MGT546 E - COMMERCE Prepared by Hawa Haji Nahar SEPTEMBER 2014.

MGT546E - COMMERCE

Prepared byHawa Haji NaharSEPTEMBER 2014

CHAPTER 8ETHICAL AND INTERNET

REGULATION ISSUES8.1 Ethical, social and Political issues8.2 Privacy and information rights8.3 Intellectual Property Rights8.4 Governance, Public Safety and

Welfare

8.1 Ethical, Social and Political issues

INTRODUCTIONa. Internet technology and its use in e-

commerce disrupt existing social and business relationships and understandings.

b. Costs and benefits of technology must be carefully considered, especially when there are as yet no clear-cut legal or cultural guidelines.

Cont…BASIC ETHICAL CONCEPTSa. Ethics: Study of principles that individuals and organizations

can use to determine right and wrong courses of action.b. Responsibility: as free moral agents, individuals,

organizations ad societies are responsible for the actions they take.

c. Accountability: Individuals, organizations and societies should be held accountable to others for the consequences of their actions.

d. Liability: Extends the concepts of responsibility and accountability to area of law.

e. Due process: refers to process by which laws are known and understood, with ability to appeal to higher authorities to ensure that laws have been correctly applied.

Cont…ANALYZING ETHICAL DILEMMASa. Dilemma: Situation in which there are at least two

diametrically opposed actions, each of which supports a desirable outcome.

b. Process for analyzing ethical dilemmas:i. Identify and describe clearly the factsii. Define the conflict or dilemma and identify the

higher-order values involvediii. Identify the stakeholdersiv. Identify the options that you can reasonably takev. Identify the potential consequences of your options

Cont…CANDIDATE ETHICAL PRINCIPLES:One or more of the following well-established ethical

principles can be used to help you determine your actions when confronted with an ethical dilemma:

Golden rule Universalism Slippery Slope Collective Utilitarian principle Risk Aversion No Free Lunch The New York Times Test (Perfect Information Rule) Social Contract Rule

Cont…A MODEL FOR ORGANIZING THE ISSUESa. Issues raised by Internet and e-commerce can be viewed

at individual, social and political levels.b. Four major categories of issues:i. Information rights: what rights do individuals have to

control their own personal information when internet technologies make information collection so pervasive and efficient?

ii. Property Rights: how can traditional intellectual property rights be enforced when perfect copies of protected works can be easily mad and distributed?

iii. Governance: should the internet and e-commerce be subject to public laws, and if so, who has jurisdiction?

iv. Public Safety and Welfare

8.2 Privacy and information rightsa. Major ethical issue related to E-

Commerce and privacy: Under what conditions should we invade privacy of others.

b. Major social issue: Development of ‘expectations of privacy’ and privacy norms.

c. Major political issue: Development of statutes that govern relations between record keepers and individuals.

Cont…Information Collected at E-Commerce Sitesa. Personally identifiable information (PII):

Data that can be used to identify, locate or contact an individual.

b. Anonymous information: Demographic and behavioral information that does not include any personal identifiers.

c. Almost all e-commerce companies collect PII and use cookies to track clickstream behavior.

Cont…Profiling: Privacy and Advertising Networksa. Profiling: Creation of digital images that characterize

online individual and group behavior.b. Anonymous Profiles: Identify people as belonging to

highly specific and targeted groups.c. Personal profiles: Add personal identifiers.d. 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

ehavior profiles of consumers.

Cont…The Concept of Privacya. Privacy: the moral right of individuals to be

left alone, free from surveillance or interference from other individuals or organizations.

b. 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.

Cont…Informed Consenta. Consent given with knowledge of all the material facts

needed to make a rational decision.b. Two models: Opt-in: Requires an affirmative action by the consumer to

allow collection and use of information. Opt-out: Default is to collect information unless consumer

takes an affirmative action to prevent the collection of data.c. Many U.S. e-commerce firms merely publish information

practices as part of privacy policy without providing for any form of informed consent.

d. Microsoft’s. Net Passport privacy policy illustrates some of difficulties of understanding privacy policies and risks.

Cont…Legal Protections for Privacya. May be explicitly granted or derived

from constitutions (U.S., Canada, and Germany)

b. May also be found in common law (U.S, England)

c. In U.S, also found in federal and state laws and regulations.

Cont…Private Industry Self-Regulationa. Safe harbor: Private, self-regulating policy

and enforcement mechanism that meets objectives of government regulations and legislation, but does not involve government regulation or enforcement.

Example: Privacy seal programs such as TRUSTe Internet privacy protection program.

b. Industry associations include: Online Privacy Alliance & Network Advertising Initiative.

Cont…European Directive on Data Protectiona. Privacy protection much stronger in Europe

than in U.S.b. European approach: comprehensive and

regulatory in naturec. European Commission’s Directive on Data

Protection; Standardizes and broadens privacy protection in European Union countries.

d. Department of Commerce safe harbor program for U.S. firms that wish to comply with directive.

Cont…Technological Solutions to Privacy Invasion on the

Weba. Many privacy-enhancing technologies being

developed emphasize security.b. Platform for Privacy Preference (P3P):

Comprehensive technological privacy protection effort sponsored by W3C:- Is a standard designed to communicate to Internet users a Web site’s privacy policy, and to compare that policy against user’s preferences or to other standards such as FTC’s FIP guidelines or EU’s Data Protection Directive.

8.3 Intellectual Property Rightsa. Intellectual property: Encompasses all tangible and

intangible products of human mind.b. Major ethical issue: How should we treat property

that belongs to others?c. Major social issue: Is there continued value in

protecting intellectual property in the Internet age?d. Major political issue: if, and if so, how, should

internet and e-commerce be regulated / governed to protect intellectual property?

e. Main types of intellectual property protection: Copyright, Patent, Trademark law.

Cont…Copyright: The Problem of Perfect Copies and

Encryption:a. Copyright Law: Problem of Perfect Copies and

encryption:b. Look and feel copyright infringement lawsuits involve

distinction between and idea and its expression.c. Fair use doctrine: under certain circumstances, permits

use of copyrighted materials without permission.d. Digital Millennium copyright Act of 1998 (DMCA): first

major effort to adjust copyright laws to internet age.e. DMCA implements WIPO treaty that makes it illegal to

make, distribute, or use devices that circumvent technology-based protections of copyrighted materials.

Cont…Patents: Business Methods and Processesa. Patent: Grants owner of 20-year exclusive monopoly on

ideas behind an invention.b. Most of early inventions that made internet and e-

commerce possible were not patented by their inventors.

c. With commercial development of internet, came desire for patents.

d. Business methods patents have been widely sought by internet and e-commerce companies

e. Many business methods internet patents granted are overbroad, and if enforced, would significantly impact e-commerce.

Cont…Trademarks: Online Infringement and Dilutiona. Trademark: Mark used to identify and distinguish goods,

and indicate their source.b. Trademarks protect public by ensuring it gets what it pays

for / expects to receive; protects trademark owner against piracy and misappropriation.

c. Infringement (Violation): use of a trademark that creates confusion with existing marks, causes consumers to make market mistakes or misrepresents origins of goods.

d. Anti cyber squatting 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.

Cont…Types of Trademark abuse on Interneta. Cyber squatting: Registration of infringing domain name,

or other internet use of existing trademark, for purpose of extorting payments from legitimate owners

b. Cyber piracy: involves same behavior as cyber squatting, but with intend of diverting traffic from legitimate site to infringing site.

c. Meta tagging: Using another’s trademarks as meta tags in a misleading or confusing manner.

d. Deep linking: Bypassing target site’s home page and going directly to content page.

e. Framing: Displaying content of another site within frame or window.

8.4 Governance, Public Safety and Welfare

GOVERNANCEa. Involves issue of social control.b. Primary Questions: i. Who will control internet

and e-commerce? ii. What elements will be controlled and how?

c. Stages of governance and e-commerce:1. Government Control Period (1970 – 1994)2. Privatization (1995 – 1998)3. Self-Regulation (1995- present)4. Government Regulation (1998 – present)

Cont…Who Governs E-Commerce and the Internet?a. 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.

b. 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)

Cont…Taxation (USA)a. Issue of taxation of e-commerce sales illustrates

complexity of governance and jurisdiction issues.b. National and international character of internet sales

wreaking havoc on traditional taxation schemes in U.S. based on local commerce and local jurisdictions.

c. November 2001: Congress extended Internet Tax Freedom Act moratorium on ‘multiple or discriminatory taxes on electronic commerce’ until November 2003.

d. Unlikely that comprehensive, integrated rational approach to taxation issue will be determined for some time to come.

Cont…

PUBLIC SAFETY AND WELFARE ISSUESa. Protection of children and strong sentiments against

ponographing: Passing legislation that will survive court challenges has proved difficult: communications Decency Act, Children’s Online Protection Act struck down, but Children’s Internet protection Act recently upheld by Supreme Court.

b. Efforts to control gambling and restrict sales of drugs and cigarettes: Currently mostly regulated by state law.

c. Equity and the Digital Divide (differences in internet and e-commerce access among income, ethnic, and age groups).

Cont…

Cont…PUBLIC SAFETY AND WELFARE ISSUESThe Internet Drug Bazaara. Online pharmacies expected to account for over S1 billion in

revenue in 2003b. E-commerce challenging traditional notions of drug

distributionc. Many prescription drugs made available, without prescriptiond. FDA has thus far been slow to respond to issuee. Some federal legislation proposed, but thus far none has

passedf. Efforts at self-regulation by legitimate online pharmaciesg. Countervailing issue: Many want to be able to purchase drugs

from Canada, Mexico – less expensive.

QUESTIONSETHICAL AND INTERNET

REGULATIONS ISSUESExplain privacy, information privacy,

and informed consent and discuss the ways in which the practices of e-commerce companies, particularly the advertising networks threaten

people’s privacy.