Market Overview

Could A Ruling Against Aereo Kill The Cloud?

Related GOOG
Ferguson Unrest Calls Attention To The State of Police Technology
Benzinga's M&A Chatter for Wednesday August 20, 2014
Ever Wonder Why Ron Johnson Left Apple for J.C. Penney? (Fox Business)

U.S. Supreme Court justices Tuesday seemed to be wondering aloud whether the case against startup Aereo was also linked to cloud computing.

The Associated Press reported Justice Stephen Breyer saying, “Are we somehow catching other things that would really change life and shouldn’t?”

The “other things” to which Justice Breyer referred included the growing enterprise of cloud storage and computing, which is where Aereo stores television programs it grabs off the air prior to its customers picking them up via their Aereo accounts.

Aereo said that if it loses in court, cloud services could be forced to police any content stored on their servers, thereby effectively rendering the entire cloud-based business model untenable.

Related: Supreme Court Ruling Could Change The Face Of Television Forever

Both the Consumer Federation of America and the Consumers Union, in an amicus brief, cited the example of a teacher who uploads various video clips onto her Dropbox account, something that would be legal under fair use doctrine.

According to the brief, “However, if this Court were to find that providing a consumer-selected video from a cloud storage source represents a public performance, as Petitioners assert, the ability of Dropbox to legally provide this teacher with access to her own files would—at the very least— be subject to serious question.”

Broadcasters, who were trying to shut Aereo down, said that comparison was not valid.

In a separate filing they said, “There is an obvious difference between providing storage for content that the end-user independently possesses and making the content itself available to anyone who pays a fee. There are legitimate services that use cloud computing technology to do the latter, but unlike Aereo, they pay for licenses to exploit the content.”

If Aereo and its lawyers are correct, companies like Microsoft (NASDAQ: MSFT), Google (NASDAQ: GOOG), and Yahoo! (NASDAQ: YHOO) have plenty to worry about. Those companies and others are heavily invested in the future of cloud computing and any obstacle to unfettered cloud-based storage would likely put a severe crimp in margins, if not kill off the entire concept all together.

On the other hand, should Aereo prevail, broadcasters, including Disney (NYSE: DIS) owned ABC, CBS (NYSE: CBS), Comcast (NASDAQ: CMCSA) owned NBC and others stand to lose billions of dollars they currently receive in re-transmission fees.

The justices clearly realize this and seek a solution that doesn’t upend one industry over another.

Meanwhile, Arstechnica pointed out a repeated pattern that seemed to be developing, comparing the current court cast to the VCR litigation 30 years ago when Hollywood tried to block people from recording content picked up on their personal antennas.

At that time, Hollywood attorney Stephen Kroft said, "Petitioners have created a billion dollar industry based entirely on the taking of somebody else’s property, in this case copyrighted motion pictures, each of which represents a huge investment by the copyright owners."

In their petition in the Aereo case broadcasters said, "The works provided by commercial television broadcasters to a remarkably broad swath of the public cost millions of dollars to produce. Petitioners rely on their ability to control how their programming is used by others in order to recoup those significant investments."

In other words, it’s déjà vu all over again.

At the time of this writing, Jim Probasco had no position in any mentioned securities.

Posted-In: ABC Aereo CBS Comcast disneyNews Events Media Best of Benzinga

 

Related Articles (CMCSA + CBS)

Around the Web, We're Loving...

Partner Network

Get Benzinga's Newsletters