Companies are setting up shop on social media platforms at an astonishing rate; indeed, one struggles to name a major consumer-focused company that has not already established a presence on Facebook and Twitter (this would not have been difficult to do a year ago). However, in their rush to capitalize on the social media boom, corporations are “click accepting” the extremely one-sided, overly burdensome online contracts that typically govern their access to social media platforms— contracts that these same corporations would be loathe to accept in the offline world, at least not without extensive negotiation. Moreover, many companies enter into these online agreements without any prior review, and often remain unaware of their binding obligations and potential liability exposure under these agreements.  

As social media platform providers become more powerful, however, their so-called “Terms of Use” agreements are attracting greater scrutiny. For example, an effort by Facebook last year to modify its main governing agreement, its “Statement of Rights and Responsibilities” or “SRR,” sparked an end-user revolt that resulted in Facebook abandoning the modification effort. Further, corporate users are beginning to focus on how best to assess and manage the risks posed by these online contracts. To facilitate this effort, we are presenting the first in what will be a series of pieces examining the Terms of Use agreements of some of the high-profile social media sites; we start this series with a look at Facebook’s SRR.  

One challenge in analyzing social media websites’ Terms of Use agreements is untangling the complex web of policies and rules that often comprise such agreements. Indeed, the Facebook SRR is merely one of twelve documents constituting Facebook’s online contractual regime (which, if printed out, spans more than 33 pages). The graphic below attempts to show how Facebook’s twelve governing documents interrelate. We cannot here summarize all of the important terms and conditions to be found in these twelve documents that govern one’s use of the Facebook platform; however, we do wish to highlight terms that may come as a surprise to many corporate users of Facebook:  

Facebook Receives a Broad License to User-Posted Content [Facebook SRR, § 2.1]: Is your company posting text, images, sound recordings or videos to its Facebook Page? If so, then your company may be granting Facebook a broad license to such content. In particular, § 2.1 of the Facebook SRR provides that, by posting content that is “covered by intellectual property rights,” such as photos and videos on or “in connection with” Facebook, users (which, again, includes companies as well as individual end-users) grant to Facebook a non-exclusive, transferable, sublicensable, royalty-free worldwide license to use any such content. This license terminates when the posted content is deleted from Facebook—unless the content has been “shared” with others, in which case the license appears to continue in perpetuity.

Promotions Are Subject to Restrictive “Promotions Guidelines” [Facebook SRR, § 3]: Is your company thinking about operating a contest, giveaway, sweepstakes or similar promotion on Facebook, or merely advertising such promotion on your company’s Facebook Page? The Facebook SRR may require that your company obtain Facebook’s prior written permission to run the contemplated promotion. Also, keep in mind that all such activities are governed by a set of supplemental terms and conditions contained in Facebook’s separate Promotions Guidelines, introduced in November 2009, which govern not only the content of the promotion but how the promotion may and may not be operated and promoted.  

Consent and Notice Requirements for Collection of User Information [Facebook SRR, § 5.7]: Does your company collect information on the Facebook platform from other Facebook users? If so, Facebook’s SRR appears to require your company to (a) obtain such users’ consent, (b) make it clear that your company is the one collecting user information, and (c) post a privacy policy explaining what information is being collected and how it will be used.  

Facebook May Unilaterally Modify the SSR’s Terms at Any Time [Facebook SRR, § 13.1]: Facebook reserves the right to change the Facebook SRR by providing notice to users on the Facebook Site Governance Page, where it gives users an opportunity to comment on such changes. To keep abreast of changes to the Facebook SRR, companies that regularly use Facebook should check Facebook’s Governance Page from time to time (or consider “Liking” the Page to ensure receipt of notices of any changes).  

Facebook May Terminate User Accounts for Violation of SRR or Where There Is a “Legal Risk” to Facebook [Facebook SRR, § 14]: Unsurprisingly, Facebook reserves the right to stop providing all or part of its services to any user who violates “the letter or spirit” of the SRR. More interestingly, Facebook also reserves the right to stop providing Facebook to any user who “creates risk or possible legal exposure for Facebook.” Read broadly, the foregoing language could allow Facebook to withhold its service from companies making novel commercial uses of Facebook, at least to the extent that such use create any “risk” for Facebook.  

All Disputes to Be Resolved in Facebook’s Home Forum [Facebook SRR, § 15.1]: Facebook’s SRR requires all Facebook users—including companies that operate Facebook “Pages”—to resolve any disputes regarding the Facebook service in the state or federal courts of Santa Clara County, California (the location of Facebook’s headquarters).  

Facebook Disclaims Security, Implied Warranties and Liability for Third- Party Acts [Facebook SRR, § 15.3]: Facebook’s SRR includes a number of broad disclaimers, including (a) disclaimers concerning the safety or security of the Facebook platform; (b) disclaimers of express and implied warranties; and (c) a disclaimer of Facebook’s liability for the actions, content, information or data of third parties. Although these broad disclaimers are commonly found in consumer-focused online Terms of Use agreements, they are the types of provisions that corporations have typically sought to negotiate out of their contracts with their service providers.  

Facebook’s Liability Capped at $100 [Facebook SRR, § 15.3]: The Facebook SRR caps Facebook’s aggregate liability arising out of the SRR or the Facebook service at the greater of $100 or the amount that the user has paid Facebook in the past twelve months. Presumably, most Facebook users—including corporate users—pay little or no money to Facebook, in which case $100 would be the cap on Facebook’s liability under the SRR. The cap presumably will increase if, for example, a company were to purchase ad space or other services from Facebook.  

In future editions of this newsletter, we will continue our exploration of the online terms of use of social media providers.