OT: Insurance companies set to destroy software industry?

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Submitted by Crooked_Banker on May 19, 2009 - 7:57pm

We don't have many profitable, non-government supported industries left in this country, and the insurance lobby is about to destroy one of them. Apparently, the insurance lobby has been working quietly behind the scenes in order to require that all software must come with a warranty. This means that anyone who writes software is on the hook if it doesn't work. Previously, software writers could disavow any warranties and basically sell software 'as is'. The insurance/crooked-bankers lobby is trying to change that.

You can find more details in this article:

The implied warranty could create immense litigation for software vendors and could even make individual open source software contributors liable for defects in open source software code that is later distributed in a third-party commercial product. The Linux Foundation argues that there are too many grey areas about the scope of the warranty and what constitutes commercial distribution. This aspect of the Principles clearly conflicts with open source software licenses that disclaim warranties. The resulting fear of litigation could broadly deter companies, universities, and individuals from making their source code available.

http://arstechnica.com/open-source/news/...

The reason the insurance lobby wants to require warranties is so that every software vendor will have to buy insurance for the software they sell. This is outrageous. These finance guys won't rest until they've destroyed everything that makes this country worth living in.

Submitted by equalizer on May 19, 2009 - 10:28pm.

You mean Microsoft wont get to infect public with blue screens? I better buy more MSFT shares.

Submitted by an on May 20, 2009 - 12:10am.

equalizer wrote:
You mean Microsoft wont get to infect public with blue screens? I better buy more MSFT shares.

It used to be fun bashing MSFT, but when's the last time you've seen the BSOD and which Windows version were you running? Was it caused by Windows or was it caused by a driver or was it caused by the person sitting in front of the monitor? I personally haven't seen one for ages and it was caused by faulty drivers. Actually, if you dig deeper, drivers were the main cause of a lot of the BSOD. So, this wouldn't only affect the software industry but also the hardware industry as well.

Submitted by Crooked_Banker on May 20, 2009 - 1:14am.

equalizer wrote:
You mean Microsoft wont get to infect public with blue screens? I better buy more MSFT shares.

This has nothing to do with higher quality software. Microsoft and other non-government-supported software vendors will just be forced to buy massive insurance policies to protect themselves against the inevitable class action lawsuits to come.

This change in law is all about letting the government-supported insurance/banking companies take a slice of the profits from non-government-supported software vendors. Attorneys will likely also benefit. The losers will be people and companies who actually make things.

Submitted by Nor-LA-SD-guy on May 20, 2009 - 7:36am.

Crooked_Banker wrote:
equalizer wrote:
You mean Microsoft wont get to infect public with blue screens? I better buy more MSFT shares.

This has nothing to do with higher quality software. Microsoft and other non-government-supported software vendors will just be forced to buy massive insurance policies to protect themselves against the inevitable class action lawsuits to come.

This change in law is all about letting the government-supported insurance/banking companies take a slice of the profits from non-government-supported software vendors. Attorneys will likely also benefit. The losers will be people and companies who actually make things.

Just My Opinion But I think this will benefit the Big companies (MSFT IBM etc…)

It’s the Small guy I think that will be forced out of business, the guy writing apps for Iphone out of his home etc…

My Guess Nigeria will become the next Software development hot spot.

Submitted by blahblahblah on May 20, 2009 - 7:41am.

Sounds like a Very Bad Idea. This will simply push development overseas.

Submitted by Crooked_Banker on May 20, 2009 - 7:53am.

Nor-LA-SD-guy wrote:

Just My Opinion But I think this will benefit the Big companies (MSFT IBM etc…)

It’s the Small guy I think that will be forced out of business, the guy writing apps for Iphone out of his home etc…

Actually, lawyers tend to go after big pockets (that's where the money is), so the big software companies are more likely to get hit by lawsuits than the little guys.

In the big picture though, this is just another tax on the 'producers' (software vendors) in order to benefit the 'non-producers' (government-supported insurance companies/attorneys/etc).

Submitted by Raybyrnes on May 20, 2009 - 6:41pm.

Requirements for Public companies is that they are going to have to report financials in an XML language. This is going to force companies to change their code.

Submitted by XBoxBoy on May 20, 2009 - 7:03pm.

Crooked_Banker wrote:
Nor-LA-SD-guy wrote:
It’s the Small guy I think that will be forced out of business, the guy writing apps for Iphone out of his home etc…

Actually, lawyers tend to go after big pockets (that's where the money is), so the big software companies are more likely to get hit by lawsuits than the little guys.

Let me give you a specific example of how this would probably play out, and you'll see that it will cost the big guys, but kill the little guys. I work writing video games. Specifically for the XBox360 and for the Wii. The company I work with, we write the game, then microsoft or nintendo certify them and they get released. More than likely, Microsoft and Nintendo would require us to purchase insurance to cover any liability caused by our games. (They already require us to purchase some liability, but not covering defects in the game) If this insurance was big enough to cover class action suits the premiums would probably be high enough to kill a small company like I work for.

So, the end result would be the killing of small innovative developers. Large firms like Microsoft and Nintendo could probably self insure, and would use their in house lawyers to fight most of the lawsuits. It would cost them, but it probably wouldn't kill them.

XBoxBoy

Submitted by Coronita on May 20, 2009 - 8:41pm.

I see it differently. Considering innovation happens more frequently at the small companies, I just see that rather than smaller companies going under, they will just be forced to sell more software to customers outside of U.S.....sort of like what I'm trying to do already off to the side.

U.S. will pay because they'll end up not getting some of the cutting edge stuff smaller companies are willing to push.

It's already a PITA to sell software in the U.S. (currently) simply because of the slowed economy and we're hitting saturation here already.

Also, while these brilliant ideas apply to boxed software, I wonder what this means for Software as a Service offerings. You aren't exactly selling a piece of code but a service....I would think the liabilities would have to be crafted differently for services than packaged apps.

Extending this further...This might end up causing the cost of software developers to go up considerably. Let's consider you are an independent contractor. Well, assuming you could end up writing software that is subject to huge liabilities, you probably would also need to increase your insurance as well..considerably...Kinda like doctors with malpractice insurance. Amateurs won't end up working in this profession due to liability risks, meaning a lesser pool of workers available...

Outsourcing I don't think will be the issue one way or the other...Because I don't think it would matter where the software orginates from...Anyone who sells in the U.S. would be subject to liabilities...In fact, it might do some good by putting out of business some of the shitty outsourcing firms that hire crappy developers that costs .10 on the dollar. It would probably also make companies think twice about going for the cheapest programmers they can find (after they get hit with a big liability suit for the first time)....

Better brush up on your skills in internationalizing your software and i18n related issues :)

However, I really wouldn't worry about this. You can bank that companies like Oracle, Microsoft, Ibm, apple etc who stand to be liable for billions fight this nail and tool. Imagine this. Everytime you get a blue screen or a virus, you can sue microsoft. Yeah, that's going to fly with a $181B company. In this unlikely scenario, I can see elite software engineers turn to hackers overnight and teaming up with lawyers who are ambulance chasers. Rather than spending time creating, it would be more lucrative to spend time trying to find software defects and security holes. It's like legalizing hacking.... Bring it!

Submitted by ucodegen on May 20, 2009 - 10:30pm.

I think the warranty issue has more than just the simple 'insurance' company approach..

1) How do you produce a warranty for open source software? Who is going to stand behind it when nothing is charged for it?

2) Does anyone who is pushing this realize that the cost to produce software that complies with the warranty requirements would be like producing FAA certified software and with the associated costs and prices?

3) How are you going to insure against the warranty? Do you also insure for potential losses? What if the software does stress analysis for airplane wings? Stress analysis for skyscrapers?

I could see a requirement for software to have fixes for bugs over a period of 'x' years.. with other constraints (ie timeliness of fix, not reducing functionality as a result of fix etc).. but in many ways, better competition.

The only people I can see winning in this, are lawyers in the lawsuits that would appear.. oh yeah.. this was authored by the American Law Institute.. figures.

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