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Move over, outsourcing, there’s a new face in town! The glory days of outsourcing may be coming to an end as businesses continue to look for innovative ways to cut costs. Crowdsourcing, also know as unsourcing, is coming to the fore as the next frontier of cost minimization.
Crowdsourcing is the process by which a group of individuals volunteer information on a particular topic through a unified source, and this information is then aggregated and distributed to users on the same network. The logistics of this sort of information sharing are relatively strightforward, and crowdsouring has taken many popular forms. For instance, Wikipedia is a prime example of a unified source through which anonymous user volunteer to create, improve, and edit various information pages that are readily available to internet users everywhere. In fact, most cell phone users unknowingly communicate real-time traffic information to mapping services through the GPS tracking devices in there phones. Justice Alito even addressed this version of crowdsourcing in his 2012 opinion in United States v. Jones.
The Economist recently singled out crowdsourcing as the future of technical support, noting that companies are beginning to establish online communities to host peer-to-peer troubleshooting and IT support discussions. Not only does this help companies cut costs, but it also leads to increased customer satisfaction. While economists have been wresting with this shifting industry trend, the legal implications of the crowdsourcing business model remain to be seen.
At first blush, it is obvious that the dynamics of crowdsourcing do not lend themselves to traditional employment law paradigms. First, it is not the case that volunteers are employees or independent contractors of the company that is profiting from their contributions. Money is not exchanged, there are no employment contracts, and volunteers may often be anonymous. Second, it is not clear the extent to which the law would, or should, consider these volunteers to be agents of the profiting company. For instance, if a consumer enters a tech support chat room to discuss an issue with his computer, to what extent does that consumer expect the advice to be credible and to what extent does that consumer expect the company to stand behind the volunteers’ advice? It seems both expected and appropriate that companies’ liabilities to consumers should increase if the company facilitates the chat room or directs consumers to it in some way. The issue of a company’s vicarious liability is particuarly poigniant since volunteers are just that–they are not screened and they do not have to demonstarte expertise to participate in the crowdsourcing market. It may not make sense for companies to monitor volunteers’ contribution because this increased monitoring cost will eat away at the cost-saving benefits of crowdsourcing. But, in the event that consumers follow bad advice from volunteers, the company may be on the hook for damages.
The solution to understanding the liability associated with crowdsourcing likely lies at the intersection of employment and agency law, and companies may not want to trade short-term cost savings for longer-term liabilities.
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