E-commerce
business. technology. society.
Third Edition
Kenneth C. Laudon
Carol Guercio Traver
Copyright 2006 Pearson Education, Inc.
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Chapter 9
Ethical, Social, and Political Issues in E-commerce
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Understanding Ethical, Social, and Political Issues in E-commerce
Internet technology and its use in ecommerce disrupts existing social and business relationships Some of the Issues: Privacy Issues Intellectual Property Public Safety Governance
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The Concept of Privacy
Privacy: The moral right of individuals to be left alone, free from surveillance or interference from other individuals or organizations Information privacy: Includes both the claim that certain information should not be collected at all, as well as the claim of individuals to control the use of whatever information is collected about them
Copyright 2006 Pearson Education, Inc.
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Information Collected at E-commerce Sites
Personally identifiable information (PII): Data that can be used to identify, locate, or contact an individual Anonymous information: Demographic and behavioral information that does not include any personal identifiers Almost all e-commerce companies collect PII and use cookies to track clickstream behavior
Copyright 2006 Pearson Education, Inc.
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Profiling and Behavioral Targeting
Profiling: Creation of digital images that characterize online individual and group behavior Anonymous profiles: Identify people as belonging to highly specific and targeted groups Personal profiles: Add personal identifiers Advertising networks can: Track both consumer behavior and browsing behavior on the Web Dynamically adjust what the user sees on screen Build and refresh high-resolution data images or behavior profiles of consumers
Copyright 2006 Pearson Education, Inc.
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Legal Protections for Privacy
May be explicitly granted or derived from constitutions (U.S., Canada, Germany) May also be found in common law (U.S, England) In U.S, also found in federal and state laws and regulations
Copyright 2006 Pearson Education, Inc.
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Informed Consent
Consent given with knowledge of all the material facts needed to make a rational decision Two models: Opt-in Opt-out Many U.S. e-commerce firms merely publish information practices as part of privacy policy without providing for any form of informed consent
Copyright 2006 Pearson Education, Inc.
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Statutory and Regulatory Protections of Online Privacy
In U.S., Federal Trade Commission has taken lead in conducting research and recommending legislation to Congress FTC Fair Information Practice Principles (1998): Notice/Awareness (Core) Choice/Consent (Core) Access/Participation Security Enforcement
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FTC Recommendations for Online Profiling
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The European Directive on Data Protection
Privacy protection much stronger in Europe than in United States European approach: Comprehensive and regulatory in nature Do not allow business firms to use PII without prior consent Track violations of privacy and enforce privacy laws European Commissions Directive on Data Protection: Standardizes and broadens privacy protection in European Union countries Department of Commerce safe harbor program for U.S. firms that wish to comply with Directive
Copyright 2006 Pearson Education, Inc.
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Technological Solutions to Privacy Invasion on the Web
Many privacy-enhancing technologies being developed emphasize security Platform for Privacy Preferences (P3P): Comprehensive technological privacy protection effort sponsored by W3C Is a standard designed to communicate to Internet users a Web sites privacy policy, and to compare that policy against users preferences or to other standards such as FTCs FIP guidelines or EUs Data Protection Directive
Copyright 2006 Pearson Education, Inc.
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How P3P Works
Figure 9.2(A), Page 527
SOURCE: W3C Platform for Privacy Preferences Initiative, 2003.
Copyright 2006 Pearson Education, Inc.
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Intellectual Property Rights
Intellectual property: Encompasses all tangible and intangible products of human mind Major social issue: Is there continued value in protecting intellectual property in the Internet age? Major political issue: If so, how, should Internet and e-commerce be regulated/governed to protect intellectual property Main types of intellectual property protection: Copyright Patent Trademark law
Copyright 2006 Pearson Education, Inc.
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Copyright: The Problem of Perfect Copies and Encryption
Copyright law: Protects original forms of expression (but not ideas) from being copied by others for a period of time Look and feel copyright infringement lawsuits involve distinction between an idea and its expression Fair use doctrine: Under certain circumstances, permits use of copyrighted materials without permission Digital Millennium Copyright Act of 1998 (DMCA): First major effort to adjust copyright laws to Internet age
Copyright 2006 Pearson Education, Inc.
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Patents: Business Methods and Processes
Patent: Grants owner a 20-year exclusive monopoly on ideas behind an invention Most of early inventions that made Internet and ecommerce possible were not patented by their inventors With commercial development of Internet, came desire for patents Business methods patents have been widely sought by Internet and e-commerce companies
Copyright 2006 Pearson Education, Inc.
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Internet and E-Commerce Business Method Patents
Figure 9.3, Page 538
SOURCE: Based on data from United States Patent and Trademark Office, 2005.
Copyright 2006 Pearson Education, Inc.
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Trademarks: Online Infringement and Dilution
Trademark: Mark used to identify and distinguish goods, and indicate their source Trademarks protect public by ensuring it gets what it pays for/expects to receive; protects trademark owner against piracy and misappropriation Infringement: Use of a trademark that creates confusion with existing marks, causes consumers to make market mistakes or misrepresents origins of goods Anticybersquatting Consumer Protection Act (ACPA): Creates civil liabilities for anyone who attempts in bad faith to profit from an existing famous or distinctive trademark by registering an Internet domain name that is identical or confusingly similar
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Governance
Primary questions: Who will control Internet and e-commerce What elements will be controlled and how Stages of governance and e-commerce Government Control Period (19701994) Privatization (19951998) Self-Regulation (1995present) Government Regulation (1998present)
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Who Governs E-commerce and the Internet?
Currently we are in a mixed mode policy environment where self-regulation, through a variety of Internet policy and technical bodies, co-exists with limited government regulation Not true that Internet cannot be controlled. In fact, Internet can be very easily controlled, monitored, and regulated from a central location (such as done by China, Singapore, etc.)
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Taxation
Issue of taxation of e-commerce sales illustrates complexity of governance and jurisdiction issues National and international character of Internet sales wreaking havoc on traditional taxation schemes in U.S. based on local commerce and local jurisdictions December 2004: Congress extended tax moratorium on multiple or discriminatory taxes on electronic commerce until November 2007 Unlikely that comprehensive, integrated rational approach to taxation issue will be determined for some time to come
Copyright 2006 Pearson Education, Inc.
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Public Safety and Welfare
Protection of children and strong sentiments against pornography Passing legislation that will survive court challenges has proved difficult: Communications Decency Act struck down Childrens Online Protection Act struck down (but still be considered by lower courts) Childrens Internet Protection Act upheld by Supreme Court (requires schools and libraries to install technology protection measures) Efforts to control gambling and restrict sales of drugs and cigarettes Currently mostly regulated by state law
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Copyright 2006 Pearson Education, Inc.