How do companies get away with slipping arbitration clauses and other abusive terms into their contracts? For one thing, they rely on the fact that most people do not have the time or motivation to read all the fine print, and that many of those who do will not understand the implications of what they are agreeing to, or will not care enough to object. Even those who do complain will not likely get far because consumer contracts are typically offered in a take-it-or-leave it manner.

This week, however, Facebook’s attempt to take advantage of the usual ignorance and apathy backfired in a big way. A couple weeks ago, Facebook revised its terms of use in a way one would not expect to lead to a major controversy. Specifically, it deleted this language from its terms of use:

You may remove your User Content from the Site at any time. If you choose to remove your User Content, the license granted above will automatically expire, however you acknowledge that the Company may retain archived copies of your User Content.

The removal of this language wouldn’t have meant much to most users, and it doesn’t seem to have attracted a lot of attention at first. But as time went on, a few began to figure out the implications of the change and to write about it on Facebook and on their blogs. Basically, Facebook was saying that the perpetual license that it had granted itself to the contents of users’ profiles would no longer expire when those users shut down their accounts. Translation: “We Can Do Anything We Want With Your Content. Forever.“

Outrage grew and spread, leaping from the blogosphere to the mainstream media. People began to look to other problems with the agreement, including an arbitration clause, and the requirement of using a single arbitrator in Santa Clara County, California.

Eventually, the controversy became big enough that Facebook could not ignore it, and last night in a late-night blog post the company’s CEO, Mark Zuckerberg, announced that the terms of use would be rolled back to the previous version. Facebook’s license to its users’ content will expire once again. Arbitration remains as it was in the old agreement, but is no longer limited to Santa Clara County. Moreover, the company says this is just a temporary step. The old terms will remain until the company can draft new terms that are responsive to users’ complaints. Zuckerberg promises that the new terms will be “written clearly in language that everyone can understand” and that “Facebook users will have a lot of input in crafting these terms.” A new Facebook group, Facebook Bill of Rights and Responsibilities, was created for this purpose.

The Facebook incident raises the question whether the Internet is changing the balance of power between the drafters of one-sided terms of use and their customers. Even if most of a company’s users don’t read revised terms of use, it’s pretty likely that at least a few will. Those few who take the time to understand the legalese can communicate with others on Facebook, on their blogs, and in the countless other forums the Internet provides. And the company can no longer easily ignore attempts to renegotiate abusive terms when it’s not just one or two customers, but thousands, that are complaining.

Cross-posted from the Consumer Law & Policy Blog