The Xbox Live Class Action

As noted on GameSpot, a number of Texas residents have sued over the Xbox Live holiday outage, for which Microsoft previously apologized and will be offering a free game. The suit apparently asks some $5 million in damages, based on a breach of contract for the service. I have a few thoughts on the matter, which are entirely thoughts and not legal advice (in case anyone is inclined to take them in an improper context).

1. A subscription to Xbox Live, annually, is $50. For 3 months, the going rate is $20, and for a month it’s $8. So, the actual value of a month of Xbox Live is somewhere between $8 and $4.17 or so. The service has been down, or at least been acting in a less than satisfactory manner for approximately one month or less.

2. Microsoft has noted, and will be offering, a free live arcade game of some sort to all paying Live members. Assuming the game isn’t one everyone has already purchased, or there are multiple options or the like, then the approximate value of the replacement game should be about the same as the loss experienced by the Live users.

3. More importantly, as this is supposedly a breach of contract action, upon review of the Xbox Live Terms of Use, the basic contract that governs Xbox Live, there’s not an action to be had on the terms of the agreement if Xbox Live goes down. To quote the agreement:

We provide the Service “as-is,” “with all faults” and “as available.” The Microsoft Parties give no express warranties, guarantees or conditions. You may have additional consumer rights under your local laws that this contract cannot change. To the extent permitted by law, we exclude the implied warranties of merchantability, fitness for a particular purpose, workmanlike effort and non-infringement.

You can recover from the Microsoft Parties only direct damages up to an amount equal to your Service fee for one month. You cannot recover any other damages, including consequential, lost profits, special, indirect or incidental damages.
This limitation applies to:
-any matter related to the Service,
-any matter related to content (including code) on third party Internet sites, third party programs or third party conduct,
-any matter related to viruses or other disabling features that affect your access to or use of the Service,
-any matter related to incompatibility between the Service and other services, software and hardware,
-any matter related to delays or failures you may have in initiating, conducting or completing any transmissions or transactions in connection with the Service in an accurate or timely manner, and
-claims for breach of contract, breach of warranty, guarantee or condition, strict liability, negligence, or other tort to the extent permitted by applicable law.
It also applies even if:
-this remedy does not fully compensate you for any losses, or fails of its essential purpose; or
-Microsoft knew or should have known about the possibility of damages.
Some states do not allow the exclusion or limitation of incidental or consequential damages, so the above limitation or exclusion may not apply to you. They also may not apply to you because your province or country may not allow the exclusion or limitation of incidental, consequential or other damages.

In short, the service is provided “as-is,” and any damages are limited to the value of one month of service. Whether a court will allow payment in the form of, say, additional time on Xbox Live or a free game is yet to be seen, but I would imagine that, given the low per user amount involved, Microsoft’s remedy would likely be adequate, especially since the outage was not 100% over the time claimed and not too terribly extensive in the grand scheme of things.

This is by no means to say the suit is doomed or without merit. There are a number of possible interpretations under which the plaintiffs could succeed, but in general, this seems similar to so many of the other suits levied against the house that Gates built: mostly for profit or for principle.

[Via Joystiq]

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About Mark Methenitis

Mark Methenitis is an attorney in Dallas Texas. Mark received his Juris Doctorate and his Master of Business Administration from Texas Tech University and his Bachelor of Arts from The University of Texas.

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