Update: MI Supreme Court Says No to Pandora Privacy

Is it a violation of Michigan consumer protection laws for a music sharing app like Pandora to share your music preferences without your knowledge? The Supreme Court says no. Its decision raises the question of who the company's customers really are.

When a federal court in California was faced with the challenge of interpreting Michigan's Video Rental Privacy Act and the Michigan Consumer Protection Act, it turned to the Michigan Supreme Court for help. The result was a decision that raises questions for any free-to-use software.

Peter Deacon sued Pandora, a music streaming app, after the company shared his musical preferences on Facebook. He claimed that by disclosing Michigan residents' names, listening history, bookmarked artists, and songs to social media Pandora was violating Michigan consumer protection laws.

Finding that Michigan courts had never defined what it means to rent, lend, or borrow under these statutes, the United States Ninth Circuit Court, which is located in California, asked the Michigan Supreme Court to weigh in.

Last week, it did so. The issue, the court said, depended on whether Deacon would be considered a “customer” of Pandora under Michigan law. It defined “customer” as someone who “purchases, rents or borrows” a book, audio recording, or video recording. Because Deacon never gave Pandora any money, he isn't protected. The court said:

“Put simply, the music-streaming program offered by defendant only involved the delivery of a sound recording to the listener; there was no corresponding ‘return’ of a recording or its equivalent from the listener to defendant.”

Consumer Protection and Free-to-Use Software

The Michigan Supreme Court's decision could have huge implications in the era of free-to-use software. Games, music apps, navigation devices, and other applications all allow users access without payment in exchange for watching advertisements, providing reviews, or other non-monetary costs.

Because these users do not pay for the software, the recent court decisions says they cannot be treated as “customers.” In turn, that means the companies behind these apps can violate users' privacy with impunity. Users implicitly pay for these services with their data – a commodity becoming increasingly valuable in the Internet-connected world.

The court decision also creates a strange tiered system of protections for software users. Companies can take advantage of their free-to-play subscribers – who are not customers. But as soon as the user gives the company money – by making in-app purchases or subscribing to a premium version, they become customers and the company becomes subject to the state's consumer protection laws. This raises questions about whether a company must retroactively purge user data when they become customers, and how such distinctions will be necessary.

The Michigan Supreme Court's decision in Deacon v Pandora has raised more questions than it answered. It will be up to consumer protection attorneys like Dani K. Liblang of The Liblang Law Firm, P.C., to protect Michigan consumers' rights. If you believe your privacy has been violated, contact The Liblang Law Firm, P.C., today for a free consultation.