Google Bans Hundreds Of Pixel Phone Resellers From Their Google Accounts (theguardian.com)

Hundreds of Google users lost their access to their emails, photos, documents, "and anything else linked to their Google identity," wrote the Guardian last week, reporting on "hundreds of people who took advantage of a loophole in US sales tax to make a small profit on Pixel phones" -- and got all of the Google accounts suspended. Long-time Slashdot reader RockDoctor writes: "The Google customers had all bought the phones from the company's Project Fi mobile carrier, and had them shipped directly to a reseller in New Hampshire, a US state with no sales tax. In return, the reseller split the profit with the customers," the Guardian adds.

People might ask, in a hurt tone of voice, "why are you doing this to me?" To which the obvious answer is "because we can, and you agreed to these (link to 3000 pages of text) terms and conditions, including our ability to do this"... The only question has been "When?", never "If?"
Update: Google "has reviewed banned users' appeals and re-enabled their accounts," reports The Guardian.

Comments

Click bait much?

[rsilvergun]

this is already a non story. Google is reactivating the accounts so long as the users promise not to do it again. They'll flush out the shill accounts and give everyone else a smack on the wrist for doing something that's pretty self evidently wrong (scalping).

Re:Click bait much?

[JaredOfEuropa]

It certainly is a story. Maybe not because of the rights and wrongs of avoiding taxes or Google's reaction, but because this ought to serve as a wake-up call for anyone relying on an external party for important data or services, especially in cases when it is not easy or possible to switch services or retrieve the data. If the tems of service allow a provider to revoke your access whenever they feel like it, then do not put your data there. And even when that's not allowed under the terms of service, keep in mind that a company can go broke or simply suspend its service in any case.

Re:Click bait much?

[Half-pint HAL]

Then they're fine. Google's sales condition was that buyers “may only purchase Devices for [their] personal use [and] may not commercially resell any Device”. Note that word "commercially". Under consumer law, you can sell your own stuff (doctrine of first sale) so they can't stop you selling privately. Google's clearly taking the position that if you're buying expressly to sell to another retailer, that's buying wholesale -- business-to-business -- and not covered by doctrine of first sale.

This is actually a very interesting point of law, and would make a fascinating test case. I think I'm on Google's side here -- one of the reasons consumer protection is so important is because customers rarely get to negotiate the terms. As the buyers couldn't negotiate the terms, the purchase of contract here was consumer and Google's Ts&Cs are effectively saying "this is not a wholesale contract. if you treat it like one it's void." which seems pretty valid to me.

Re:Click bait much?

[Half-pint HAL]

I agree.

If nothing illegal was done here...what's the problem?

As I've just commented above, maybe the law was broken. There is a huge difference in law between a retail contract and a business-to-business contract and the related rights. Google's Ts&Cs say no "commercial resale", specifically because they know that they can't ban private resale. But their standpoint is that any purchase with the express purpose of commercial resale is technically "wholesale" and not covered by the contract. This is potentially very important when it comes to transfer of rights and responsibilities (a complicated part of consumer protection legislation that is further confounded by state-level commerce laws).

Re:Click bait much?

[Kiwikwi]

How is "scalping" self evidently wrong? If I own a ticket to a concert or sports event, why is it "wrong" for me to sell it at a market price?

Because you're abusing a market failure, and in fact helping to create it in the first place. You're inserting yourself in the distribution chain, but not adding anything of value.

Re:Click bait much?

[Anonymous Coward]

I don't buy into this non-sense. I'm not buying into Google's terms and conditions. If they sold a product the consumer has the right of resale regardless of what was in the terms of service. You can put whatever you like in a TOS and that doesn't make it legal.

"The first sale doctrine, codified at 17 U.S.C. 109, provides that an individual who knowingly purchases a copy of a copyrighted work from the copyright holder receives the right to sell, display or otherwise dispose of that particular copy, notwithstanding the interests of the copyright owner."

Google may or may not be committing a crime blocking users from its site/services under normal conditions though. However they may be breaking the law (truth-in-advertising laws) because the purchaser has reasonable expectation to be able to use the services associated and advertised with their phone.

Is this Soviet Russia?

[TimothyHollins]

Since when was it OK to break the spirit of the law? Is this some post-Trump perspective where tax avoidance is a virtue?

I can see the problem with Google acting as a vigilante, but taking the side of those that attempt to circumvent US law seems almost anarchistic. Surely "because it's not *technically* illegal" is a childish defense.

Re:Is this Soviet Russia?

[klingens]

In this case, it is ok ever since Google and its corporate brethren dodged paying taxes by playing shenanigans with the tax system in different countries. It's the same here: this worked cause some US state doesn't have a sales tax.
If Google can arbitrate taxes cause it's "technically not illegal", then so can their customers. Or do you think Google is allowed but their customers have to play by a different rule?

Re:Is this Soviet Russia?

[Anonymous Coward]

One is legal and one isnt. Pay ur damn sales tax.

WA has no state income tax (I like that), its important people dont dodge the sales tax here. Goto Oregon and its the other way around, you automatically lose something like 10% of your income before you see it, at least here you only see the taxation if you spend it.

Re:Is this Soviet Russia?

[alexo]

One is legal and one isnt. Pay ur damn sales tax.

Google is not a part of the legal system.

Lots of states have anti-scalping laws

[rsilvergun]

they're meant for tickets but might apply to any good or service being scalped. So depending on your jurisdiction yeah, laws might be broken.

And in any case they're violating Google's terms of service. Google can't control what you do with the phone after they sell it to you (right of first sale) but they can choose not to sell it to you.

And there are lots of good reasons to prevent scalping. For tickets the reasons are obvious. Bands sell tickets at a loss and make it up with merch at the show. I've seen photos of sold out Red Hot Chili Pepper's concerts where the auditorium was 1/10th full because the scalpers bought all the tickets and only sold them to the few rich folks who could afford it. Great for the venue (100% sell out) horrible for the band.

I see the same thing with a product like the NES classic. Nintendo isn't just selling those to make money, they're selling them to keep themselves in the consumer's mindshare while they work on their next console. So they sell them at a lower price to ensure 100% sell out. Scalpers blow that to hell since they're sitting on all the product.

I also saw this with the Gundam Seed toyline. Really nice toyline. $10 figures with amazing detail and playability. Got scalped like crazy and were going for $50 online. The Scalper could make a profit by selling 2 to OCD collectors and sitting on 7 of them. So they did. The show needed the merch to stay in mindshare. Cool toys are one of the things that made Wing and G Gundam so big. Fans and kids couldn't get the toys, show died on the vine.

When artists of all stripes can't get their product in consumers hands for a price that all but a handful can afford they lose out. That's the real cost of scalpers. For a real business making real product it's not just about the sales today, it's about the sales tomorrow, next month, next year. The scalpers cut that off like a parasite.

Re: Lots of states have anti-scalping laws

[Sarten-X]

Having worked in theater for a while, I can assure you that ticket sales (in a traditional venue, at least) have practically nothing to do with the house costs... but it's complicated.

First, the house charges rent. That typically covers the wear & tear, upkeep, and basic services for the show during its run. There may be basic crew costs included, or they may be negotiated separately, but the bottom line is a big up-front cost for the producers to put a show on stage at all.

As tickets go on sale, they are priced according to what the market will bear, through a joint agreement between the producers and the house. Front-row seats for a Broadway show pull in above-average prices, but the nosebleed section behind a pillar next to the air conditioner barely sells for enough to cover the processing cost. However, selling cheap seats allows the producers to boast about the number of tickets sold, and helps the house meet goals for community access (which is very important for nonprofit houses). A cut of the ticket sales goes to the house (justified as covering the box office processing costs), but the majority of it goes to the producers... After all, the producers are also paying a lot of the expense to promote the show, often through separate advertising deals with the house company.

To address the original point: Ticket sales are based on the market, not the expenses. A nonprofit house working toward promoting the arts might indeed sell tickets at a huge loss to please their patron donors. A promoter trying to increase a band's popularity might cut prices, expecting to lose money on the whole show in an effort to boost popularity for higher return later. On the other hand, a top-bill show with great reviews in other venues could be priced at a huge profit, and still expect to sell.

Finally, once the show opens, the producers have the captive audience in the seats, excited about the show, and that's when the real money-making starts. Concessions are usually handled mostly by the house, but merchandise is usually purely profit for the producers. That's why the adage about merchandise rings true. It does allow promoters to cut ticket prices and still make a profit on the show, or at least reduce the expense they paid for promoting the brand. For small bands who have to pay their own expenses, this is the best chance they get at turning a profit on the show.

Ironic since Google ships their earnings elsewhere

[JoeyRox]

Google is penalizing these people who had their phones shipped to another state to avoid taxes yet Google ships their earnings to other countries to do the same thing.

Re:Crooks fiddle their tax

[Rosco P. Coltrane]

The real irony is that another set of crooks who fiddle their taxes (Google) suspended their accounts on moral grounds.