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Visualizing the Length of the Fine Print, for 14 Popular Apps

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length of terms of service agreements

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Terms of Service: The Length of Common Digital Contracts

Do you take the time to read the terms of service before you agree to when downloading the latest app or software?

Of course you do…

The world is awash with apps and internet services that ask potential users to agree to a service agreement. Most people click on ‘agree’ and move on, knowing that reading the service agreements could put them to sleep and defer their favorite internet fix.

Taking inspiration from designer Dima Yarovinsky’s project titled I Agree, today’s post visualizes the length of service agreements, by counting the words and calculating how long it would take users to read each one.

Ain’t Nobody Got Time for That

The average reading speed of most adults is 200 to 250 words per minute (wpm). College students, probably because they are very studious and not skimming, move that pace up to around 300 words per minute. For the sake of this analysis, we calculated reading times based on 240 wpm.

App/ServiceWord CountHow many minutes to read? (240 wpm)
Microsoft15,26063.5
Spotify8,60035.8
Niantic (Pokemon Go)8,46635.2
TikTok7,45931.4
Apple (Media Services)7,31430.5
Zoom6,89128.7
Tinder6,21525.9
Slack5,78224.1
Uber5,65823.6
Twitter5,63323.5
Bumble5,44222.7
Snapchat4,93520.6
Linkedin4,34618.1
Facebook4,13217.2
Google3,45914.4
Amazon3,41614.2
YouTube3,30813.7
Reddit3,26713.6
Dropbox2,70411.3
Netflix2,62811.0
Instagram2,4519.7

The service agreement for Microsoft stands out at the top of the list with an agreement that would take over an hour to read — a bit less time than it would take to read Shakespeare’s Macbeth. To be fair, this service agreement does seem to cover the company’s entire suite of products.

These agreements are an insight into the legal mumbo jumbo that exists when it comes to regulating the use of these apps. There are a multitude of agreements that go even further into depth about what rules govern developers, online cash transactions and much more. The average American would need to set aside almost 250 hours to properly read all the digital contracts they accept while using online services.

Regardless, users may feel like they are wasting time reviewing a contract that can neither change or refuse—or more vitally, even comprehend.

Not All Text is Equal: The Flesch Reading-Ease Test

Apparently dealing with some of his own textual frustration, a Dr. Rudolf Flesch observed that some text, in particular legal language, appeared to be written to make reading as difficult as humanly possible.

Long sentences filled with arcane words can drag out simple sentences and discourage comprehension. Flesch wanted to measure the variability in reading comprehension — and by studying different kinds of writing, he developed a formula to determine readability and forever scorn lawyers.

In the Flesch Reading-Ease test, higher scores indicate material that is easier to read. Lower numbers mark passages that are more difficult to read. The formula for the Flesch Reading-Ease Score (FRES) test is:

Flesch Reading Ease Test

The readability score uses two metrics:

  1. The numbers of words per sentence
  2. The number of syllables per word

Based on this score, a text would correspond to a particular education level.

ScoreGradeAvg. Words per sentenceSyllables per 100 words
100-905th grade8123
90.0-80.06th grade11131
90.0-70.07th grade14139
70.0-60.08th and 9th grade17147
60.0-50.010 to 12th grade21155
50.0-30.0College25167
30.0-0.0College graduate29192

So how do the service agreements in our sample rank in terms of the Flesch Reading-Ease test?

App/ServiceFlesch Reading Ease ScoreEquivalent Grade Level
Facebook5610 to 12th grade
Google5610 to 12th grade
Instagram5410 to 12th grade
Linkedin5410 to 12th grade
Microsoft5410 to 12th grade
Snapchat5410 to 12th grade
Dropbox5110 to 12th grade
Bumble50College level
YouTube50College level
Reddit48College level
Apple Media Services47College level
Tinder46College level
Amazon45College level
Netflix45College level
TikTok44College level
Spotify44College level
Zoom42College level
Uber40College level
Twitter39College level
Niantic (Pokemon Go)39College level
Slack36College level

While not the most difficult to read, they definitely include a fair amount of legalese that helps discourage reading. The length and the difficulty of reading these agreements makes them practically useless to the average person.

This is a problem because it undermines basic concepts of contracts and informed consent. Users are giving up their rights without their knowledge.

Terms of Service: You Are the Product

These apps and software are the forefront of the data collection for a multi-billion dollar industry.

Individual user activity and information get easily collected and stored, creating databases of user patterns. This type of behavioral information makes marketers salivate, allowing them target their products to their ideal audience at lower costs than traditional advertising.

Do you know what you have agreed to?

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Technology

Timeline: The Shocking Collapse of Silicon Valley Bank

Silicon Valley Bank was shuttered by regulators becoming the largest bank to fail since the height of the Financial Crisis. What happened?

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Timeline: The Shocking Collapse of Silicon Valley Bank

Just days ago, Silicon Valley Bank (SVB) was still viewed as a highly-respected player in the tech space, counting thousands of U.S. venture capital-backed startups as its customers.

But fast forward to the end of last week, and SVB was shuttered by regulators after a panic-induced bank run.

So, how exactly did this happen? We dig in below.

Road to a Bank Run

SVB and its customers generally thrived during the low interest rate era, but as rates rose, SVB found itself more exposed to risk than a typical bank. Even so, at the end of 2022, the bank’s balance sheet showed no cause for alarm.

Summary of the SVB balance sheet at the end of 2022

As well, the bank was viewed positively in a number of places. Most Wall Street analyst ratings were overwhelmingly positive on the bank’s stock, and Forbes had just added the bank to its Financial All-Stars list.

Outward signs of trouble emerged on Wednesday, March 8th, when SVB surprised investors with news that the bank needed to raise more than $2 billion to shore up its balance sheet.

The reaction from prominent venture capitalists was not positive, with Coatue Management, Union Square Ventures, and Peter Thiel’s Founders Fund moving to limit exposure to the 40-year-old bank. The influence of these firms is believed to have added fuel to the fire, and a bank run ensued.

Also influencing decision making was the fact that SVB had the highest percentage of uninsured domestic deposits of all big banks. These totaled nearly $152 billion, or about 97% of all deposits.

ℹ️ The Federal Deposit Insurance Corporation (FDIC) insures up to $250,000 per account, per bank, for depositors.

By the end of the day, customers had tried to withdraw $42 billion in deposits.

What Triggered the SVB Collapse?

While the collapse of SVB took place over the course of 44 hours, its roots trace back to the early pandemic years.

In 2021, U.S. venture capital-backed companies raised a record $330 billion—double the amount seen in 2020. At the time, interest rates were at rock-bottom levels to help buoy the economy.

Matt Levine sums up the situation well: “When interest rates are low everywhere, a dollar in 20 years is about as good as a dollar today, so a startup whose business model is “we will lose money for a decade building artificial intelligence, and then rake in lots of money in the far future” sounds pretty good. When interest rates are higher, a dollar today is better than a dollar tomorrow, so investors want cash flows. When interest rates were low for a long time, and suddenly become high, all the money that was rushing to your customers is suddenly cut off.”

YearU.S. Venture Capital ActivityAnnual % Change
2021$330B98%
2020$167B15%
2019$145B1%
2018$144B64%
2017$88B6%
2016$83B-3%

Source: Pitchbook

Why is this important? During this time, SVB received billions of dollars from these venture-backed clients. In one year alone, their deposits increased 100%. They took these funds and invested them in longer-term bonds. As a result, this created a dangerous trap as the company expected rates would remain low.

During this time, SVB invested in bonds at the top of the market. As interest rates rose higher and bond prices declined, SVB started taking major losses on their long-term bond holdings.

Losses Fueling a Liquidity Crunch

When SVB reported its fourth quarter results in early 2023, Moody’s Investor Service, a credit rating agency took notice. In early March, it said that SVB was at high risk for a downgrade due to its significant unrealized losses.

In response, SVB looked to sell $2 billion of its investments at a loss to help boost liquidity for its struggling balance sheet. Soon, more hedge funds and venture investors realized SVB could be on thin ice. Depositors withdrew funds in droves, spurring a liquidity squeeze and prompting California regulators and the FDIC to step in and shut down the bank.

What Happens Now?

While much of SVB’s activity was focused on the tech sector, the bank’s shocking collapse has rattled a financial sector that is already on edge.

The four biggest U.S. banks lost a combined $52 billion the day before the SVB collapse. On Friday, other banking stocks saw double-digit drops, including Signature Bank (-23%), First Republic (-15%), and Silvergate Capital (-11%).

NameStock Price Change, March 10 2023Unrealized Losses / Tangible Equity
SVB Financial-60%*-99%
First Republic Bank-15%-29%
Zions Bancorp-2%-47%
Comerica-5%-47%
U.S. Bancorp-4%-55%
Fifth Third Bancorp-4%-38%
Bank of America-1%-54%
Wells Fargo1%-33%
JPMorgan-1%-21%

Source: Morningstar Direct. *Represents March 9 data, trading halted on March 10.

When the dust settles, it’s hard to predict the ripple effects that will emerge from this dramatic event. For investors, the Secretary of the Treasury Janet Yellen announced confidence in the banking system remaining resilient, noting that regulators have the proper tools in response to the issue.

But others have seen trouble brewing as far back as 2020 (or earlier) when commercial banking assets were skyrocketing and banks were buying bonds when rates were low.

The whole sector is in crisis, and the banks and investors that support these assets are going to have to figure out what to do.-Christopher Whalen, The Institutional Risk Analyst

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