PS3 Waters Heating Up For Sony

When Sony announced — at the eleventh hour — that it would be disabling the popular "Other OS" feature of its PlayStation 3 console, the reception was anything but positive. Now the outrage has moved from the digital picket line into the courtroom.

The move, which was enforced via a firmware update pushed out on April 1st, gave users two choices: Update and lose their Linux installations, or stay put and lose the ability to use many of the system's other features. Sony's only explanation was that the option presented "security concerns."

As expected, users took their case online, registering their displeasure across the Internet. Equally as expected, Sony remained recalcitrant.

Users appeared to have gained some ground just days later, when a UK-based PS3 owner received a 20% refund — £84 — after citing European consumer protection regulations in a complaint to Amazon UK. Under Directive 1999/44/EC, sellers must warrant that goods are "fit for the purpose which the consumer requires them and which was made known to the seller at the time of purchase."¹²

Sony, however, was nonplussed. The EU directive attaches the warranty obligation to the seller, not the manufacturer, meaning that Amazon is stuck holding the bill. Sony has indicated that it has no intention of reimbursing retailers who issue refunds — it does not appear that any other refunds have been made, however, and Amazon is hardly likely to throw a fit over £84. If claims start to stack up, however, that could change, and Amazon has aptly demonstrated that it isn't adverse to delisting those that displease it.

At the moment, however, Amazon is the least of Sony's worries. As of last week, Sony is now facing three separate federal class action lawsuits in California (where Sony is headquartered), claiming breach of contract, breach of good faith and fair dealing, breach of California's Unfair Competition Law, and violation of California's Consumers Legal Remedies Act.

It will be up to a jury to decide what laws were or weren't broken — if it ever reaches a jury, given that most class action suits are settled before trial — but there would appear to be at least some merit to the claims. It is incontestable that at least some PS3 buyers relied on the "Other OS" feature when they made their purchase. Even if most people never think of them as such, purchases — whether houses, cars, gaming systems, or packs of gum — are contracts, and contracts hinge on mutual promises to deliver. Take away what you promised to deliver (i.e., the "Other OS" the buyer was specifically looking for) and the contract falls apart.

Sony could be in for even more trouble, however. Though there is no indication that anyone has yet to do so, the possibility exists that disaffected consumers in Europe could complain to the European Commission, which has a strong history of investigating unfair and illegal trade practices. The EC has aptly demonstrated its lack of leniency towards offending companies, and shows little concern for a violator's size, industry position, or political influence. Put another way, the Commission does not hesitate to cut any company that pushes European law off at the knees.

U.S.-based consumers could, of course, complain to the Federal Trade Commission, and as is always the case, to Congress, which holds hearings at the drop of a hat. Normally, such complaint would be of little concern, but in the case of the PS3, could be bolstered by the fact that the U.S. military has purchased millions of dollars worth of PS3 systems for use as low-cost supercomputers. It's unlikely that the loss of gaming features is of any concern there, but that no further firmware upgrades — particularly given that the system has finally been successfully hacked — could prove cause for concern.

Being at odds with an army of angry consumers is trouble enough — being at odds with the Army itself is hardly and enviable position.