20 years ago, Ted Cruz published a law paper proving companies could always beat customers with terms of service

You might think that when companies impose crappy, abusive terms of service on their customers that the market could sort it out, by creating competition to see who could offer the best terms and thus win the business of people fed up with bad actors.



You'd be wrong.

In a devastating 1996 Hastings Law Journal article, Cruz -- then a clerk for Supreme Court justice Rehnquist -- sets out the case that companies would not lose enough business from the tiny minority of obsessives willing to read through the long, dull terms of service and think through whether they'll interfere with their enjoyment of their property to make it worth modifying those terms. This would lead all the companies in a space to converge on a set of terms that are nightmarishly abusive.


This is exactly what's happened in the 20 years since.


This month, now-Senator Cruz voted to allow ISPs to spy on their customers and sell their most intimate data -- as well as injecting intrusive ads and trackers into their internet traffic -- on the grounds that Americans would examine the ISPs' terms of service and choose the ones who don't abuse their position. Senator Cruz has also repeatedly voted to limit competition in the ISP sector, leaving the vast majority of Americans with two or fewer choices for broadband.

Motherboard's Jason Koebler contacted Cruz's office for comment, but didn't hear back.

There are various ways manufacturers make sure consumers stay uninformed. The contracts are long and difficult to understand. Often, they apply to people who don't even know they've entered into them. And we are unwittingly entering into so many contracts that it's simply not worth it to read them all. Cruz notes that, even in 1996, many thermometers were coming with pages-long user agreements.

"Not only must one determine what the provisions mean, but one must also assess their impact on a case-by-case basis," Cruz wrote. "For many products, any cost whatsoever may be enough to induce consumers not to become informed."

A 2014 NYU study found that roughly a tenth of one percent of consumers even look at licensing agreements at all, and most read them for only a few seconds. For those of you who enjoy math, Cruz modeled his argument (this is a theoretical world where the market is truly efficient).

Ted Cruz's Law Paper From 1996 Is the Best Argument Against Letting Tech Companies Run Rampant
[Jason Koebler/Motherboard]