Is it legal to force users to accept new terms of service by threatening financial loss?

Question

Why isn't it illegal, (extortion or duress), to force users to accept new Terms of Service by threatening financial loss, (like denying access to purchased content, or inhibiting or prohibiting the ability to earn an income)?

Users often heavily invest financially in those products for many years, (monthly fees, digital content like Amazon Kindle books, or cash transactions in games). And, they can lose all of their investments to sudden changes, (changes that severely limit rights they used to have).

For example: What if games that allowed real money economies suddenly denied users the ability to earn incomes? Or, what if Amazon were to stop people from lending books, or giving them to others, (if they allowed it in the past)? Or, what if games were to disallow people from streaming them, or suddenly restrict speech, or disallowing players to transfer items with each other? Or, what if Microsoft Windows was to suddenly change its license to mandate reporting how the software is used, by removing previously installed software support for optional reporting. etc…

Now, you may not transfer, exchange, sell, market, promote or solicit any of this platform's items or services you provide using this platform outside of this platform and must instead use this platform and currency for these.

Now, you may not engage in harmful, abusive, or hurtful criticism towards this platform or developers including communication via other platforms.

Answer 1

Why isn't forcing users to accept new Terms of Service by threatening financial loss, (like denying access to purchased content, or inhibiting or prohibiting the ability to earn an income), considered extortion and therefore illegal?

Usually this is not illegal, and even if it is, it usually doesn't constitute extortion (or extortion's civil counterpart, which is called "duress", which is an affirmative defense to contract enforcement).

Generally speaking, exercising a legal right someone already has, for a purpose that is not improper, does not constitute extortion.

A TOS Rarely Creates A Reasonable Expectation That It Won't Change

Most importantly, in the case of terms of service governed information technology services, the firm that creates the terms of service reserves, at the outset, the right to change them at any time.

So, the user has no reasonable expectation that the terms of service won't change in a manner that they dislike. There is no implied promise to never change anything material about the service.

Terms of service are usually specifically drafted from the outset to avoid creating something that looks like a property interest on the part of the user in having the service continue to work in a particular manner.

TOS Terms May Not Be Unconscionable

Both the original terms of service and any subsequent amendment of them, is not permitted to be "unconscionable" (e.g. it can't make the life of your first born child a liquidated damages provision that applies if the terms of service are breached).

But, there isn't much of a legally protected reliance interest in not having the terms of service changed in this situation (although almost every general rule could conceivably have some exception to it, probably far more factually extreme than the fact patterns identified in the question).

If a term is unconscionable, it may not be enforced as contrary to public policy, without regard to what prior versions of the same agreement may have stated.

TOS Changes Are Usually Prospective Only

On the other hand, a terms of service amendment is generally only effective prospectively and does not generally change rights that have fully accrued and vested prior to their amendment, at least until the user takes some act to affirmatively continue to use the service going forward.

When there are vested rights under old versions, the remedy is not to characterize the change as extortion, however. It is to not apply the amendment to the terms of service retroactively to the already vested rights.

For example, if the old terms of service did not contain an arbitration clause, and litigation was in progress under the old terms based upon old transactions, and then a new terms of service were adopted that mandated arbitration, this amendment would not generally be applied to require the pending lawsuit in court to be stayed and transferred to an arbitration forum. The right to litigated vested when the lawsuit was filed.

Answer 2

Why isn't forcing users to accept new Terms of Service by threatening financial loss, (like denying access to purchased content, or inhibiting or prohibiting the ability to earn an income), considered extortion and therefore illegal?

The lawfulness of applying new terms of services depends on the language of those terms. The pair of clauses you recently added fall short of extortion.

The Black's Law Dictionary defines extortion as:

Unlawful obtaining of money from another. [...] [E]xaction of money by reason of oppressive conditions or circumstances, [...]; obtaining of property from another, with his consent, induced by wrongful use of force or fear [...]. Obtaining of property of another by threats to injure him and to destroy his property. [...] Taking or obtaining of anything from another by means of illegal compulsion or oppressive exaction. [...] To constitute "extortion", money or other thing of value must have been willfully and corruptly received[...], the wrongful use of fear must be the operating cause producing consent.

Statutory definitions of extortion are largely similar to that from Black's Law Dictionary.

The prohibitions in the two clauses you reproduce are far from being oppressive. At no point do these prohibitions demand giving the provider money or thing of value. Nor do they entail a wrongful use of force of fear. Contrary to your description, these prohibitions make no threats as to "destroying" the counterparty's property.

The first clause only prohibits you to use external venues or platforms for transacting the "platform's items or services you provide using this platform". This requirement of exclusivity is not a threat of financial loss.

Although the second clause is lawful, its enforceability is dubious. The clause implies, inter alia, that you are not allowed to conspire with others to harm the site. By virtue of the covenant of good faith and fair dealing that is implied in all contracts, this clause is somewhat redundant. It is unenforceable insofar as the provider cannot realistically prevent its users from disparaging the platform elsewhere. Regardless, this clause cannot reasonably lead to a finding of extortion.