Corporations Are Being Forced To Take Consumer Complaints Back To Court After Arbitration Push Backfires Spectacularly

from the the-devil-you-know dept

For years, AT&T worked tirelessly to erode its customers' legal rights, using mouse print in its terms of service preventing consumers from participating in lawsuits against the company. Instead, customers were forced into binding arbitration, where arbitrators, chosen and paid by the companies under fire, unsurprisingly rule in favor of companies more often than not. Initially, the lower courts derided this anti-consumer behavior for what it was, noting that however brutally flawed the class action is, binding arbitration, at least the way we let companies designed it, in many ways made things worse.

But these lower court roadblocks quickly evaporated when the Supreme Court ruled in 2011 (Mobility v. Concepcion) that what AT&T was doing was perfectly OK. While lower courts saw this as an "unconscionable" abuse of consumer rights and the law, the Supreme Court bought into the ongoing myth that binding arbitration is a hyper-efficient, modern alternative to class actions. In reality, it shifted things to a form of binding arbitration that was costly, lopsided, and cumbersome for consumers, and less transparent for those used to visiting Pacer to dig up legal histories.

Fast forward to a few years ago, when a growing number of companies and services (like Fairshake) began streamlining the arbitration process, making it easier and less expensive for consumers (and yeah, class action lawyers). This shifted the balance of power back toward consumers, and starting in 2018 or so companies like Uber, AT&T and Comcast began to complain they were being swamped with arbitration feuds. Now, a year later, even giants like Amazon are being forced to take consumer complaints back to the courtroom, in part because a system they constructed to dodge accountability is no longer helping them do that:

"With no announcement, the company recently changed its terms of service to allow customers to file lawsuits. Already, it faces at least three proposed class actions, including one brought May 18 alleging the company’s Alexa-powered Echo devices recorded people without permission.

The retail giant made the change after plaintiffs’ lawyers flooded Amazon with more than 75,000 individual arbitration demands on behalf of Echo users. That move triggered a bill for tens of millions of dollars in filing fees, according to lawyers involved, payable by Amazon under its own policies."

To be very clear, the existing class action system is broken as well, usually doling out relatively pathetic payouts to impacted consumers, while class action lawyers get new boats. But the premise that the binding arbitration system (at least as implemented) was somehow better, at least in the way we implemented it in the States, has never been true. If you ask lawyers that represent companies like Amazon and AT&T, the fact that folks developed new systems that shifted the balance of power ever so slightly back toward consumers and class action lawyers is seen as terribly unfair:

"It has the potential to be pretty unfair to the company,” said Patrick Bannon, an employment lawyer at Seyfarth Shaw LLP who has represented clients facing mass arbitrations. The arbitration fees put intense pressure on businesses to settle, he said, “whether the claim is valid or not."

But if you ask the folks actually fighting for consumers (and not all of them are ambulance chasers), they see it as fair play:

"Companies thought they were getting out of liability altogether,” by adding arbitration clauses, said Chicago lawyer Travis Lenkner, whose firm filed the majority of the Amazon claims. “Now they’re seeing exactly what they bargained for, and they don’t like it."

In short, corporations (beginning with AT&T) spent the better part of the last decade fighting for an arbitration system that resulted in fewer payouts, fewer successful complaints, and less overall transparency. And while happy about that initially, the second the internet and technology shifted the balance of power in the other direction, they were eager to flee back to the devil they knew. It should be curious to see if other giants like AT&T also begin stripping binding arbitration out of their end user agreements, or if this is just a temporary setback on the path toward less accountability.

Filed Under: arbitration, binding arbitration, class action, class action lawsuits, consumer rights, consumers

Charter Spectrum Tells FCC Broadband Caps Are 'Popular' As It Tries To Kill Merger Conditions Preventing Them

from the bad-things-are-good-for-you dept

To be very clear: American consumers don't like broadband usage caps. At all. Most Americans realize (either intellectually or on instinct) that monthly broadband usage caps and overage fees are little more than monopolistic cash grabs. They're confusing, frustrating price hikes on captive customers that accomplish absolutely none of their stated benefits. They don't actually help manage congestion, and they aren't about "fairness" -- since if fairness were a goal you'd have a lot of grandmothers paying $5-$10 a month for broadband because they only check their email twice a day.

Enter U.S. cable giant Charter (Spectrum), which is currently in the middle of trying to get the FCC to kill the merger conditions applied as part of its 2015 $79 billion acquisition of Time Warner Cable and Bright House Networks. Those conditions, among other things, required that Charter adhere to net neutrality (despite the fact that the GOP has since killed net neutrality rules), and avoid usage caps and overage fees. Both conditions had 7 year sunset clauses built in, and Charter, eager to begin jacking up U.S. broadband consumer prices ever higher, has been lobbying to have them killed two years early.

Charter's lobbying tactics so far have included giving money to groups like the Boys and Girls Club in exchange for gushing support for the elimination of the merger conditions, despite the fact that doing so would harm these groups' constituents with higher prices.

Charter's other major play apparently involves trying to tell the FCC that U.S. consumers really like monthly usage caps and annoying fees, restrictions the cable monopoly claims are "popular." From a filing (pdf) spotted by Ars Technica:

"There is also evidence that some consumers—either those who do not consume a lot of data and/or those who are looking for a lower-cost plan—may want a service where prices are based on the amount of data used... These different plans are proliferating in the market because they offer consumers a cost-effective alternative to unlimited data plans that are more than adequate to meet their needs. The DC/UBP [data caps and usage-based pricing] Condition, however, prevents Charter from keeping pace with its competitors and offering consumers the kinds of plans they are looking for."

This is a cute bit of logic U.S. broadband monopolies have long used that attempts to imply that caps and overage fees are about "fairness." But they've never been about fairness. ISPs love to insist they just want to "experiment with price differentiation," but you will never see a giant ISP offer a super cheap plan for people like your grandma that only check the Weather Channel website and their email a few times a day. And they don't do that because the goal is to drive up the costs of everybody's connection over the longer haul to please investors' needs for higher quarterly returns.

And they can get away with this because in most U.S. markets, their only competition is a phone company that hasn't upgraded its DSL lines since 2004 or so, or no competition at all. If the market actually saw competition and had functional regulatory oversight, you might see plans more closely tailored toward your actual usage. But in a market absent of real pricing competition and overseen by fecklessly captured regulators, what you get instead is endlessly higher prices, usually in the form of sneaky, misleading fees. Charter's filing tries to tap dance around this problem as well:

"Opponents’ claims that the BIAS market is not competitive are beside the point and overstated. The Conditions are unnecessary regardless of the level of BIAS competition because Charter, like other broadband providers, lacks the incentive or ability to discriminate against OVDs. OVDs are critical to the BIAS business and far too large and powerful to thwart with data caps or interconnection fees.

Only a cable monopoly with a 20 year track record of overcharging captive customers could try to argue that a lack of competition is "beside the point." Incumbent telecom monopolies, eager to protect their dwindling TV revenues, have every incentive to use usage caps anti-competitively. And they already are. AT&T, for example, exempts its own streaming video service from its arbitrary usage caps, while financially penalizing users that use Netflix, Amazon, or any other competitor.

There is zero doubt that Charter wants to follow down this path as well. And it certainly will; it just wants to do so slowly to minimize backlash (picture the boiling frog fable with you as the frog). There's also not much doubt that the captured, fact-phobic Trump FCC is eager to help them, proclaiming that letting a cable monopoly price gouge captive customers is about "restoring internet freedom," or whatever half-baked justification is on the menu this week.

Filed Under: broadband caps, consumers, fcc, merger conditions
Companies: charter, charter spectrum

EU Considering Enacting Right-To-Repair To Return Power To Consumers, Protect The Environment

from the hopefully-not-too-little-too-late dept

Right-to-repair laws are still a work in progress, mainly due to industry opposition. The wants and needs of millions of device/vehicle owners don't amount to a hill of beans in this world full of interloping industry leaders, as noted DIY repairman/nightclub owner Rick Blaine once sourly noted.

Allowing people to actually own the things they've purchased seems like a foreign concept to US tech leaders, even though that was the status quo long before goods went digital and the DMCA was enacted. Why should people be at the mercy of those whose profits depend on walled gardens, closed loops, and well-funded lawyers issuing cease-and-desist orders at the drop of a proprietary screwdriver? Well, as someone else sourly noted, those with the gold make the rules.

While we struggle through with some piecemeal replacements for our assumed rights of ownership here in the US, it appears the European Union is going to get serious about handing customers back their purloined rights. As the New York Times reports, a right-to-repair is up for discussion -- not so much because of the impact on customers, but because of the impact on the environment.

The “right to repair,” part of a wide-ranging policy package known as the Green Deal that was introduced this month, is the latest example of the European Union’s ambitions to promote more sustainable economic growth and to prevent waste. It extends standards brought in last year that put “right to repair” obligations on the manufacturers of some large appliances.

“The linear growth model of ‘take-make-use-discard’ has reached its limits,” Virginijus Sinkevicius, the union’s environment commissioner, told reporters in Brussels as he presented the “Circular Economy Action Plan,” which includes the “right to repair” initiative.

“We want to make sure that products placed on E.U. market are designed to last longer, to be easier to repair and upgrade, easier to recycle and easier to reuse,” he added.

Obviously, providing people with a right-to-repair (and the information to make those repairs) will help curb the amount of dangerous chemicals and minerals being dumped into the ecosystem. Planned obsolescence has been the status quo for years, with repair prices and restrictions making it far easier to replace items than repair them. This has added up to serious environmental damage. It has also added to problems around the world where rare minerals are mined under the direction of governments who use their profits to finance war, rape, and numerous other atrocities.

But it will also give people back something they've historically enjoyed: the ability to tinker with and repair their purchased products without being locked out by proprietary tools and methods that are shared with only certain gatekeepers to ensure steady purchases of new products and the speedy destruction of anything slightly out-of-date.

Here's how the EU's proposal [PDF] puts it [all emphasis in the original]:

Empowering consumers and providing them with cost-saving opportunities is a key building block of the sustainable product policy framework. To enhance the participation of consumers in the circular economy, the Commission will propose a revision of EU consumer law to ensure that consumers receive trustworthy and relevant information on products at the point of sale, including on their lifespan and on the availability of repair services, spare parts and repair manuals. The Commission will also consider further strengthening consumer protection against green washing and premature obsolescence, setting minimum requirements for sustainability labels/logos and for information tools.

In addition, the Commission will work towards establishing a new ‘right to repair’ and consider new horizontal material rights for consumers for instance as regards availability of spare parts or access to repair and, in the case of ICT and electronics, to upgrading services. Regarding the role that guarantees can play in providing more circular products, the Commission will explore possible changes also in the context of the review of Directive 2019/771.

This would be a step up from the EU's aggressive recycling requirements, which demands companies selling electronics recycle at least 65% of the total weight of goods sold (i.e., recycling 65 tons for every 100 tons of goods put on sale). As it stands now, zero companies have met that requirement, which has been in place since 2012.

This would hand power back to consumers. It won't make it easier for companies to hit recycling targets, but it may alter the market for new goods, making it more financially feasible for device makers to slow the rollout of new products and extend the life of those already on the market.

If enacted, it will drastically change the way electronics manufacturers do business in Europe. It may see some drop out of the market completely. But expect a lot of opposition from the companies affected as this legislative proposal moves forward. If there's one thing companies like Apple and Microsoft can agree on, it's that customers shouldn't be allowed to cut them out of the repair/modification/replacement chain.

Filed Under: consumers, eu, right to repair

Turns Out Most People Still Don't Hate 'Big Internet' As Much As Politicians And The Media Want Them To

from the these-things-make-our-lives-better dept

"The narrative" over the past few years concerning internet companies has clearly shifted. It went from one that generally praised the wonders and power of the internet to one that now blames the internet for everything. The hagiographc coverage of the past clearly went too far, but the current "techlash" seems to have gone way too far in the other direction as well -- much of it from people grasping at straws over why things they don't like have happened in the world. The good folks over at The Verge have done a big consumer survey of people's general opinions of various big internet companies and it shows that most people still like these internet services, and believe, on the whole, that they make their lives better, not worse. Even the services that get the "worst" grades, still get over a 60% "favorable" rating, while Amazon, Google, YouTube, Netflix, Microsoft, and Apple all come in over 80% positive (with Amazon, Google, and YouTube breaking 90%).

A separate question asked how people view these companies' impact on society, and again, they are mostly positive -- and even in the cases where there is some level of negativity (mainly: Facebook, Instagram, and Twitter), the positive feelings greatly outweigh the negative:

There are many more fascinating findings and I recommend checking out the full Verge story on this, though I will note a bit of generational shock, as someone who lived through the 90s era of everyone in tech absolutely hating Microsoft and not trusting the company one bit, to Microsoft now being listed as the company that people trust the most with their data. Times sure have changed.

Still, as the general narrative -- and a lot of political rhetoric -- is focused on how awful these companies are and how "something must be done" about them, it does seem worth noting that most of the public seems to really like these services and feel the world is a better place because of them.

Now, take that information and compare it to just how little people trust companies in the telecom sector, and you might wonder why none of the narrative seems to focus on those companies. Indeed, the only political pressure on those companies seems to be to get them to merge and consolidate faster. Also, I should note that as fond as people are of repeating the silly and misleading line that "if you're not paying for it, you're the product," compare the levels of trust between all of these free internet services (very high) and the telco services you pay for (very low), and perhaps realize that it's not the "free" or "not free" part that engenders trust.

Filed Under: big internet, big tech, consumers, narrative, techlash, users
Companies: amazon, apple, facebook, google, microsoft, twitter, youtube

T-Mobile Cares So Much About Consumer Privacy, It's Fighting The FCC's Flimsy Fine For Location Data Sharing

from the light-wrist-slaps dept

T-Mobile, like many mobile carriers, insists in highly values consumer privacy. But that hasn't really been reflected in the company's response to ongoing SIM hijacking scandals. Nor was that dedication particularly apparent when T-Mobile (along with AT&T, Verizon, and Sprint) were all caught selling access to user location and 911 data to pretty much any nitwith with a nickel.

Last week, after a year of stonewalling, the Trump FCC announced it would be doling out some light wrist slaps to companies that were caught selling access to this data. For most of the companies, the fines they received were a tiny, tiny fraction of not only their annual revenues, but the billions made over the last decade selling access to this data to law enforcement, people pretending to be law enforcement, and even stalkers. All four of the companies also just received tens of billions on dollars from the Trump tax cuts in exchange for promises they completely flaked out on.

It would be a pittance to pay off the fine and move on, especially given this particular FCC is unlikely to engage in much follow up to either confirm data collection has actually stopped, or police access to the mountains of data already collected. But T-Mobile says it's intending to fight the fine anyway, because, you know, it cares just that much about consumer privacy and accountability:

"While we strongly support the FCC’s commitment to consumer protection, we fully intend to dispute the conclusions of this NAL and the associated fine," the company said."

So yeah, T-Mobile will "support" the FCC's "commitment to consumer protection" (which barely exists in the first place) by...(checks notes)...fighting the already feeble end result. This is, again, apparently a reflection of T-Mobile taking "consumer privacy seriously":

"We take the privacy and security of our customers’ data very seriously," said T-Mobile. "When we learned that our location aggregator program was being abused by bad actor third parties, we took quick action. We were the first wireless provider to commit to ending the program and terminated it in February 2019 after first ensuring that valid and important services were not adversely impacted."

Again, there's little chance these companies will actually leave billions in location data revenues on the table. While all four major carriers say they've stopped the practice, it's far more likely they've simply tweaked their privacy policies, renamed the collection systems, and buried them deep in some subsidiary somewhere. After all, who is going to do the legwork required to audit the entire industry's privacy and data collection practices, Ajit Pai?

Filed Under: competition, consumers, fcc, fines, privacy
Companies: t-mobile

Do People Want A Better Facebook, Or A Dead Facebook?

from the there's-a-difference dept

The question in the title is one that I actually think is worth discussing, because seeing the reactions to both Mark Zuckerberg's announced plans for greater privacy in Facebook's messaging tools, and to Elizabeth Warren's not very well thought out plan to break up Facebook, it seems quite clear that some people just want the company dead at any cost. Indeed, I've seen a lot of people pointing to this AP article, derisively, about how Facebook's plans for more privacy are all a misleading game because the the company might profit from it.

As if that's a bad thing.

For years, we kept getting told that the reason big companies like Facebook and Google didn't treat user privacy very carefully was because there was profit in scooping up all our data, and that there were no profits in privacy. This was seen as a problem. Yet, now that Facebook is exploring ways to provide more privacy and snoop less, some are still complaining that it might profit from it? Shouldn't we want to see business models that align with protecting user privacy? Shouldn't we want companies to realize that protecting user privacy both can and should be profitable as well? Won't that encourage companies to move away from data surveillance business models into ones that are more respectful to end users?

That's why I highlighted the positive concepts in Zuckerberg's post. Because I think it's good to encourage companies to go in the right direction.

But many people, clearly, do not agree. And, as far as I can tell, the thinking is that they don't care about a better Facebook or a Facebook that protects privacy. All they want is a damaged or (even better) a dead Facebook. And, frankly, that kind of thinking makes no sense to me. Look, I'm all for something better coming along and killing off Facebook that way. I'm all for creative destruction -- especially the kind that destroys big stodgy businesses by giving their customers a much, much better experience. But, focusing just on killing off Facebook for no reason other than "company bad" doesn't make much sense. Like it or not, billions of people use Facebook.

And most people can agree that Facebook has a history of fairly egregious behavior at times, but slamming the company for finally doing something positive, doesn't seem particularly productive. It doesn't encourage other companies to do the right thing either. Sure, it makes sense if your goal is just a "dead Facebook," but arguing for a "dead Facebook" for no other reason than you just don't like Facebook is irrational. I want to see more competition in the marketplace, and I'd love to see Facebook not be as dominant. But I'd also greatly prefer a Facebook that is a good actor, rather than a bad one.

Filed Under: antitrust, big tech, consumers, elizabeth warren, mark zuckerberg, privacy
Companies: facebook

Dear Silicon Valley Tech Companies: Stop Treating Your Structural Challenges As Political Challenges

from the politics-and-business-are-not-the-same dept

A couple weeks back Karl wrote up an excellent analysis of the NY Times' big piece looking at how Facebook tried to deal with ongoing criticism of the company concerning the influence operations that it appears Russians used their site for. Karl's post focused on just how many companies make use of similar political smear campaigns, and everyone (including the press) should be much more tuned into this kind of thing. Indeed, a followup story from the NY Times last week showed that a bunch of other tech companies -- namely Lyft, Lime, Juul and Qualcomm -- all had hired the very same "Definers" firm that Facebook had hired to smear its opponents.

I wanted to write a follow up post, though, to make a slightly different point. This one is more directed at the people who work at all of the big tech companies: Stop thinking about running your companies as political campaigns, and focus most on what is best for end-users. It should be noted, of course, that all of these companies are a bit different, and they all do take different approaches to the market, but over the last few years, especially, one thing that has shined through with many of these companies is that they've dealt with the challenges suddenly being directed at them as political issues, rather than structural issues.

It's not difficult to see why this is happening. To some extent, it goes back to the popular saying: "We judge others by their actions and ourselves by our intentions." When these companies are getting attacked over their actions, they often feel wronged by the coverage, which they feel is unfair, because the press are often judging the decisions absent larger context that shows how they reached those results. And sometimes it is unfair. But there are still elements of truth in all of these complaints, and companies need to recognize even more, that these challenges are both structural and potentially existential, rather than one of people just being "unfair" in their coverage.

The second reason why this is happening is that the political world has spent years beating on Silicon Valley to be "more engaged" in politics, and so much is now being driven by how things look through a political lens that it's become controlling in many ways. All of these companies have hired tons of political operatives, who know how to do political campaigns. Not all of them care what the company is actually doing -- they just care about how it's perceived.

Years back, when I was studying "organizational behavior," in college, I remember the professor explaining office "politics" succinctly: raising your own profile while decreasing the profile of anyone else. And, indeed, there are many examples in the NY Times Facebook article of this kind of thinking in action. Rather than deal with the larger structural problems, Facebook decided to go after its critics and its competitors. After the NY Times piece came out, TechCrunch published a bunch of the pitches they received from Definers, noting how very political they were. Unlike most PR pitches, in which the sender identifies what company they're representing, and why they're emailing, Definers pitches were... different:

We checked our inboxes and none of the pitches Definers sent to TechCrunch made an explicit disclosure that the messages they contained had been paid for by Facebook to push a pro-Facebook agenda. They all required the recipient to join those dots themselves.

[....]

Here’s an example of Definers’ oppo mud-slinging we were sent targeting Apple and Google on Facebook’s behalf:

Just came across this – thought you might find it interesting: https://digitalcontentnext.org/blog/2018/08/21/google-data-collection-research/

“A major part of Google’s data collection occurs while a user is not directly engaged with any of its products. The magnitude of such collection is significant, especially on Android mobile devices, arguably the most popular personal accessory now carried 24/7 by more than 2 billion people.”

The study’s findings are rather shocking… It really highlights how other tech companies should be looked at critically – scrutiny shouldn’t just be on FB for data misuse. Apple & Google have been perpetrators of data abuse as well…

“Scrutiny shouldn’t just be on FB for data misuse” is the key line there, though it’s still hardly a plain English disclosure that Facebook paid for the message to be sent.

We received multiple Definers’ pitches on behalf of what looks to be three different tech companies — and only one of these is explicitly badged as a press release from the firm paying Definers to do PR. (In that case, e-scooter startup Lime.)

Not that they listen to me, but if there was a simple message I could get across to everyone working at these companies, it's that they need to stop treating actual structural issues and the actual impact of what they do as political fights, but as real, structural issues that need to be addressed. That's not to say admit that all of the criticism is valid -- because some of it is not. But, recognize that there is truth in many of the complaints, and to focus on actually doing right by your users, not simply attacking the messenger or denying the seriousness (and certainly not by merely pretending to take the issue seriously in public while privately admitting nothing will change). The fact that Facebook repeatedly denied "key aspects" of this story, only to post a blog post the night before Thanksgiving that more or less admitted everything they had previously denied, shows that the company is still treating this as a political campaign. Friday night news dumps are a classic political move to "bury" bad news, and the only time better than a random Friday night is the night before a major holiday.

For many years I've said that one of the reasons why I find the tech industry so important is that it has -- historically -- been a demonstration of what good happens when certain (not all) companies and their users have interests aligned. Rather than working at cross purposes, or trying to screw over users, many tech companies have shown that they can provide value in a way that everyone comes out of it better off. When they actually focus on doing the right thing -- even at the short term expense of the bottom line -- good long term strategies tend to result.

However, treating everything as a political campaign is the opposite of that strategy. It means attacking critics and competitors, rather than focusing on doing what's right. And, unfortunately, this political thinking is becoming pervasive across the tech industry. Some will argue that it has actually always been true, but that's not accurate at all. Much of Silicon Valley's success was premised on taking a very different approach -- one that really did focus on doing the right thing, rather than the most expedient or the most immediately profitable. But, that has changed for many, many companies. And even if it may be understandable as to why it is happening, that's still no excuse.

So, for everyone who works at these companies, please take a step back and think about what your actual vision is. Are you making decisions to actually do what's best for the users of your products. Or are you simply attacking your critics and competitors? If it's the latter, it seems like a clear sign that your company has lost its way.

Filed Under: consumers, doing the right thing, innovation, politics, users
Companies: apple, definers, facebook, google, lime, lyft, qualcomm

Gaming Industry And Game Consumers On A Collision Course Over Loot Boxes

from the down-their-throats dept

If you're a gamer, you know all about loot boxes. We haven't covered them or the associated controversy here, as both are slightly outside of the usual topics we cover. But we do in fact cover digital marketplaces and how companies and industries react to market forces and it's becoming more clear that the gaming industry and the gaming public are on something of a collision course over loot boxes.

As a primer, a loot box is a digital randomized thing, typically purchased in-game and resulting in a random reward of in-game content. Some content is more valuable than others, leading to some referring to loot boxes as a form of gambling, particularly when some of the game content can provide benefits to players in multiplayer settings. Overwatch popularized loot boxes somewhat in 2016, although mobile games have used some flavor of this kind of monetization for pretty much ever. The gaming public never really liked this concept, with many arguing that it breaks in-game competition by giving players willing to pay for loot boxes an advantage. But the loot box fervor hit its pique after the release of Star Wars Battlefront 2, with EA being forced to massively alter how its loot boxes worked in game. Since then, loot boxes are a topic of consumer backlash as a general rule.

Making it somewhat strange, therefore, that the gaming industry seems to want to embrace loot boxes as its dominant business model.

With all the controversy, scrutiny, and international regulation randomized video game loot boxes are facing these days, you might think the practice of charging players for a chance at unknown in-game items might be set for a precipitous decline. On the contrary, though, one analyst sees spending on loot boxes increasing by over 62 percent in the next four years to become a $47 billion piece of the industry. By then, loot boxes will represent over 29 percent of all spending on digital games, the analyst said, up from just under 25 percent currently.

In a newly published forecast of the global game market, Juniper Research concedes that developers are "effectively encouraging a form of in-game gambling" with loot boxes and using that addictive potential to "extend both the lifecycle and engagement of games titles to their audience." These kinds of non-traditional money-making techniques are a practical necessity for developers squeezed by increasing costs and stagnant or declining up-front game prices, Juniper says.

Whatever your opinion of loot boxes, it should be clear that there is trouble on the horizon. Individual opinions will vary, but it seems clear that the majority of gamers are strongly against loot boxes, and that majority is very, very loud. Put another way, the vocal reaction to loot boxes is almost universally negative, with barely anyone at all praising their use in games. The market is sending the gaming industry a very clear message and the industry has apparently decided to place an awful lot of poker chips in dismissing that message.

Even governments are getting in on the backlash, actually, for a variety of reasons. Some seek to protect consumers from blatant attempts to extract more revenue from them by gamemakers, while others want loot boxes regulated as a form of gambling.

Yet the gaming industry is so all-in on this that Juniper thinks both the public and governments will allow loot boxes to exist merely because gamemakers are making so much money off of them right now.

"Whilst some restrictions may be put in place by government and regulatory bodies, the practice is unlikely to be banned outright simply due to the effect it would have on the games industry as a whole," Juniper writes in a recent white paper on the subject. And while platforms like Steam have recently cracked down on third-party "skin gambling" sites, Juniper argues they've resisted calls to ban skin trading altogether for the simple reason that they make too much money from their five-percent transaction fee.

That all works at the governmental level, where regulatory capture is indeed a thing and monied interests likely will indeed sway politicians, but the market forces in the public are another matter. Already the public has thought of loot boxes as generally abusive of the industry. Free to play mobile games are one thing, but the moment EA tried this in a paid-for console game, the shit hit the fan.

Loot boxes aren't the only business model available to the gaming industry, but they are fairly unique in how disliked they are. If the gaming industry doesn't correct course soon, we could easily see a slowdown in an industry otherwise primed for massive growth.

Filed Under: business models, consumers, loot boxes, video games

If New FCC Boss Ajit Pai Is So 'Pro Consumer,' Why Does The Telecom Industry Need To Pay People To Say So?

from the dollar-per-holler dept

On his first day new FCC Boss Ajit Pai repeatedly and breathlessly insisted that consumers and the digital divide would be his top priority. The problem: that dedication was directly contradicted by not only Pai's past voting record at the agency, but his first actions as agency head. Out of the gate Pai undermined an FCC legal case against prison phone telecom monopolies, scrapped an FCC plan to bring competition to the cable box, killed all ongoing zero rating inquiries and began laying the ground work for killing net neutrality, and prevented nine already-approved ISPs from helping the poor via the agency's Lifeline program.

Unsurprisingly, it didn't take particularly long for some news outlets to realize that Pai's words weren't supported by his actions. Both The Washington Post and the New York Times penned editorials blasting Pai, most notably for his ongoing disdain for net neutrality, which has broad, bipartisan support.

Driven to defend Pai's selection as FCC boss for obvious reasons, ISPs got right to work fighting back via their traditional weapon of choice: bullshitters for hire. Shortly after the Post and Times pieces surfaced, contrasting op-eds quickly popped up in newspapers and websites nationwide claiming Pai is actually an incredible boon to consumers, competition and innovation. Most of these op-eds failed to adequately disclose the authors' financial ties to large broadband providers, or the fact they take money while pretending to be objective analysts -- often including Congressional testimony.

Fred Campbell, a long-standing ISP-funded "consultant," penned a piece over at Forbes blasting the Post and Times for "doublespeak," while insisting that Pai is secretly a hero of the people:

"Doublespeak is language that disguises or even reverses the meaning of words in order to disguise the nature of the truth. A flurry of attacks on Ajit Pai, the new chairman of the Federal Communications Commission, are full of it. It’s clear that Pai is serious about closing the digital divide between those who use cutting-edge communications services and those who do not."

Ah the post-truth era, when those that spend the most time practicing doublespeak endlessly whine about doublespeak.

Look, if you actually talk to any genuine consumer advocate in the telecom space (they're easy to spot: they're the ones with limited budgets and shittier suits), they'll quickly tell you that while Pai is a nice guy -- he's a water carrier for industry, rarely if ever challenging their positions on any issue of consumer note. You only need look at his voting record, and the numerous times he not only voted down indisputably pro-consumer initiatives like net neutrality, but refused to hold companies like AT&T accountable for outright fraud -- even when that fraud involved the Lifeline program Pai professes to now adore.

Campbell's editorial was one of numerous, similar missives. Rick Boucher, one-time respected Congressional fair use champion, now works at Sidley Austin, a law firm that effectively acts as an AT&T policy arm. That direct financial tie isn't really made clear in an op-ed over at Light Reading, where Boucher informs readers that, despite his nonexistent track record on the subject, Pai will somehow be a champion of expanded broadband coverage:

"Chairman Pai recently announced the formation of the Broadband Deployment Advisory Committee, a task force that will offer "specific" recommendations to speed broadband deployment and, in his words, "close the digital divide."

Pai's action is an excellent first step towards accelerating broadband deployment (and adoption) throughout the country. Getting great minds together to hack a solution is both wise and urgent. And perhaps most important, it's a sign that fact-based decision-making is now the order of the day at the FCC."

But forming a committee to talk about the digital divide isn't an actual solution to anything -- especially expanded broadband coverage. And it certainly doesn't magically obliterate Pai's anti-consumer, and anti-startup voting record. If there's an FCC plan to actually shore up competition or bring broadband to the under-served (like the FCC's recent vote to ensure low-income users can use their $9.25 monthly Lifeline credit for broadband), you can be fairly certain Pai voted against it. It's not really something that's open to debate. Well, unless you're the type that's paid to pretend that generally-accepted facts are up for debate.

It's important to understand that broadband providers and politicians adore slathering meaningless platitudes upon the "digital divide" because it earns them cheap political brownie points without having to do much of anything. In fact that's Comcast's entire lobbying MO, and the primary reason they renamed their top lobbyist the company's "Chief Diversity Officer." It's a simple schtick: distract the public by professing your support for closing the digital divide with the bare minimum of effort, while denying the singular problem that causes broadband coverage gaps and high prices in the first place: a lack of competition.

Over at The Hill, the National Grange, one of countless organizations telecom providers pay to support megamergers and other unpopular policy, also ignores Pai's clear and obvious history, claiming he'll be an incredible boon for rural communities. Over at the telecom-industry funded Heartland Institute blog, Scott Cleland, who also takes funds from the sector while pretending to be an objective analyst, crows that Pai will "return a pro-consumer focus" to the FCC:

"Unlike the Federal Communications Commission’s previous head, new FCC Chairman Ajit Pai is putting consumers first, not net neutrality. The sad reality is that the previous FCC did the bidding of the biggest edge providers, both on the issue of net neutrality and opening up the cable box market, as I will explain."

Up is down, black is white. We've long noted how the broadband industry has tried to downplay net neutrality issues by claiming that everything is somehow Netflix's fault, and incumbent broadband providers are just misunderstood, innocent daisies. Logical cohesion is generally missing from this narrative, but Pai himself has played a starring role in claiming repeatedly that -- in stark contrast to all available evidence -- it's the edge (content and service companies not-coincidentally challenging the industry's TV stranglehold) providers that are the real internet villains.

This disconnect between reality and dollar-per-hollar rhetoric is nothing new, especially in telecom. Former FCC boss Michael Powell, now the cable industry's top lobbyist, made a career out of paying endless lip service to consumers to the acclaim of industry sockpuppets, while his actions repeatedly worked to undermine oversight of giant companies like Comcast (to obvious end). That's because the real goal for most of these folks is something you may have ferreted out already: protection of loyal campaign contributor revenues above all else. If anything, there's an active disdain for the consumer.

If Pai actually were "pro consumer," his voting record would reflect it with minimal debate. And consumer advocates (the ones that actually spend ten hours a day fighting the good fight to little acclaim or profit) wouldn't be issuing warnings about "empty rhetoric" and "Orwellian" behavior at the FCC. At the end of the day you have to wonder: if you need to covertly pay people to support your argument, what kind of argument do you actually have?

Filed Under: ajit pai, broadband, consumers, fcc, fred campbell, public, rick boucher, scott cleland