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Can Ello Legally Promise To Remain Ad-Free?
In a previous article about Ello, I wrote:
There is, in short, nothing to stop Ello from doing what Facebook does whenever they make a significant change to their Terms of Service: presenting users with a dialog box next time they sign in, saying, "These are the new rules, by checking this box, you are agreeing to abide by the new contract which you're not going to read."
After the story had been filed, I had a second thought and wrote to Ello's PR department, asking:
Why not just make an irrevocable commitment in the TOS, to remain privacy-friendly, or ad-free, or whatever else it is that Ello wants to promise users? Something like, "This is a binding, irrevocable commitment that cannot be modified in future updates to the TOS." That wouldn't make the venture capitalists happy, but it might address some of the concerns of the users.
Coincidentally, just as I was sending that email, Ello was issuing a press release announcing that they had re-chartered as a Public Benefit Corporation (PBC), bound by a charter which is intended, precisely, as an irrevocable commitment not to run ads or sell user data.
However, as user WWJohnBrowningDo pointed out in the previous story's comment threads, the Delaware law defining a "Public Benefit Corporation" states that the charter can be modified, or the PBC status nullified, or the company bought out by another entity not bound by the original charter, with the approval of a 2/3 supermajority of shareholders. (Go here and scroll down about halfway to the section beginning "Notwithstanding any other provisions of this chapter." It's also called out on the site about benefit corporations that is linked in Ello's press release.)
So, my non-lawyer face-value reading of the situation is: Previously, Ello could only change its policy and run ads with the approval of 51% of shareholders, and now 67% is required. That's an improvement but hardly an eternal guarantee. Either way, the majority could be achieved if enough of the original founders and shareholders give in to temptation, or if the exit-hungry venture capitalists get enough seats on the board to outvote them. (I ran this past a few Internet privacy lawyers to ask if there was any more nuance to it than this -- in particular, whether a company could make a "binding promise" in their PBC character, then toss it out with a 2/3 supermajority vote and get away with it. They said they had no idea.)
So, even if a PBC charter is not an irrevocable promise to remain ad-free, perhaps we can give them credit for trying to make such a promise, to the maximum extent legally possible. Or did they? This is just off the top of my head, but: What if they had said, "To each user signing up, we promise that if we ever start running ads or selling user-specific data or otherwise violating this charter, we will pay $1,000 to each affected user."
Now that's no longer merely a "charter" but is now an actual obligation to an outside party. And a contractual obligation to an outside party cannot be nullified by a 2/3 majority or even a 100% majority of shareholders. (Imagine: "All shareholders in favor of canceling our agreement to pay back the money we borrowed from FooBarBank, raise your hands.") On the other hand, this depends on whether a court would find the contract to be enforceable.
Regardless, even if Ello never voted to rescind their charter, another potential loophole is that the charter contains no formal definition of what constitutes "charging for advertising". Ello's stated business model is to offer optional special features that users can pay to use. But conceivably they could add paid features which essentially amount to the ability to advertise to other users, such as the ability to send mass messages to thousands of recipients. (I doubt Ello would do anything as crass as to let you spam thousands of random strangers. However, in most social networking sites such as Facebook, you cannot even mass-message thousands of people who are in your Facebook friends list. That's the kind of feature that some Facebook users, and some Ello users, would presumably be willing to pay for.) Or Ello could charge extra to have a special "badge" appear next to your name, or your company name, in search results. Or, like CouchSurfing.org, they could offer to "verify" your identity by charging $25 to a credit card in your name. And if the paid features really do remain Ello's sole source of revenue, then their developers may find themselves under subtle pressure to degrade the experience for regular non-paying users, while offering increasingly attractive perks to the paid ones.
Aral Balkan, one critic of Ello's venture-capital cash infusion, told me pointedly: "Their original statement smacked of misdirection. 'Look, we just got over $5M in additional venture capital but don't worry about that because...' I still don't trust them, sorry. They're closed source, centralized, (currently at least) free to use, and they've just taken an order of magnitude more VC after the influx of users they experienced. It sounds like typical Silicon Valley fare to me. If it looks like a duck and quacks like a duck..."
I don't think it's a matter of "trust" -- I have no reason to doubt that the founders behind Ello are good people -- but when you dangle millions of dollars in front of someone, they can find rationalizations and loopholes that are consistent with their vision of themselves as a good person. And of course since hosting the Ello platform will cost money, if they don't make enough of it back from selling paid features, they will eventually make the kind of passive-aggressive announcement that is issued routinely by formerly free or ad-free services: "Look, we either have to start raising money somehow, or the service has to be shut down completely." And then regardless of how most people respond, they can say after a few days, "We have received an outpouring of support from users who said they would be willing to view ads as long as it keeps the service alive" (without saying what percentage of all user responses expressed this sentiment). Then the ads go up (I'm calling it thirty-six months in advance: some pundits will grandiosely refer to this as "destroying Ello in order to save it"), and then we're back to Facebook all over again.
Man, this guy sure does have a lot to say about a lot of things, and for some reason is allowed to use Slashdot as his personal blog.
please ?
Shut the fuck up.
Sincerely,
Everyone in the Known Universe
First: Can someone get Bennet a fucking livejournal. Jesus Christ.
Second: yes. yes it can. By becoming a B corporation it can make ad-free high security social networking its mandate, but should it run aground of shareholders and explicitly the legal definition of a corporation (that it continue to provide increasing profits yearly) it can become a co-operative where the users become the owners. In business this is called a poison pill and is often coded into the sale, merger, or buyout in such a way that it cannot be avoided. If there were a takeover, this option would kick in and as owners, the users could decide they simply dont want ads anymore. as a majority minority stakeholder, the users would crush the board.
another option is to open-source everything. Not just BSD, but GPLv3 or Affero. GPL codes forkability is a land mine that no corporation wants to step on. Ello will have to provide continually excellent service and listen to its customers, or forks of the project will begin to take root (mysql, dokeos, foswiki for examples) and bury the host company.
Good people go to bed earlier.
Read on for the rest ....
We Can Only Hope
Ad-free, no analytics for sale, free-as-in-beer proprietary centralized social network, eh?
Who is paying for hardware, software, rent, and electricity, investors? When do they get a return? Yeah, yeah, B-corp - where does the money come from?
Is this a serious venture or a spoof by Facebook to show people that thermodynamics cannot be ignored? Or the Tonika/Disapora* crowd trying to show the value of a distributed system?
I'm assuming this is addressed somewhere and just happened to be skipped by the press coverage I've seen.
My God, it's Full of Source!
OUTSIDE_IP=$(dig +short my.ip @outsideip.net)
You've read and regurgitated many of the points which were made in the article about this last week, and which were made by many of us.
I'm awfully glad we have you to read through the discussions and save ourselves from doing it.
Seriously, since when do we have someone whose job it is to read and summarize discussions? Are you getting paid for this shit?
If I can exclude timothy, then why the hell can't I exclude "stories" from Bennett? Because, really ... he adds nothing of value here.
We've become the fscking Bennet Haselton show lately, and it's pathetic and means the "editors" are even more lazy and useless than before.
Lost at C:>. Found at C.
Bennett Haselton writes... and writes... and writes some more.
What he writes may be insightful, I wouldn't know. His essays are so long winded that as soon as I see the unending diatribe my eyes skew into the bedazzled glare of a Japanese kid sent into a Pokemon educed epileptic shock. If I'm lucky, my wife will come along and slip some medication under my tong while carefully prying the crushed mouse from my iron grip.
Can you make Bennett Haselton an editor, so that everyone that doesn't care about his articles can simply exclude them? He's becoming the new Jon Katz -- and Katz was the reason why we eventually got the "exclude by posting editor" feature in the first place.
How can we continue to believe in a just universe and freedom to eat crackers if we have no ale?
I know this one!
Carlill v Carbolic Smoke Ball Company [1892]
Confucius say, "Find worm in apple - bad. Find half a worm - worse."
... elsewhere.
There is no sig.
This legal opinion written by a lawyer.
Oh no, it's actually not. Bennet should learn how to program and then add some value to the world, instead of giving opinions and hoping someone else will.
"First they came for the slanderers and i said nothing."
> All those GPL "OR ANY LATER VERSION" are at the whim of the FSF being a benevolent organization in the future.
There are quite a lot of people, myself included, who released software while GPLv2 was current and feel that FSF went a little bit evil with v3. Even to the extent that I agree with Stallman regarding bad patents, I don't think it's right to retroactively pull that into a copyright license. To me, that's precisely the same as if he'd added "you lose your license if you vote Democrat". Democrats may or may not be a bad thing, but Stallman doesn't have a moral right to impose his views regarding political affiliation upon my software.
I chose the license because I agreed with what it was - the position it took regarding copyright and secrecy. I allowed for "any later version" to allow for _revisions_, adjustments, to the wording. I didn't do that to allow Stallman and friends to attach their unrelated personal preferences to my work.
The default is "or any later version". Quoting myself:
> I allowed for "any later version" to allow for _revisions_, adjustments, to the wording. I didn't do that to allow Stallman and friends. ..
I can't unrelease 15 years of work - that was all released under the GPL license, including provisions in case the wording of rhe license needed to be clarified to account for different legal terms in different jurisdictions or something. That actually happened- some of the legal terminology doesn't mean the same thing in the UK as it does in the US, so it was good that the wording could be clarified. That's why I didn't strike the "or any later version" clause. That meant trusting the FSF to make those clarifications without significantly changing the meaning and purpose of the license. They violated that trust.
I wouldn't have been bothered if they'd introduced the PBL, Patent Bomb License, and I might have used it for some work. For them to convert the GPL into such a thing was underhanded and dishonorable. I now prefer to avoid the FSF because I can't trust them.