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I disagree. With the caveat that you should not let your data escape, there are very good services out there: 37signals, salesforce, web analytics, where it isnt worth trying to host it yourself. My friends, this is where we are going to make our money. Thank RMS for GPL, gcc, and other fine tools, but let's ignore his rants.
On the one hand Gmail. On the other, running your own sendmail server and being the authoritative DNS for your domain.
Referring to his conclusion in relation to this issue as a rant is unfair, and mistaken.
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Wow, isn't that like Robin agreeing with Batman about the Joker?

Not that I disagree with their basic logic. I think you need to take steps to keep your data yours, though going so far as to completely cut yourself off from web services seems a bit too black and white.

Hmm, now I am imagining RMS wearing a Batman costume. Thanks, I guess.
Who the hell still listens to ESR? After the CML2 fiasco, his series of incredibly stupid border-line racist blog posts, and the general realisation that Raymond hadn't, after all, done anything much except for relentlessly promote himself, I thought we'd dispensed with him as a spokesman for Open Source?
People that can recognize a HACKER listen to ESR.

Have you read TAOUP?

So, are people who rent vs. own their homes non-free because they are opting into the home-as-a-service trap? Of course, they are at risk. The landlord could kick you out, forget to pay the water bill, etc. But, you accept those risks because you perhaps want the flexibility of renting, the extra time saved by not having a lawn to mow, or the financial benefits of living without a mortgage.

Why stop at owning a server? If you rent rackspace in a datacenter, they own you too. What if they lock the door and won't let you in? They could even steal your server along with all your data. What are you going to do then? Perhaps you should build your own. Then, you're still in trouble. What if the monopolies that control the pipe into your datacenter decide that you don't deserve connectivity anymore? Then, you're really screwed. You should just go live in a cave or something. Life is just too risky.

Seriously, business/life/whatever has inherent risk. Often when faced with a binary choice, both options have non-trivial risks associated. You either accept the risks or mitigate them. Most importantly, you measure them. Is Amazon willing to risk what must be its fastest growing business segment by holding someone's data hostage? Doubtful. Are you, as a small start-up, capable of messing up servers you physically manage. You bet! So, pick your poison.

Sure life is risky. But most of the scenarios you mention have nothing to do with software freedom.

Say you rent rackspace. You can run free software on that server, and have complete control over all of your data. If the datacenter doesn't play nice, you can always take your software and data elsewhere. You are free. That same freedom will be useful should someone choke off your connection.

The landlord could kick you out, forget to pay the water bill, etc.

Actually, most areas have tenants rights provisions that prevent a landlord from doing these things. Hence, your rights as a renter are protected.

No such laws exist for software.

Contracts allow for civil penalties including "specific performance" as ordered by a court -- this might mean "give the customer his data back." One would hope anyone hosting something of significance would have a contract in place with his hosting provider.
Then why don't we have/create a free version of "Software As A Service"?

How could that be applied to the various cloud computing services that RMS has an issue with? Like Google Docs, Gmail, cloud computing power (like Amazon, Google).

In my limited view, I think software is not the problem - it's the hardware. There's a lot of upfront cost to setting up a server farm and employing people to run it, and there's a lot of competition out there.