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The Sony PS3 Class File An Amended Complaint
Thursday, March 10 2011 @ 05:59 PM EST

The class action plaintiffs in In Re SONY PS3 “Other OS" Litigation have filed their Amended Complaint [PDF] that they hope will fully address the deficiencies that the judge found in the original filing, and it's dynamite.

The Amended Complaint claims that Sony Computer Entertainment America didn't remove OtherOS functionality due to security concerns. It had other options, if security had been the real issue. It was done, they claim, for financial reasons, and that Sony's justification for the removal of Linux functionality was "false", chosen so Sony could rely on the wording of various terms. They also point a finger at IBM, claiming that possibly IBM was not happy about the military using PS3s for clustering, instead of buying IBM Blades servers:

159. SCEA suggested initially that the removal of the “Other OS” function from the “fat” models in April 2010 was for security and intellectual property reasons.

160. On its website, SCEA wrote: Why did you delete the “Other OS” feature?

A. To protect the intellectual property of the content offered on the PS3 system as well as to provide a more secure system for those users who are enjoying games and other entertainment content on the PS3 system, we have decided to delete the feature to address security vulnerabilities of the system.
161. This statement is a fabrication. SCEA gave these reasons as a pretext so that it could attempt to argue that the Warranty, SSLA, and/or TOS allowed for the removal of the “Other OS” feature. In reality, SCEI and SCEA removed this feature because it was expensive to maintain (as they previously admitted when the feature was removed from the “slim” models – but which they conveniently removed from SCEA’s website); they were losing money on every PS3 unit sold (due to poor decisions in the planning and design of the Cell chip as noted above and given the PS3’s extra features); SCEA needed to promote and sell games to make their money back on the loss-leading PS3 consoles (and there was no profit in users utilizing the computer functions of the PS3); and IBM wanted to sell its expensive servers utilizing the Cell processor (users could cluster PS3s for the same purposes much less expensively).
Wow. If you were George Hotz's lawyers, your ears would be perking up right about now, methinks. We don't know yet how the judge will rule on this amended complaint, but if they are allowed to go forward and can prove these allegations, I don't see how this could not affect the SCEA v. Hotz litigation.

I'll work on a text version for you, and when that's done (it is 98 pages), we'll take a closer look, but I didn't want you to have to wait for that. Here's just a snip, beginning on page 44 of the filing, to give you a fuller idea of this particular claim:

SCEA’s purported Justifications for Removal were False

159. SCEA suggested initially that the removal of the “Other OS” function from the “fat” models in April 2010 was for security and intellectual property reasons.

160. On its website, SCEA wrote: Why did you delete the “Other OS” feature?

A. To protect the intellectual property of the content offered on the PS3 system as well as to provide a more secure system for those users who are enjoying games and other entertainment content on the PS3 system, we have decided to delete the feature to address security vulnerabilities of the system.
161. This statement is a fabrication. SCEA gave these reasons as a pretext so that it could attempt to argue that the Warranty, SSLA, and/or TOS allowed for the removal of the “Other OS” feature. In reality, SCEI and SCEA removed this feature because it was expensive to maintain (as they previously admitted when the feature was removed from the “slim” models – but which they conveniently removed from SCEA’s website); they were losing money on every PS3 unit sold (due to poor decisions in the planning and design of the Cell chip as noted above and given the PS3’s extra features); SCEA needed to promote and sell games to make their money back on the loss-leading PS3 consoles (and there was no profit in users utilizing the computer functions of the PS3); and IBM wanted to sell its expensive servers utilizing the Cell processor (users could cluster PS3s for the same purposes much less expensively).

162. SCEA has never revealed how its “intellectual property” would be unprotected through the use of Linux on the PS3. Moreover, the utilization of Linux did not make the PS3 less “secure.”

163. It is virtually impossible to use the “Other OS” for piracy because the PS3 is specifically designed to avoid allowing piracy through using the “Other OS” feature. When the “Other OS” feature is enabled, the software prevents the proper operation of the gaming feature to avoid allowing the features to interplay. In order for a hacker to pirate a game, it is necessary to perfectly emulate the operating system for which the game is designed, including the API, which is the interface for the game OS that supports all of the features of a game. However, when the Other OS is in use, the API and other hardware features are blocked, including the graphics chip in the PS3, which makes it impossible to run a pirated game on the Other OS. As of January 2011, Sony had yet to identify a single instance in which someone used the Other OS to pirate protected content.

164. Blu-Ray piracy using the Other OS was not a unique threat. In order to pirate a Blu-Ray disc, a hacker requires a secret code or key; with that key, a hacker can pirate a Blu-Ray using a PC or a PS3 or any other computer – there is nothing unique about the PS3 in this regard.

165. In the AV Watch article discussed supra, Takase-San also commented on security not being an issue by saying: “That with respect to the Other OS security becomes the hole, but with the PS3 very firm security measures are being done, presently there is no such problem. If anything, support power is lightened.”

166. In short, SCEA has offered no valid security justifications for removing the Other OS feature. The PS3 became subject to hacking after SCEA removed the “Other OS” feature and angry users sought ways to have their advertised and paid for features turned back on.

167. Further, in February 2011, well after the Other OS feature was removed, it was a Sony employee who “tweeted” (sent a message via Twitter) the code that allowed users to get around the protections that prevent the PS3 from playing pirated games.

168. It was only on February 16, 2011, that SCEA announced that “[u]nauthorized circumvention devices for the PlayStation 3 system have been recently released by hackers.” Notably, this was only after SCEA had removed the “Other OS” feature and then tweeted the PS3’s anti-circumvention codes to the world.

169. SCEA could have taken other steps that were less intrusive than removing an advertised function of the device if security truly were a concern. Indeed, SCEA revealed that it had the capacity to monitor PS3 systems using “hacking” software and would remove those consoles from its PSN if they violated the TOS. In its February announcement, SCEA stated: “Consumers using circumvention devices or running unauthorized or pirated software will have access to the PlayStation Network and access to Qriocity services through PlayStation 3 system terminated permanently.”

170. Thus, if any security concerns truly did exist at the time that justified SCEA’s removal of the “Other OS” feature, it could have taken alternative steps at that time and barred “hackers” or “jailbroken” consoles from the PSN as opposed to removing the “Other OS” feature for all users.

171. Instead, the true reason SCEI, SCEA and Sony removed the “Other OS” feature was because of financial concerns.

172. Initially priced at $599 (much more than its competitors), SCEA was losing money on every PS3 console sold. In 2006, isuppli.com estimated that it cost Sony $806 to produce each PS3. That meant that each console sold resulted in a net loss to SCEI and SCEA of over $200.

173. SCEA priced the PS3 with the expectation that it would make back the money lost on the console through the sale of games and accessories. The problem for SCEA arose from consumers and researchers who used the PS3 for its value as a computer through the other operating system. Such users bought few or no games or accessories, giving SCEA no way to recoup its losses on the console.

174. As one article noted, Sony “isn’t pleased with the handful of private research labs, companies, and individuals using racks of PS3s as a relatively inexpensive Cell cluster node or workstation. Because Sony sells the PS3 at a loss, any customer who doesn’t buy games for the console is bad for the bottom line.” Further, on the Air Force cluster alone, SCEA likely lost hundreds of thousands of dollars.

175. SCEA and the other Sony entities were constantly looking for ways to cut costs and lower prices. For example, IBMs Cell chips originally went from 90-nanometers to 65-nanometers and eventually to 45-nanometers in 2009. The 65-nanometer Cell cost Sony $46.46 per unit, and the 45-nanometer Cell was $37.73. This reduction did not substantially alter performance, but was less expensive to manufacture, and reduced the power usage of the PS3, reducing the need for cooling mechanisms.

176. Instead of maintaining the original price in an attempt to profit from these types of lower costs, Sony cut the price of PS3 from $599 to $399 and then to $299 to increase market share and as a result of increasing competition. Isuppli estimates that Sony was still losing money on consoles with a sale price of $299, however, as production costs, while lower, were still estimated at $348 per unit.

177. As SCEA admitted when it removed the “Other OS” feature from the “slim” models, maintaining the hypervisor which allowed for multiple operating systems was very expensive. The tremendous financial pressure to cut costs further led to the removal of this feature – not “security” concerns.

178. On the Fixstars message board forums, Kai Staats (former CEO of Terra Soft Solutions and later of Fixstars) explained how the hypervisor became increasingly difficult and expensive to maintain for Sony:

Sony was quite diligent about testing, and with each new rev of the GameOS (which acts as the hypervisor for Linux) there was a battery of tests. Often the GameOS had to be modified to support things which otherwise broke in Linux, so it is not a one-way street. GameOS affects Linux, and Linux affects GameOS. If a component on the mobo changed, the hypervisor code would change to support the new component, and then the testing starts again. While I am not aware of a time when the GameOS was modified to correct something we discovered to be broken in Linux, I can state that with nearly every third release of updated GameOS versions, something broke in Linux for which we compensated on our end, often with the assistance of Geoff [Levand] (who was great to work with, BTW).
179. As the sonyinsider.com website notes, based on this evidence, the decision to remove the “Other OS” feature appears to be “100% cost-based.”

180. Other sources have speculated that, IBM, SCEI’s partner in STI, also applied pressure to convince SCEI to remove the “Other OS” feature as it was losing sales of its expensive servers to those who were clustering PS3s (which had the same Cell processor) for much less money.

181. Although they contained lower performance per unit, PS3s were an inexpensive alternative to IBM’s Cell Blade servers which cost approximately $18,000. When the US military purchased thousands of PS3 for a super-computing cluster, the purchasing report noted that SCEA was the only company capable of manufacturing the required hardware at an economical price.

182. When an article in The Economist1 noted that the military was making a substantial saving by creating the PS3 network compared to building a traditional super computer, users speculated: “Do you think that other investors in Cell technology. Such as IBM [sic] might be a little pissed at Sony selling devices that are near equivalent to their own more expensive products? One could speculate the pressure to remove PS3 linux came from external sources.”2

183. Financial pressures were what led SCEI and SCEA to remove the “Other OS” feature. SCEA had no valid basis to remove an advertised feature from its PS3, for which users had paid significant sums, merely because it no longer wanted to pay to support that feature or it was losing money on sales of games and accessories. SCEA’s pretextual “security” or “intellectual property” concerns were not the true reason for the removal of the feature. 184. SCEA relies on wording from its Warranty, SSLA, and TOS to argue that “security” concerns allow it to remove the Other OS feature. Even if security were a concern, the language in these documents does not support SCEA’s interpretation. 185. The Warranty states that “[s]ome [warranty] services may . . . cause some loss of functionality.”

186. Update 3.21 was not a “warranty service.” Nor did Update 3.21 cause “some loss of functionality.” Users who downloaded Update 3.21 had a core advertised feature removed from their system. Users who did not download Update 3.21 lost other core advertised features. SCEA’s Warranty does not authorize the removal of Other OS or those other features.

187. The SSLA states “SCE may provide updates, upgrades, or services to your PS3TM to ensure it is functioning properly in accordance with SCE guidelines or provide you with new new offerings. . . . Some services may . . . cause a loss of functionality.”

188. Update 3.21 was not a “service” as intended in the meaning of the SSLA. It was an optional “update.” SCEA’s SSLA does not claim that an “update” will cause a loss of functionality – only “services” are mentioned as possibly doing so. Nor did Update 3.21 cause “a loss of functionality.” Users who downloaded Update 3.21 had a core advertised feature removed from their system. Users who did not download Update 3.21 lost other core advertised features. SCEA’s SSLA does not authorize the removal of Other OS or those other features.

189. SCEA’s TOS states “[f]rom time to time, it may become necessary for SCEA to provide certain content to you to ensure that Sony Online Services and content offered through Sony Online Services, your PlayStation3TN computer entertainment system . . . is functioning properly. . . . Such content may include automatic updates or upgrades which may . . . cause a loss of functionalities or utilities.”

190. Update 3.21 was not an “automatic update or upgrade” as intended in the meaning of the SSLA. It was an “optional” update, meaning that the user selected whether to download the update, and lose a critical feature, or not download the update, and lose a different critical feature.

191. None of the agreements which SCEA claims apply state that an optional Firmware Update will cause a user to lose core advertised features of the PS3, nor do they alert users that the “Other OS” feature might be disabled, particularly in light of Defendant’s representations that the “Other OS” is a central feature of the PS3 and that Defendant would support it for the ten year lifespan of the PS3. The “Other OS” feature and the ability of the PS3 to operate as a computer (or the elimination of access to the PSN network and play games online, as well as other features) were not “functionalities” – they were core advertised features of the PS3 along the lines of its ability to play games or play Blu-Ray DVDs.

192. Thus, even if security issues were a valid concern, SCEA was not authorized by any of the purported agreements it has cited to issue Firmware Update 3.21 and remove the “Other OS” feature for millions of users.

193. In February 2011, SCEA released Firmware Update 3.56. This Update contained a security patch preventing “jailbroken” consoles (such as those that had been “hacked” to actually allow the “Other OS” feature back on to the consoles) from accessing the PSN. Thus, if SCEA truly wanted to prevent “unauthorized” consoles that may have been “hacked,” it had other methods available to it, such as barring access to the PSN (to the extent allowed under its purported agreements), as opposed to removing a feature that it no longer wanted to pay to support, that was causing it to lose money on game sales, and/or that IBM was upset about because of a loss in sales of Blades servers.

______
1 http://www.economist.com/node/15063872?story_id=15063872

2http://www.neogaf.com/forum/showthread.php?t=383838


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