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"Because It Is Wrong": an Essay on the Immorality and Illegality of The

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JOURNAL OF LAW, TECHNOLOGY & THE INTERNET • VOL. 12 • NO. 1 • 2020 – 2021 “BECAUSE IT IS WRONG”: AN ESSAY ON THE IMMORALITY AND ILLEGALITY OF THE ONLINE SERVICE CONTRACTS OF GOOGLE AND FACEBOOK* Preston M. Torbert† This essay argues that the behavioral-advertising business model under which an internet platform, such as Google or Facebook, provides free services in exchange for the user’s personal data is immoral and illegal. It is immoral because it relies on addiction, surveillance, and manipulation of the user to deplete the user’s autonomy. The contract between the company and the user is immoral. It can also be plausibly argued that the contract is illegal under California law because it is contrary to good morals, is unconscionable, and is against public policy. As society becomes more aware of these moral and legal defects, courts in the future should be more willing to find these contracts illegal and thus void. In such case, the user’s consent to the contract would be nullified and the company would have no legal right to gather and monetize the personal data of the user. The companies should then be forced to convert to a subscription model with a fiduciary duty to users to restrict the gathering and monetizing of personal data. This essay employs perspectives not only from morality and law, but also from philosophy, history, political theory, and neuroscience. Part One covers morality, Part Two legality. * I am indebted to Harvard Law Professor Charles Fried and his son, Suffolk University Philosophy Professor Gregory Fried, for the phrase “Because it is Wrong.” See BECAUSE IT IS WRONG: TORTURE, PRIVACY AND PRESIDENTIAL POWER IN THE AGE OF TERROR (2010). I use the word “Essay” in the sense used by Michel de Montaigne—a trial or attempt, not something definitive. † Lecturer in Law, University of Chicago Law School, and Visiting Professor, Peking University School of Transnational Law. CONTENTS Part One: Morality .................................................................................................. 1 I. Introduction ................................................................................................. 1 II. Markets and Morals ................................................................................ 3 III. Advertising .............................................................................................. 6 A. Then and Now ..................................................................................... 6 B. The Advertising-based Business Model ............................................. 9 IV. The History of Google .......................................................................... 10 A. Before Advertising ............................................................................ 10 B. After Advertising .............................................................................. 12 V. The History of Facebook ...................................................................... 20 A. Before Advertising ............................................................................ 20 B. After Advertising .............................................................................. 26 1. Formation, 2004-2012: The Issue of Privacy ................................... 26 2. Consolidation, 2012-present: The Issue of Autonomy ..................... 30 a. Addiction ..................................................................................... 31 b. Surveillance ................................................................................. 34 c. Manipulation ............................................................................... 36 d. Loss of Autonomy ....................................................................... 38 C. The Behavioral-Advertising Business Model and Its Implications .. 41 1. The Economics of the Behavioral-Advertising Business Model ...... 41 2. The Morality of the Behavioral-Advertising Business Model .......... 42 3. Disregard for Moral Issues ................................................................ 43 4. Exploitation of Human Weakness..................................................... 48 5. Users as Lab Animals ....................................................................... 49 6. Unhappiness ...................................................................................... 50 7. Critical Silence .................................................................................. 51 8. Frictionless Sharing .......................................................................... 54 9. Data Exhaust ..................................................................................... 56 10. Threat to Democratic Practice ........................................................ 58 i Journal of Law, Technology & the Internet — Vol. 12 11. Threat to Rule of Law ..................................................................... 61 Part Two: Legality ................................................................................................ 63 I. Contract Law and the Behavioral-Advertising Business Model............... 63 A. Inalienable Rights ............................................................................. 63 B. Illegal Contracts: The Precedent of the Peonage Contract ............... 70 C. Types of Illegal Contracts ................................................................. 81 1. Contracts Contrary to Good Morals .................................................. 82 2. Unconscionable Contracts ................................................................ 90 3. Contracts Against Public Policy ....................................................... 96 D. Illegality .......................................................................................... 103 1. Factors Affecting A Decision on Illegality ..................................... 103 a. Federal Government Inaction .................................................... 103 b. Tradition of Judicial Activism................................................... 109 c. Procedural Issues ....................................................................... 111 d. Changing Mores ........................................................................ 115 e. Changes to the Business Model ................................................ 119 f. Threat to Personhood ................................................................ 123 g. Threats to Democratic Society and Theory ............................... 126 i. Democratic Society ................................................................ 126 ii. Democratic Theory ................................................................ 129 h. Paternalism ................................................................................ 131 i. Uncontrolled Experiment .......................................................... 133 j. Bad Beliefs and Bad Behavior .................................................. 136 2. Consequences of Illegality .............................................................. 142 a. Contract Unenforceable and Void ............................................. 142 b. Statutory Violation or Common Law Tort? .............................. 144 c. Alternative Business Model ...................................................... 149 d. Ownership of Data .................................................................... 153 e. Bankruptcy ................................................................................ 157 f. International Consequences....................................................... 158 ii Part Three: Conclusion ....................................................................................... 161 I. Morality................................................................................................... 161 II. Legality ............................................................................................... 167 iii “Because It Is Wrong”: Immorality and Illegality of Online Service Contracts PART ONE: MORALITY I. INTRODUCTION Many internet service companies have a business model that relies on advertising. A user enters into a contract with the company by accessing the appropriate web page and clicking on the consent button to confirm that the user agrees to the company’s Terms of Service. A contract between the user and the company is established.1 Under the contract, the user consents to the company’s collection, aggregation, and handling of the user’s personal data and the company sells the attention 2 of the user to advertisers, political parties, and others. Essentially, the user barters his or her personal information in exchange for free use of the service. Under this model, the users are not the company’s customers, the advertisers are.3 This has become the predominant business model for internet service companies. This business model has attracted criticism. Some say that the model will inevitably be misused; that it is harmful to the health of the public sphere and politics; that under it crucial decisions are made unilaterally, without recourse, and 1 The validity of the clickwrap license was first recognized in California in the case Hotmail Corp. v. Van$ Money Pie, Inc., No. C-98 JW PVT ENE, C 98-20064 JW 1998 WL388389 (N.D. Cal. 1998). For a discussion on clickwrap licenses see generally Nathan J. Davis, Presumed Assent: The Judicial Acceptance of Clickwrap, 22 BERKELEY TECH. L. J. 578, 579-81 (2007). See also, E. ALLAN FARNSWORTH, FARNSWORTH ON CONTRACTS § 4.26 (2004). More recently, courts have been moving away
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