BitTorrent, Inc. may have finally made the mistake that content creators and owners around the world have been waiting for. Content owners have been able to successfully sue and recover hundreds of millions of dollars from Napster, Grokster, Bearshare and Limewire, but until recently have been unable to sue BitTorrent, Inc for its role in assisting hundreds of millions of people to illegally consume billions of media products. Many people are amazed to learn that BitTorrent, Inc., the technology we believe is primarily responsible for the decline of recorded music, home video and video game revenues, has received more than $40m in venture capital investment from Silicon Valley’s Accel Partners. The legal loophole that allows BitTorrent to exist is the famous “betamax” case, where the court ruled that as long as the VCR (Video Cassette Recorder) had one legitimate non-copyright infringing use, it was a legal technology.
The VCR however, did not restrict its features after years in the marketplace to make it easier for people to commit infringement without getting caught. In our opinion, that is what BitTorrent, Inc. announced today. In our opinion, they are restricting the existing long-standing features of their product for the the sole purpose of making it easier for people to use their software to distribute copyrighted content without getting caught and prosecuted.
TorrentFreak reported that “To protect the privacy of its users BitTorrent Inc. therefore decided to randomize the peer-id uTorrent users display to other peers.” Among other things, the peer-id tells other computers using BitTorrent what software brand and version the other computer is using. This information improves the performance of the file transfer by enabling peers to use all of the latest features available when communicating with another computer. TorrentFreak writes, “Thanks to the new feature it is no longer possible to track BitTorrent users based on their peer-id for a longer period of time.” BitTorrent’s own words are “Feature: don’t use a consistent peer-id (to mitigate tracking)”
In describing the peer-id, BitTorrent says:
“The 20-byte peer id field sent [has] been used not only to identify peers but also to identify the client implementation and version.
A number of clients begin the peer id with a dash followed by two characters to identify the client implementation . . .The remaining bytes are random. An example is -AZ2060-” This means the software brand is Azureus and the version is 2.060.
What is Accel Partners’ motivation to invest in BitTorrent, a technology that is devastating the media industry and has no sustainable legal business model? As advertisers are beginning to be held accountable for their role in sponsoring piracy, how does BitTorrent make money? In 2007, Accel invested $47m in Admob which they sold to Google for $750m in Google stock in 2009. BitTorrent is the largest peer-to-peer platform and according to Sandvine, 30% of European and Asian internet traffic is peer-to-peer filesharing in 2012 and 15% of US traffic. According to Envisional, 100% of the top 10,000 torrents infringed on copyright in 2011. What percentage of Google’s ads are served on pages that refer people to get files from the 30% of all European and Asian and 15% of all US traffic used for infringement? As long as BitTorrent provides a reason for people to search for illegal content that they find on sites that have ads from Google’s ad networks, Accel’s investment in Google stock keeps going up. When Accel sold Admob for Google stock it was $572 a share. It is $733 today. Neither Google, Accel Partners nor BitTorrent needed to pay any of those pesky content creators!
Why does BitTorrent, a company backed by a large shareholder in Google need to reduce the functionality of its software in order to help people hide from law enforcement? Why do its users need to hide? Because in our opinion, both BitTorrent and Accel Partners are well aware that their technology is primarily used by people to break the law. Prior to BitTorrent restricting features to help users hide from law enforcement, the Betamax decision was the thin legal thread they hung onto. It is our opinion that now that they go out of their way to restrict their long-standing features to empower their users to hide from legitimate and legal law enforcement monitoring, that they have crossed the line and opened themselves up to liability.