDY v. Blizzard

Today, an Arizona District Court issued its ruling in the MDY v. Blizzard case, which involves contract, copyright, and DMCA claims. The claims addressed at trial were fairly limited because the Court entered summary judgment on several claims last summer. In-court comments by lawyers suggest that the case is headed toward appeal in the Ninth Circuit. Since I served as an expert witness in the case, I’ll withhold comment in this forum at this time, but readers are free to discuss it.

On digital TV and natural disasters

As I’m writing this, the eye of Hurricane Ike is roughly ten hours from landfall.  The weather here, maybe 60 miles inland, is overcast with mild wind.  Meanwhile, the storm surge has already knocked out power for ten thousand homes along the coast, claims the TV news, humming along in the background as I write this, which brings me to a thought.

Next year, analog TV gets turned off, and it’s digital or nothing.  Well, what happens in bad weather?  Analog TV degrades somewhat, but is still watchable.  Digital TV works great until it starts getting uncorrectable errors.  There’s a brief period where you see block reconstruction errors and, with even a mild additional amount of error, it’s just unwatchable garbage.  According to AntennaWeb, most of the terrestrial broadcast towers are maybe ten miles from my house, but that’s ten miles closer to the coast.  However, I get TV from Comcast, my local cable TV provider.  As I’ve watched the HD feed today, it’s been spotty.  Good for a while, unwatchable for a while.  The analog feed, which we also get on a different channel, has been spot on the whole time.

From this, it would appear that Comcast is getting its feed out of the air, and thus has all the same sorts of weather effects that I would have if I bothered to put my own antenna on the roof.  Next year, when the next hurricane is bearing down on the coast, and digital TV is the only TV around, it’s an interesting question whether I’ll get something useful on my TV during a disaster.  Dear Comcast, Engineering Department: please get a hard line between you and each of the local major TV stations.  Better yet, get two of them, each, and make sure they don’t share any telephone poles.

[Sidebar: In my old house, I used DirecTV plus a terrestrial antenna for HD locals, run through a DirecTV-branded HD TiVo.  Now, I’m getting everything from Comcast, over telephone poles, into a (series 3) TiVo-HD.  In any meaningful disaster, the telephone poles are likely to go down, taking out my TV source material. I get power and telephone from the same poles, so to some extent, they make a single point of failure, and thus no meaningful benefit from putting up my own antenna.

Once the storm gets closer, I’ll be moving the UPS from my computer to our, umm, shelter-in-place location.  I don’t expect I’d want to waste precious UPS battery power running my power-hungry television set.  Instead, I’ve got an AM/FM portable radio that runs on two AA’s.  Hopefully, the amount of useful information on the radio will be better than the man-on-the-street TV newscasters, interviewing fools standing along the ocean, watching the pretty waves breaking.  Hint: you can’t “ride through” a storm when the water is ten feet over your head.]

Second Life Welcomes Bank Regulators

Linden Lab, the company that runs the popular virtual world Second Life, announced Tuesday that all in-world “banks” must now be registered with real-world banking regulators:

As of January 22, 2008, it will be prohibited to offer interest or any direct return on an investment (whether in L$ or other currency) from any object, such as an ATM, located in Second Life, without proof of an applicable government registration statement or financial institution charter. We’re implementing this policy after reviewing Resident complaints, banking activities, and the law, and we’re doing it to protect our Residents and the integrity of our economy.

This is a significant step. Thus far Second Life, like other virtual worlds, has tried to avoid entanglement with heavyweight real-world regulatory agencies. Now they are welcoming banking regulation. The reason is simple: unregulated “banks” were out of control.

Since the collapse of Ginko Financial in August 2007, Linden Lab has received complaints about several in-world “banks” defaulting on their promises. These banks often promise unusually high rates of L$ return, reaching 20, 40, or even 60 percent annualized.

Usually, we don’t step in the middle of Resident-to-Resident conduct – letting Residents decide how to act, live, or play in Second Life.

But these “banks” have brought unique and substantial risks to Second Life, and we feel it’s our duty to step in. Offering unsustainably high interest rates, they are in most cases doomed to collapse – leaving upset “depositors” with nothing to show for their investments. As these activities grow, they become more likely to lead to destabilization of the virtual economy. At least as important, the legal and regulatory framework of these non-chartered, unregistered banks is unclear, i.e., what their duties are when they offer “interest” or “investments.”

This was inevitable, given the ever-growing connections between the virtual economy of Second Life and the real-world economy. In-world Linden Dollars are exchangeable for real-world dollars, so financial crime in Second Life can make you rich in the real world. Linden doesn’t have the processes in place to license “banks” or investigate problems. Nor does it have the enforcement muscle to put bad guys in jail.

Expect this trend to continue. As virtual world “games” are played for higher and higher stakes, the regulatory power of national governments will look more and more necessary.

Workshop: Computing in the Cloud

I’m excited to announce that Princeton’s Center for InfoTech Policy is putting on a workshop on the policy and social implications of “Computing in the Cloud” – the trend where companies, rather than users, store and manage an increasing range of personal data.

Examples include Hotmail and Gmail replacing desktop email, YouTube taking over as a personal video platform, and Flickr competing with desktop photo storage solutions. Facebook, Myspace and other social networks have pioneered new kinds of tools that couldn’t exist on the desktop, and more new models are sure to emerge.

I’m confident that this trend will reshape tech policy, and will change how people relate to technology. But I don’t know what the changes are. By drawing together experts from computer science, industry, government and law, I hope the Center can help those of us at Princeton, and workshop participants from around the country, get a better sense of where things might be headed.

The workshop will be held on the Princeton campus on January 14 and 15, 2008. It will be free and open to the public. We will have a series of panel discussions, interspersed with opportunities for informal exchanges of ideas. We’re still putting together the list of panels and panelists, so we haven’t yet published a schedule. If you’re interested in attending or want to get email updates about the workshop, please email David Robinson (dgr at princeton dot edu).

Here are some of the possible themes for panels we are exploring:

  • Possession and ownership of data: In cloud computing, a provider’s data center holds information that would more traditionally have been stored on the end user’s computer. How does this impact user privacy? To what extent do users “own” this data, and what obligations do the service providers have? What obligations should they have? Does moving the data to the provider’s data center improve security or endanger it?
  • Collaboration and globalization: Cloud computing systems offer new sharing and collaboration features beyond what was possible before. They make shared creation among far-flung users easier, allow or require data to be stored in many different jurisdictions, and give users access to offerings that may be illegal in the users’ home countries. How will local laws, when applied to data centers whose user base is global, affect users practice? Do these services drive forward economic growth — and if so, what effect should that fact have on the policy debate?
  • New roles for new intermediaries: Cloud services often involve new
    intermediaries such as Facebook, MySpace, eBay, and Second Life, standing between people who might have interacted more directly before these services emerged. To what extent are these services “communities”, as their providers claim? How much control do users feel over these communities? How much control do and should users actually have? How does the centralized nature of these intermediaries affect the efficiency and diversity of online experiences? Can the market protect consumers and competition, or is government oversight needed?
  • What’s next: What new services might develop, and how will today’s services evolve? How well will cloud computing be likely to serve users, companies, investors, government, and the public over the longer run? Which social and policy problems will get worse due to cloud computing, and which will get better?