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At last week’s U.S. Supreme Court hearing on Aereo, the Justices raised questions about the effect of their decision, if any, on cloud computing. This was no surprise; after all, Aereo has loudly proclaimed that the whole sweep of future innovation will be at stake if it loses. The job of the Court is to examine claims like Aereo’s with a curious but critical eye.
And that it is just what the Justices did during the hearing. This case is not about cloud computing. The sky is not falling, and neither is the cloud.
Cloud computing refers generally to services that store and deliver content to consumers using shared servers (“the cloud”). Some cloud services, like Google Drive or Dropbox, function like storage lockers for files their users have acquired elsewhere. Other cloud services, like Netflix, Amazon Prime and Spotify, obtain and supply content pursuant to licensing arrangements. Still other services, like iTunes, provide licensed content as well as storage.
Aereo has blurred these important distinctions. Unfortunately, much of the media coverage after the Supreme Court hearing has too.
Licensed services like Netflix, Amazon and iTunes play by the rules, and that means their services are not at issue here. In fact, these services provide concrete evidence that refutes Aereo’s vague threats about “innovation” writ large. These services developed because of licensing – not despite it. And they continue to thrive today, to the benefit of the public and copyright holders alike, because they deliver something valuable to consumers – not just a way to circumvent the law.
Aereo, on the other hand, is an illegitimate, unlicensed streaming service. It grabs broadcasters’ signals from the airwaves without paying for them, stores user-specific copies of that programming in its servers, and then delivers that programming over the Internet live or on-demand for a fee. Aereo would prefer that everyone just focus on that second function (storage) but disregard the other two (theft and transmission).
The Aereo case, unfortunately for Aereo, is about those other two steps: appropriating broadcast signals for the purpose of reselling them at a profit – the very thing Congress acted to prohibit in unambiguous terms when it enacted the “transmit clause” that is at the heart of this case.
At the hearing, the Justices asked about these critical differences between Aereo and legitimate cloud services. They repeatedly mentioned the line between merely passive storage, on the one hand, and active content-distribution services, on the other. Aereo falls in that second category, which is why this case does not implicate cloud storage services. And it does not have a license, which is why this case does not implicate iTunes, Amazon or other legitimate streaming services on the content-delivery side of the line.
And it turns out to be just that simple. This is exactly the reason the U.S. Justice Department told the Supreme Court why the Aereo case has nothing to do with cloud computing. Delivering on-demand streaming of copyrighted programming for a fee is the quintessential public performance. The fact that Aereo streams broadcasters’ content over the Internet after pulling it down through thousands of small antennas that make thousands of user-specific copies is irrelevant. Aereo’s retransmission of this content is what matters. Indeed, that is what Aereo does.
Much is at stake in the Supreme Court’s decision in this case. Broadcasters invest billions of dollars to create, acquire, and distribute the most-watched video programming in the country, and perhaps even the world. But what is not at stake is cloud computing.
Neal Katyal, a partner at Hogan Lovells, is a legal advisor to the broadcasters, and former Acting Solicitor General of the United States.
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