Law and technology

Antivirus company McAfee has done the right thing by offering to reimburse “reasonable expenses” for home users hit by its faulty update last week. Without intending to derogate from this good gesture, it should be noted that McAfee is (arguably) simply doing what it is legally required to do.

In New Zealand, software is covered by the Consumer Guarantees Act 1993 (see my post here). If a software product (in this case, the McAfee antivirus software) is sold in a situation covered by the Act (which for home users it would be), and the software is not of “acceptable quality” (which this incident would, I think, qualify as), a consumer can seek compensation from the developer for:

“… any loss or damage to the consumer … resulting from the failure … which was reasonably foreseeable as liable to result from the failure.” (section 27, CGA)

Under this provision, what compensation could be claimed from a commercial software developer who delivered “unacceptably faulty” code? Well, it depends on several factors, but in the McAfee case it could include:

• The cost of hiring a technician to disable the faulty software;
• The cost of hiring a replacement PC while another was being fixed;
• Telephone support charges, etc.

Business-related losses, such as “lost profits” and business interruption costs, would be more difficult to prove and recover, given the “consumer” orientation of the Act and other factors, but would not be impossible. (In addition, it is often overlooked that businesses can be consumers too.) It would also be unlikely that compensation could be claimed for, say, a lost Trade Me deal due to the faulty software crashing a bidder’s computer – in most cases, such specific losses would not be sufficiently “forseeable” (to the developer) in the circumstances.

A consumer could also seek a refund for the software from the retailer (section 18(3)(a) CGA).

However, while the Consumer Guarantees Act provides a range of pro-consumer rights, in practice it can be difficult to enforce those rights – as anyone who has seen Fair Go or Target, or has tried to deal with a dodgy store-owner, will have seen. In some cases going to the Disputes Tribunal or even court may be necessary. Compensation can obtained where due, but the time and effort may deter some from doing so. Of course, a reputable business would never allow its reputation to be tarnished in this way, and ideally would proactively meet its obligations.

This is why it is good to see McAfee front-foot this situation by offering to reimburse expenses. Problems like this can and will happen from time to time with software products, and McAfee sets a good example for other software companies that face similar incidents.

Their offer does not, however, extend to business users – non-cash compensation has instead been offered for businesses. It is standard for licenses (and/or other sales terms) to exclude consumer warranties for business users. The offer of limited compensation for business users (where it is not legally required) is therefore again a welcome step, although some business users who incurred significant business interruption may be left out of pocket.

It is good to see that ICONZ has called out Orcon over its claim to have “just launched NZ’s first locally developed cloud computing infrastructure service” (made during the NZ Cloud Computing Summit no less). On the other hand, good on Orcon for landing a pre-emptive marketing strike and pushing its superior on-demand features.

Cloud computing easily ranks on par with Web 2.0 as a “term that means whatever we want it to mean” (i.e. meaningless). And try explaining the difference between cloud computing, software-as-a-service, network computing and ASP. So it’s arguably both meaningless and redundant.

Clearly, though, it is beloved by marketing departments. Interestingly, the term “cloud computing”, which only started gaining popularity in late 2007, hasn’t reduced “software as a service” in searches while becoming the dominant buzzword, as illustrated here (Google Trends):

It will be interesting to see how other NZ ISP’s and web hosts respond. Anything that promotes competition between, and awareness of, homegrown providers will be a good thing. It is surprising that most of the Kiwi companies I have talked to about cloud computing (well, it is catchy) have only ever mentioned EC2 or Azure, even though their main customer bases are in New Zealand.