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Amazon’s shift on lawsuits

Amazon recently changed its terms of service – and now allows customers to bring lawsuits against the company rather than having to go through arbitration.    Why?  Well, per the Wall Street Journal, the company faced seventy five thousand Echo users who were organized to file individual arbitration cases… and Amazon on the hook for millions of dollars in fees.   So the company changed its terms of service, removing the requirement for Arbitration to save money on the fees.  

Why do we care?

The company did the math, and it’s cheaper to potentially be sued..  due to the fee structure involved in arbitration.

I’ve been highlighting financial motivations around security and noted the same line of thinking going on here.    A class action lawsuit may be a lot cheaper for the company… win or lose.  Let that sink in – they can lose, and still save money.

If you want the rules of any game to change, make sure the incentives align.