It’s well understood that a darknet doesn’t function if everyone free-rides and no one shares. The more people share, the more valuable the network (i.e., network effect.) So it should be no surprise that many are skeptical of the P2P industry’s claims of voluntary steps to reduce inadvertent file-sharing, and of LimeWire’s claims that their latest software version successfully addresses that. A chairman of a key U.S. House committee with a long history of examination of P2P technology today made clear his skepticism is quite strong.

Edolphus Towns, chairman of the House Committee on Oversight and Government Reform, held a hearing today titled “Inadvertent File Sharing Over Peer-To-Peer Networks: How It Endangers Citizens and Jeopardizes National Security.”

Here’s a segment of Towns’ opening remarks:

Imagine for a moment that you had special software on your computer that exposed many of the files on your hard drive to searches by other people. At any time your computer is connected to the Internet, other computer users with similar software could simply search your hard drive and copy unprotected files. Unfortunately, that is the sad reality for many unsuspecting computer users.

Peer-to-peer (P2P) file sharing software like LimeWire works in just that way. Most people who use P2P software do it to download music and movies over the Internet. And most people who use it are totally unaware that they may expose some of the most private files on their computers to being downloaded by others.

Towns cited the nearly 10 years his committee has investigated this problem — which has occurred under several chairmen from both parties — and concluded this:

As far as I am concerned, the days of self-regulation should be over for the file-sharing industry. In the last Administration, the Federal Trade Commission took a see-no-evil, hear-no-evil approach to the file sharing software industry. I hope the new Administration is revisiting that approach and I hope to work with them on how to better protect the privacy of consumers.

The latest evidence of continued inadvertent file-sharing was provided by The Progress & Freedom Foundation’s Tom Sydnor, co-author of several important studies on the issue while at PFF and at the U.S. Patent & Trademark Office. Sydnor was one of the witnesses today, here is his testimony.

Inadvertent file-sharing can cause significant financial and other risks. Often it is a teenager in a household who downloads the software and the parents have no idea that their own personal documents — tax forms, bank records, passwords, etc. — are vulnerable.

And LimeWire’s CEO freely admitted to me in January that their business model doesn’t mesh with protecting the rights of creators. This is, of course, because they need copyrighted works to drive the network (what do you think people are “sharing”) and it is not surprising other information gets swept up as well.

This is of course the thrust behind a bill by Rep. Mary Bono Mack, bipartisan legislation with 35 co-sponsors that would have the FTC more aggressively protect the privacy of P2P users. It isn’t a copyright bill, it is a privacy bill, and it meshes with what Chairman Towns is calling for in his criticism of the FTC.

Without taking a position on the merits of regulation or legislation or how any such regulation or legislation should be crafted, one can’t deny that P2P continues to pose risks to many Americans, and one can’t deny that many in Congress remain dissatisfied with efforts by the P2P community to address this problem.

Lime Group Chairman Mark Gorton told Rep. Darrell Issa at the hearing that LimeWire already has done everything needed to ensure consumer safety, even though the record in Congressional studies, outside studies and in numerous journalism reports shows otherwise. Issa didn’t buy Gorton’s argument, and noted that LimeWire’s appeal is the broad breadth of documents available. “Isn’t your model.. the propagation of useful of interesting content,” he asked. Individual customers benefit from increased privacy, Issa said, but LimeWire suffers from that drop in files. Issa accurately called that LimeWire’s “conundrum.”

As stated in the opening of this post, legislators are asking P2P providers to act against their best interests. This is never easy for the party being asked.

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This entry was posted on Wednesday, July 29th, 2009 at 10:57 am by Patrick Ross and is filed under FTC, capitol hill, internet, p2p, piracy. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.