Should Microsoft pay for the billions of dollars of damage that flaws in its software have caused around the world? It might have to, if a new European Commission consumer protection proposal becomes law. Although that sounds an appealing prospect, one knock-on consequence could be that open source coders would also be liable for any damage that errors in their software caused.

Here's what the European Commission is proposing:

A priority area for possible EU action is "extending the principles of consumer protection rules to cover licensing agreements of products like software downloaded for virus protection, games or other licensed content", according to the commissioners' agenda. "Licensing should guarantee consumers the same basic rights as when they purchase a good: the right to get a product that works with fair commercial conditions."

EU consumer commissioner Kuneva said that more accountability for software makers, and for companies providing digital services, would lead to greater consumer choice.

Now, you might think this is yet another case of Eurocrats gone mad, but they're not alone in believing that those who write software should take responsibility for it. No less a person than the security guru Bruce Schneier is also a big fan of the idea:

There's no other industry where shoddy products are sold to a public that expects regular problems, and where consumers are the ones who have to learn how to fix them. If an automobile manufacturer has a problem with a car and issues a recall notice, it's a rare occurrence and a big deal – and you can take you car in and get it fixed for free. Computers are the only mass-market consumer item that pushes this burden onto the consumer, requiring him to have a high level of technical sophistication just to survive.

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The key to fixing this is software liabilities. Computers are also the only mass-market consumer item where the vendors accept no liability for faults. The reason automobiles are so well designed is that manufacturers face liabilities if they screw up. A lack of software liability is effectively a vast government subsidy of the computer industry. It allows them to produce more products faster, with less concern about safety, security, and quality.

Equally, no less a person than Alan Cox is against it:

Cox said that it would be difficult to make open-source developers liable for their code because of the nature of open-source software development. As developers share code around the community, responsibility is collective. "Potentially there's no way to enforce liability," he said.

But Schneier has a suggestion for dealing with that problem too:

The key to understanding this is that this sort of contractual liability is part of a contract, and with free software -- or free anything -- there's no contract. Free software wouldn't fall under a liability regime because the writer and the user have no business relationship; they are not seller and buyer. I would hope the courts would realize this without any prompting, but we could always pass a Good Samaritan-like law that would protect people who distribute free software. (The opposite would be an Attractive Nuisance-like law -- that would be bad.)

There would be an industry of companies who provide liabilities for free software. If Red Hat, for example, sold free Linux, they would have to provide some liability protection. Yes, this would mean that they would charge more for Linux; that extra would go to the insurance premiums. That same sort of insurance protection would be available to companies who use other free software packages.

So, where do you stand on the issue? Do you think introducing liability for software would be a great way to force Microsoft to pay for all the damage its software has caused, and to start writing some really secure code, or would it lead to terrible problems for those producing free software, and stunt the uptake of open source? Would the European Commission's proposal be a blessing or a blight?

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