It's a sad day when an Internet start-up - especially a popular one - bites the dust. VC and angel money being scarce these days, and paying models not always easy to implement, more than one on-line service that users believed in - and used - has gone the way of all silicon.
The scene in the office on that sad day reminds one of sort of a virtual shiva: now-former employees make the last copies of their resumes on the office copy machine, the last paychecks are distributed, the boss signs letters of recommendations for workers and whatever is left of the office supplies are distributed. And, of course, there's the last lunch, with employees and managers reminiscing on their time together and promising to keep in touch.
Then there are the assets. The hardware that the service ran on are often taken by creditors or the VCs who will not be seeing a return on their investment; the patents are either sold, rented out or frozen, in the hope that they will be used to innovate on another day. And, of course, the final monetary accounting is taken, ensuring that former employees' pensions and other savings plans are kept safe.
What about the data? Ah, there's an interesting question. We would expect the information on hard drives and databases to be wiped; indeed, there would seem to be little use for user data after the service has closed down. Of course, someone could mine the database for e-mail addresses and sell them, but the reputation of the company - especially the management, and most crucially the CEO - would be severely tarnished. It's hard to imagine that an Internet start-up whiz, who was able to raise millions of dollars to fulfill his or her vision, would stoop that low - or be that hard up for cash.
But there might be other information that could come in handy - depending on the nature of the service. Here is a quote from a well-known Internet service, where you can store information, documents and ideas for yourself or for others: "By submitting to [service] any ideas, suggestions, documents and/or proposals... you acknowledge and agree that... your contributions automatically become the property of [service] without any obligation of [service] to you; and you are not entitled to any accounting, compensation or reimbursement of any kind from [service] under any circumstances."
I'm intentionally not naming the service, because, in truth, this terms-of-service (TOS) agreement is not unique; Gmail's, for example, says that they have a right to use your information in all sorts of ways. Gmail, the classic cloud application, stores all your information on-line, and nowadays many people are using Gmail for their main mail account - meaning that they transmit all sorts of sensitive information right to Google's waiting claws, which the company can theoretically use for nefarious purposes.
But I'm not worried about Gmail; any company whose stock price is in excess of $600 (GOOG, traded on the NASDAQ, closed on Monday at $625.68) doesn't need the petty business ideas and thoughts we may send through and store on their servers. Whatever we can come up with, I'm pretty sure the Google people have already thought of, and they either have a pilot program in motion based on that idea or have rejected it as non-applicable to their business model.
But what about a service that stores information like Google does - including sensitive spreadsheets, business plans, communications, thoughts and ideas - shares of which are not trading at $625 a share and, in fact, are no longer trading at all, because they're bust? Could one of our business ideas - a really good one - end up the property of an ex-CEO or of whomever said CEO or the board of directors sells the intellectual aspects of the former service provider?
Concerns over computer-application and Internet-service TOS are nothing new, and there have been many celebrated cases of user TOS protests; for example, the one against Facebook (http://tinyurl.com/yc53jtt), where users got nervous when Facebook claimed the right to use any user content posted by anyone, in any way they wanted to. According to the TOS that every user agrees to (but few bother reading before agreeing), the Facebook people have a perfect right to take your photos and sell them to an advertising agency. By clicking "yes" on a page that links to an agreement that says, "You hereby grant Facebook an irrevocable, perpetual, non-exclusive, transferable, fully paid, worldwide license (with the right to sublicense)" and use in any way "any User Content you post on or in connection with the Facebook Service," you've given them all the permission they need to use you in a "Don't let this happen to you!" style ad campaign!
Partly as a result of the protests, Facebook has updated its privacy settings (http://tinyurl.com/yajh3bl), making it easier to opt out of any potential use of your content for purposes you didn't intend them to be used for. But what are those Facebook-posted photos and updates worth anyway? It's not like the company is going to auction off your photo to an ad agency for millions - and if your image is worth that kind of money, you've probably beaten Facebook to the ad agency and made your own deal, anyway.
But Facebook and Google are in a league of their own - they're wallowing in cash already and would have far more to lose if they were caught selling, renting or otherwise profiting from user content. As both companies make clear on their Web sites and in numerous blogs, the legalese in the TOS agreements is for their protection, such as when data gets cached (and used) on a server not under their control and ends up being linked to by an undesirable Web site. Numerous articles of mine, for example, are linked from The Jerusalem Post server to sites of less-than-savory individuals (anti-Semites and the like), but it's clear that I couldn't hold the Post responsible for that.
But when it comes to smaller Web services whose future is iffy: beware. We want the convenience of the cloud, but not all cloud data and information-storage services are created equal. I'm sure no CEO would be the type to want to rip off an innovative business plan or idea I posted/stored on his or her service/servers. And under normal circumstances it's almost impossible to conceive of such a thing happening.
But when the chips are down and some CEO is down and out, it's entirely possible that his/her next Big Idea will be the very same one you jotted down and posted in your (private) account - an account on a site where the TOS says that "your contributions automatically become the property of [service] without any obligation of [service] to you."
It hasn't happened yet (to my knowledge), but on the day it does, that fluffy white cloud will turn dark and angry - and become the harbinger of a hurricane.