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Startup Law A to Z: Customer Contracts – TechCrunch

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Your startup needs customers to survive. If and when you make sales or generate installs, you are wading into the fast moving stream of commerce and exposing yourself to risk. Well-drafted customer contracts limit your liability and create legally enforceable rights to get paid for your work. In fact, contracts are actually dispute prevention mechanisms, forcing parties on either side to clearly define what is supposed to happen in advance, aligning expectations and increasing the likelihood that all goes according to plan.

So developing a working understanding of contracts generally, a deep understanding of your core customer contracts specifically, and hiring a competent lawyer to draft key contracts from the beginning, together represent an investment that will pay dividends over the life of your startup.

This article, the third in Extra Crunch’s exclusive “Startup Law A to Z” series, follows previous articles on intellectual property (IP) and corporate matters. If you are tuning in now, this series is designed to provide founders enough information to intelligently analyze business circumstances vis-à-vis certain common legal issues startups face. These articles are detailed and admittedly lengthy, but the concepts discussed are critical for founders to understand deeply.

If after reading this or other articles in the “Startup Law A to Z” series, you identify legal risks facing your startup, then other Extra Crunch resources can help. For example, the Verified Experts of Extra Crunch include detailed profiles of “Verified Expert Lawyers” – some of the most experienced and skilled startup lawyers in practice today. You can and should use these resources to identify attorneys focused on serving companies at your stage with experience in the particular matters at hand and simply reach out for further guidance.

The Customer Contracts checklist:

Contract Law Generally

  • Contract Formation
  • Term and Termination
  • Breach and Remedies

Terms of Use vs. End User License Agreements

  • Distinctions and Key Provisions
  • Enforceability through Click-Wrap Agreements
  • Notice of Amendments and Revisions

Privacy Policies

  • State, Federal, International Laws:
    • CCPA
    • CalOPPA
    • Required under Cal. Bus. & Prof. Code § 22575(a)
    • FTC (COPPA, HIPAA, Gramm-Leach-Bliley Act)
    • GDPR
  • Disclosure and Enforceability

NDAs

  • Mutual vs. One-Way
  • Definition of Confidential Information
  • Residual Clauses
  • Non-Solicit and Non-Competes

Master Services Agreements and Service Level Agreements

  • Y-Combinator “Sales Agreement” / MSA Template
  • Deal Terms, Legal Terms, Boilerplate Terms
  • Legal Terms Explained:
    • Warranty and Disclaimer
    • Indemnity (and Insurance)
    • Limitation of Liability

Contract law generally

What is a contract? Any law student preparing for the bar exam will tell you, in monotone: “a contract is a promise or set of promises, for breach of which the law provides a remedy, or the performance of which the law recognizes as a duty.”

Simple enough, but which law? For contracts, it is primarily the “common law” which governs contracts, that is, law derived from judicial decisions and not government-enacted statutes (historical background courtesy of UC Berkeley). That said, contracts for the sale of “goods” are governed by specifically promulgated rules set forth in the Uniform Commercial Code (or “UCC”). And yes, in certain circumstances, courts have found that software may be considered “goods” for this purpose, see On Contracts.

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Google Play Store cuts developer tax for subscriptions by half

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The industry practice of “70/30” revenue cuts between developers and app store owners have been put under a microscope in the past few years, especially after Epic Games made some big noise about it. It did force a few platforms to make changes to their policies, usually reducing the so-called “developer tax” under certain circumstances only. In general, however, storefront owners still take 30% of the profits by default, but Google is making a significant change in that policy to push subscriptions to the forefront.

Like many things in businesses, the 70/30 revenue split became a de facto standard without any explicit consensus among industry players. Giving store and platform owners 30% of profits might have worked well for the likes of Steam, where each product often sells in double digits, but it didn’t translate well to the mobile app market. Unfortunately, that has been the status quo for many years, which really hurt developers that sold their apps for an average price of $4.99 or even less.

It may be even worse for apps and services whose profits may come on a monthly or annual basis. At the same time, however, the likes of Google and Apple are trying to push the subscription model as a more viable and sustainable strategy compared to one-off payments for apps. In order to incentivize this model, Google is making it more attractive for developers to switch to subscription fees by lowering the tax they have to pay.

Starting January next year, the service fee or anything sold via Google Play Store will be reduced from 30% to 15%, meaning developers and publishers take away 85% of any of the revenue they make. Previously, Google allowed that same cut but only after 12 months of a recurring subscription. This change follows another big move last April when it cut the revenue cut to 15% for the first $1 million of a developer’s revenue.

Google is also adjusting some of the figures for ebook publishers and on-demand music streaming services. They can get their service fee reduced to as low as 10%, but only if they take part in Google’s Play Media Experience program. This program, the Android maker says, encourages publishers to target most or all of the devices where Android is available, making sure that the same experience and content is present in cars, TVs, and even smartwatches.

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Skype now works also on Firefox after two years

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When the video conferencing trend kicked up last year thanks to the COVID-19 pandemic, it was no surprise that Microsoft would jump on the bandwagon as well. What was a bit surprising, however, was that it prioritized bringing its younger Teams platform up to snuff instead of promoting the video conferencing service it has had for years. In fact, some might have almost forgotten about Skype at this point, including Microsoft. Two years after launching its new Web app, Microsoft has finally made Skype work on Firefox, though not without what might be an unnecessary warning.

Granted, there is a Skype desktop app anyway, so a Web browser experience might sound redundant. Not everyone, however, might want to install a separate app just for the occasional call, and not everyone might be keen on using Microsoft’s blessed browser. Depending on which browser you do prefer, however, you might have felt snubbed by Microsoft.

Switching Microsoft Edge from its homegrown edgeHTML engine to Chromium did mean that similar browsers like Chrome and Opera were able to support the new Skye for Web experience. Safari users on Macs, however, waited until May this year to be able to use Skype in their browser of choice.

Now it’s the turn of Firefox users to get equal treatment. According to Dr. Windows, going to the Skype landing page for browsers will finally let you use the communication platform’s functionality. There is still a warning that not all features might be available, but that might not actually be the case.

This compatibility with Firefox will be available on Skype 8.78, which is currently still in preview for Insiders. There’s no word yet on when it will roll out to the public, but until then, expect Skype’s official documentation to still believe that Firefox is the only browser that isn’t supported by Skype for Web.

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All Galaxy S22 models to get Exynos 2200 and Snapdragon 898 variants

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Samsung is expected to soon announce what could be the biggest upgrade to its Exynos chips in years. The partnership it started with AMD a few years back is anticipated to level up the silicon’s graphics game, utilizing AMD’s rDNA technology for the benefit of mobile users. There has been some uncertainty, however, about which devices will be betting this Exynos 2200, especially with the ongoing chip shortage. The latest word gives a small amount of relief to would-be Galaxy S22 buyers, but the actual availability of this chip might still be in question.

Given recent controversies surrounding Samsung’s Exynos silicon, the arrival of the AMD-powered Exynos 2200 is naturally hoped to bring some much-needed salvation for the business. Early benchmarks look promising, at least under certain contexts and conditions, and the entry of graphics technology from AMD could spark a new area for competition among mobile chipset makers. Whether the Exynos 2200 lives up to expectation is, of course, a completely different question, but many are waiting with bated breath for what’s coming.

Unfortunately, present economic conditions might put a damper on that enthusiasm. Initially, there were doubts that Samsung would even put the Exynos 2200 inside its next smartphone flagship, reserving it for tablets or an ARM-powered Windows laptop. Eventually, rumors evolved to expect limited availability of Exynos-powered Galaxy S22 phones, probably exclusive to the Galaxy S22 Ultra.

Android Police’s Max Weinbach, however, gives a bit more hope by “confirming” that it will be available for all variants of the phone. The Galaxy S22, Galaxy S22+ (or Pro), and Galaxy S22 Ultra will get both Exynos 2200 and Snapdragon 898 versions, which, of course, still depend on the market.

Unfortunately, that latter might mean that those in the US won’t be seeing the graphics upgrade that the Exynos 2200 will promise. Buyers in the US have only been able to get Snapdragon-powered devices from Samsung, while European markets once had to contend with weaker Exynos chips only. It seems that tables will be turned and those in the US will feel short-changed when the Galaxy S22 arrives.

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