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PayPal Dumped Cloud Company After It Refused To Monitor Customers' Files (fortune.com)
German Dropbox rival Seafile claims PayPal dropped it as a customer after it refused to comply with the payment services company's demand to spy on its users' data. In a blog post, the company informed its customers that they can no longer pay for the service using PayPal -- the only payment method that Seafile currently relies on. CEO Silja Jackson told Fortune, "We're looking into alternative payment services, but currently we're running a cloud service and not getting paid." Founded in 2009, Seafile has over 250,000 users, many in universities. The service offers an open-source file-synchronization system that organizations can install on their own servers -- for a fee, if they want enterprise features -- and last October the firm decided to also start offering a paid version that's hosted on Seafile's German servers, for individuals and small businesses.
I think paypal is doing the right thing here. There seems to be two possibilities: 1) either the service is legal, 2) or the service is illegal. If the service is illegal, Paypal is in tough position, since money trail is going directly to paypal. This means they''ll be responsible of the illegal behaviour. Given paypal's size, they might have significant problems with deadlines for checking that their organisation is on ok legal position. Thus their position kinda makes sense.
The cloud company on the other hand, does not seem in very good position. Their position is that they're not allowed by law to monitor what happens in their own network. This sounds completely bullshit. All the german privacy laws is guaranteed to not apply for a request like this, where paypal is asking their position on their legal status. Given that the company refused to give any position on the legality of their file service, paypal's decision is exactly the right choice. Their best choice would be to provide the statistics that paypal is requesting.