You can't sue Microsoft either now.

[noiseredux]

It's one of 2011's more troubling, if less sexy developments: that of major publishers and platform holders finding ways to stop customers taking them to court if something goes wrong with their product or service.

Sony was the first company to introduce a "no sue" clause as part of its terms of service in September, and was swiftly followed by Electronic Arts. Now Microsoft and its Xbox 360 are in on the act.
As part of the new dashboard update rolling out worldwide today, the console comes with a new terms of service agreement that users must agree to. Most of it is standard stuff, until you get to section 18.1.4. Binding Arbitration. It reads as follows:

IF YOU LIVE IN THE UNITED STATES, YOU AND MICROSOFT AGREE THAT IF YOU AND MICROSOFT DO NOT RESOLVE ANY DISPUTE BY INFORMAL NEGOTIATION UNDER SECTION 18.1.2 ABOVE, ANY EFFORT TO RESOLVE THE DISPUTE WILL BE CONDUCTED EXCLUSIVELY BY BINDING ARBITRATION IN ACCORDANCE WITH THE ARBITRATION PROCEDURES IN SECTION 18.1.7 BELOW. YOU UNDERSTAND AND ACKNOWLEDGE THAT BY AGREEING TO BINDING ARBITRATION, YOU ARE GIVING UP THE RIGHT TO LITIGATE (OR PARTICIPATE IN AS A PARTY OR CLASS MEMBER) ALL DISPUTES IN COURT BEFORE A JUDGE OR JURY. INSTEAD, YOU UNDERSTAND AND AGREE THAT ALL DISPUTES WILL BE RESOLVED BEFORE A NEUTRAL ARBITRATOR, WHOSE AWARD (DECISION) WILL BE BINDING AND FINAL, EXCEPT FOR A LIMITED RIGHT OF APPEAL UNDER THE FEDERAL ARBITRATION ACT. ANY COURT WITH JURISDICTION OVER THE PARTIES MAY ENFORCE THE ARBITRATOR'S AWARD.

THE ONLY DISPUTES NOT COVERED BY THE AGREEMENT IN SECTION 18.1 TO NEGOTIATE INFORMALLY AND ARBITRATE ARE DISPUTES ENFORCING, PROTECTING, OR CONCERNING THE VALIDITY OF ANY OF YOUR OR MICROSOFT'S (OR ANY OF YOUR OR MICROSOFT'S LICENSORS') INTELLECTUAL PROPERTY RIGHTS.

Shortly after, section 18.1.6 reads:

18.1.6. CLASS ACTION WAIVER. YOU AND MICROSOFT AGREE THAT ANY PROCEED­INGS TO RESOLVE OR LITIGATE ANY DISPUTE, WHETHER IN ARBITRATION, IN COURT, OR OTHERWISE, WILL BE CONDUCTED SOLELY ON AN INDIVIDUAL BASIS, AND THAT NEITHER YOU NOR MICROSOFT WILL SEEK TO HAVE ANY DISPUTE HEARD AS A CLASS ACTION, A REPRESENTATIVE ACTION, A COLLECTIVE ACTION, A PRIVATE ATTORNEY-GENERAL ACTION, OR IN ANY PROCEEDING IN WHICH YOU OR MICROSOFT ACTS OR PROPOSES TO ACT IN A REPRESENTATIVE CAPACITY. YOU AND MICROSOFT FURTHER AGREE THAT NO ARBITRATION OR PROCEEDING WILL BE JOINED, CONSOLIDATED, OR COMBINED WITH ANOTHER ARBITRATION OR PROCEEDING WITHOUT THE PRIOR WRITTEN CONSENT OF YOU, MICROSOFT, AND ALL PARTIES TO ANY SUCH ARBITRATION OR PROECCEDING.

What this means is that if something happens to Xbox Live or the Xbox 360 in general, you can't sue Microsoft. Nor can you join in a class action suit targeting Microsoft.

As we've explained previously, this sets a dangerous precedent, as these new terms have been drafted for exactly the same reason as Sony's, EA's and many other non-gaming companies, like insurance firms, have in recent times.

Unlike courts, whose outcomes are decided by juries (who can by sympathetic towards consumers battling multinational corporations), decisions made via private arbitration often find in favour of businesses, and even when siding with consumers offer relatively small payouts.

You normally can't appeal the findings of a private arbitration hearing, nor is there an independent or public means of reviewing an arbitrator's decisions. They are also designed to be conducted privately, out of the public eye.

It's a move designed, in essence, to steamroll your rights as a consumer. To ensure that even if Microsoft screws something up, or something terrible happens to the platform, any compensation or dispute will be handled on their terms, not those of a court and jury.

Before you say "what good would lawsuits do anyway?", remember, it was an avalanche of class action suits that helped prompt Microsoft to fess up to the "Red Ring of Death" issue with the Xbox 360 and offer extended warranties.

Note that this move only affects residents of the United States. Those outside the US can carry on as usual. For Americans who want to do something about the new terms, there is a way out. So long as you contact Microsoft within thirty days of singing the new terms of service agreement, you can be exempt from this new clause. You'll need to contact them in writing, by mailing:

Microsoft Corporation, ATTN: LCA ARBITRATION, One Microsoft Way, Redmond, WA 98052-6399

You should probably do so.

UPDATE - American readers are letting us know that in several states the matter of whether these kind of agreements are even legal is up for debate. Illinois, for example, has ruled that consumers must always be given the right to pursue legal action in a court of law, while Ohio and New Mexico are currently investigating the same matter.

....go!

[dsheinem]

before anyone starts jumping on "$ONY" or "M$" for their policies on this just realize that Nintendo, Sega, Valve, and pretty much every other game company will probably not be far behind (EA has the same policy in place, for example). Given that thus far this policy has been determined legally permissible, it makes good financial sense for these companies to adopt this policy. The legal clause itself might be detestable, but companies are stupid for not taking advantage of it.

In other words: don't hate the playa, hate the game.

[noiseredux]

my prediction is this will be more like the Steam Got Hacked thread where even though it was the same thing that everyone was so mad at Sony for, they'll now give Microsoft a pass for some reason.

[Zing]

major publishers and platform holders finding ways to stop customers taking them to court if something goes wrong

"Finding ways"? It's a voluntary contractual agreement.

[o.pwuaioc]

dsheinem: I disagree. We can hate both the game and the players who play unethical games. Whatever happened to companies that take mottoes like "do no harm"?

[Opa Opa]

What, pray tell, is an 'unethical game'?

[Hatta]

Our government is wholly owned by corporations. What else is new?

oh, and dsheinem, just because it's legal doesn't make it right.

[o.pwuaioc]

What, pray tell, is an 'unethical game'?

See dsheinem's comment above.

[dsheinem]

dsheinem: I disagree. We can hate both the game and the players who play unethical games. Whatever happened to companies that take mottoes like "do no harm"?

Fair point, though I think that when we are talking about multi-million/billion dollar companies with large shareholder bases (such as these game companies) we are almost always going to be outside of the realm where the pubic good>good for bottom line in cases like this. Additionally, they aren't really doing "harm" as users do have the right to opt out of these agreements, not sign them, etc. - it just requires effort and/or sacrifice. If a company feels it can legally get rid of a clause that potentially leaves it open for significant losses, aren't they doing the right thing by their shareholders (and by those who want them to keep making games) by closing it?

[o.pwuaioc]

dsheinem: I disagree. We can hate both the game and the players who play unethical games. Whatever happened to companies that take mottoes like "do no harm"?

Fair point, though I think that when we are talking about multi-million/billion dollar companies with large shareholder bases (such as these game companies) we are almost always going to be outside of the realm where the pubic good>good for bottom line in cases like this. Additionally, they aren't really doing "harm" as users do have the right to opt out of these agreements, not sign them, etc. - it just requires effort and/or sacrifice. If a company feels it can legally get rid of a clause that potentially leaves it open for significant losses, aren't they doing the right thing by their shareholders (and by those who want them to keep making games) by closing it?

If companies are legally able to ruin the environment if it makes them a profit, is it ok that they do that, too?

Obviously we agree that the fundamental error lies in the legality of such contracts, but that doesn't, in my mind, excuse amoral, nay, immoral corporate decisions.