5.

1 UNDERSTANDING ETHICAL, SOCIAL, AND POLITICAL ISSUES IN E-COMMERCE

The Internet and its use in e-commerce have raised pervasive ethical, social, and political issues
on a scale unprecedented for computer technology. Why is the Internet at the root of so many
contemporary controversies? Part of the answer lies in the underlying features of Internet technology
itself, and the ways in which it has been exploited by business firms.

We live in an “information society,” where power and wealth increasingly depend on

information and knowledge as central assets. Controversies over information are often disagreements
over power, wealth, influence, and other things thought to be valuable. Like other technologies, such as
steam, electricity, telephones, and television, the Internet and e-commerce can be used to achieve
social progress, and for the most part, this has occurred. However, the same technologies can be used to
commit crimes, despoil the environment, and threaten cherished social values.

Before automobiles, there was very little interstate crime and very little federal jurisdiction over
crime. Likewise, with the Internet: before the Internet, there was very little “cybercrime.” Many
business firms and individuals are benefiting from the commercial development of the Internet, but this
development also exacts a price from individuals, organizations, and societies.

A Model for Organizing the Issues E-commerce—and the Internet—have raised so many ethical,
social, and political issues that it is difficult to classify them all, and hence, complicated to see their
relationship to one another.

Clearly, ethical, social, and political issues are interrelated. One way to organize the ethical,
social, and political dimensions surrounding ecommerce is shown in the Figure below. At the individual
level, what appears as an ethical issue—” What should I do?”—is reflected at the social and political
levels— “What should we as a society and government do?” The ethical dilemmas you face as a
manager of a business using the Web reverberate and are reflected in social and political debates. The
major ethical, social, and political issues that have developed around ecommerce over the past 10 years
can be loosely categorized into four major dimensions: information rights, property rights, governance,
and public safety and welfare.

Some of the ethical, social, and political issues raised in each of these areas include the following:

Information rights

 What rights to their own personal information do individuals have in a public marketplace, or in
their private homes, when Internet technologies make information collection so pervasive and
efficient? What rights do individuals have to access information about business firms and other
organizations?

Property rights

 How can traditional intellectual property rights be enforced in an Internet world where perfect
copies of protected works can be made and easily distributed worldwide in seconds?

Governance

 Should the Internet and e-commerce be subject to public laws? And if so, what law-making
bodies have jurisdiction—state, federal, and/or international?
Public safety and welfare

 What efforts should be undertaken to ensure equitable access to the Internet and e-commerce
channels? Should governments be responsible for ensuring that schools and colleges have
access to the Internet? Are certain online content and activities—such as pornography and
gambling—a threat to public safety and welfare? Should mobile commerce be allowed from
moving vehicles?

Basic Ethical Concepts: Responsibility, Accountability, and Liability

Ethics

 is at the heart of social and political debates about the Internet.

 the study of principles that individuals and organizations can use to determine right and wrong
courses of action. It is assumed in ethics that individuals are free moral agents who are in a
position to make choices.

In western culture, there are four basic principles that all ethical schools of thought share:

 Responsibility
o means that as free moral agents, individuals, organizations, and societies are
responsible for the actions they take.
 Accountability
o means that individuals, organizations, and societies should be held accountable to
others for the consequences of their actions.
 Liability
o extends the concepts of responsibility and accountability to the area of law.
o Liability is a feature of political systems in which a body of law is in place that permits
individuals to recover the damages done to them by other actors, systems, or
organizations.
 Due process
o a feature of law-governed societies and refers to a process in which laws are known and
understood, and there is an ability to appeal to higher authorities to ensure that the
laws have been correctly applied.

Dilemma

 a situation in which there are at least two diametrically opposed actions, each of which
supports a desirable outcome.

The following is a five-step process that should help:

1. Identify and clearly describe the facts. Find out who did what to whom, and where, when, and
how. In many instances, you will be surprised at the errors in the initially reported facts, and often you
will find that simply getting the facts straight helps define the solution. It also helps to get the opposing
parties involved in an ethical dilemma to agree on the facts.
 2. Define the conflict or dilemma and identify the higher-order values involved. Ethical, social,
and political issues always reference higher values. Otherwise, there would be no debate. The parties to
a dispute all claim to be pursuing higher values (e.g., freedom, privacy, protection of property, and the
free enterprise system).

3. Identify the stakeholders. Every ethical, social, and political issue has stakeholders: players in
the game who have an interest in the outcome, who have invested in the situation, and usually who
have vocal opinions. Find out the identity of these groups and what they want. This will be useful later
when designing a solution.

4. Identify the options that you can reasonably take. You may find that none of the options
satisfies all the interests involved, but that some options do a better job than others. Sometimes,
arriving at a “good” or ethical solution may not always be a balancing of consequences to stakeholders.

5. Identify the potential consequences of your options. Some options may be ethically correct
but disastrous from other points of view. Other options may work in this one instance but not in other
similar instances. Always ask yourself, “What if I choose this option consistently over time?” Once your
analysis is complete, you can refer to the following well-established ethical principles to help decide the
matter.

Candidate Ethical Principles

• The Golden Rule

Do unto others as you would have them do unto you. Putting yourself into the place of others
and thinking of yourself as the object of the decision can help you think about fairness in decision
making.

• Universalism

If an action is not right for all situations, then it is not right for any specific situation (Immanuel
Kant’s categorical imperative). Ask yourself, “If we adopted this rule in every case, could the
organization, or society, survive?”

• Slippery Slope

If an action cannot be taken repeatedly, then it is not right to take at all. An action may appear
to work in one instance to solve a problem, but if repeated, would result in a negative outcome. In plain
English, this rule might be stated as “once started down a slippery path, you may not be able to stop.”

• Collective Utilitarian Principle

Take the action that achieves the greater value for all of society. This rule assumes you can
prioritize values in a rank order and understand the consequences of various courses of action.

• Risk Aversion

Take the action that produces the least harm, or the least potential cost. Some actions have
extremely high failure costs of very low probability (e.g., building a nuclear generating facility in an
urban area) or extremely high failure costs of moderate probability (speeding and automobile
accidents). Avoid the high failure cost actions and choose those actions whose consequences would not
be catastrophic, even if there were a failure.

• No Free Lunch

Assume that virtually all tangible and intangible objects are owned by someone else unless
there is a specific declaration otherwise. (This is the ethical “no free lunch” rule.) If something someone
else has created is useful to you, it has value and you should assume the creator wants compensation
for this work.

• The New York Times Test (Perfect Information Rule)

Assume that the results of your decision on a matter will be the subject of the lead article in the
New York Times the next day. Will the reaction of readers be positive or negative? Would your parents,
friends, and children be proud of your decision? Most criminals and unethical actors assume imperfect
information, and therefore they assume their decisions and actions will never be revealed. When
making decisions involving ethical dilemmas, it is wise to assume perfect information markets.

• The Social Contract Rule

Would you like to live in a society where the principle you are supporting would become an
organizing principle of the entire society? For instance, you might think it is wonderful to download
illegal copies of Hollywood movies, but you might not want to live in a society that does not respect
property rights, such as your property rights to the car in your driveway, or your rights to a term paper
or original art.

5.2 PRIVACY AND INFORMATION RIGHTS

Privacy

 the moral right of individuals to be left alone, free from surveillance or interference from other
individuals or organizations, including the state.
 Privacy is a girder supporting freedom: Without the privacy required to think, write, plan, and
associate independently and without fear, social and political freedom is weakened, and
perhaps destroyed.

Information privacy

 a subset of privacy.

The right to information privacy includes both the claim that certain information should not be
collected at all by governments or business firms, and the claim of individuals to control the use of
whatever information that is collected about them.

Individual control over personal information is at the core of the privacy concept. Implicit in the
claim to control one’s own personal information is the claim to be able to edit and even delete personal
information from the Web. This is often called “the right to be forgotten” (Rosen, 2012).
 Due process also plays an important role in defining privacy. The best statement of due process in
record keeping is given by the Fair Information Practices doctrine developed in the early 1970s and
extended to the online privacy debate in the late 1990s (described later in this section).

There are two kinds of threats to individual privacy posed by the Internet.

 One threat originates in the private sector and concerns how much personal information is
collected by commercial Web sites and how it will be used.
 A second threat originates in the public sector and concerns how much personal information
government authorities collect, and how they use it.

Big Data

 powerful storage and analytic capabilities resulted in a torrent of data pouring into marketing
and law enforcement databases.

The major ethical issues related to e-commerce and privacy include the following:

Under what conditions should we collect information about others? What legitimates intruding into
others’ lives through unobtrusive surveillance, online tracking programs, market research, or other
means? Do people have a right to be informed when Web sites are collecting data about them?

The major social issues related to e-commerce and privacy concern the development of “expectations
of privacy” or privacy norms, as well as public attitudes. In what areas of life should we as a society
encourage people to think they are in “private territory” as opposed to public view?

The major political issues related to e-commerce and privacy concern the development of statutes
that govern the relations between record keepers and individuals. How should both public and private
organizations—which may be reluctant to remit the advantages that come from the unfettered flow of
information on individuals—be restrained, if at all? In the following section, we look first at the various
practices of e-commerce companies that pose a threat to privacy.

Information Collected at E-commerce Sites

Personally Identifiable Information (PII)

 which is defined as any data that can be used to identify, locate, or contact an individual

Advertising Networks and Search Engines

 also track the behavior of consumers across thousands of popular sites, not just at one site, via
cookies, Web beacons, tracking software, spyware, and other techniques.
Social Networks and Privacy Social networks

 pose a unique challenge for the maintenance of personal privacy because they encourage
people to reveal details about their personal lives (passions, loves, favorites, photos, videos,
and personal interests), and to share them with their friends.

People who contribute user-generated content have a strong sense of ownership over that content
that is not diminished by posting the information on a social network for one’s friends.

What’s involved are some basic tenets of privacy thinking: personal control over the uses of
personal information, choice, informed consent, participation in formulation of information policies, and
due process. Some of these ideas are foreign to managers and owners seeking to monetize huge social
network audiences. As for members who post information to everyone, not just friends, these should be
seen as “public performances” where the contributors voluntarily publish their performances, just as
writers or other artists do. This does not mean they want the entirety of their personal lives thrown
open to every Web tracking automaton on the Internet.

Mobile and Location-Based Privacy Issues

Mobile Device Privacy Act

 The Act requires any firm performing consumer data collection on cell phones, other devices, or
on Web sites, to inform consumers, and the Federal Trade Commission. However, the Act has
not yet been passed by Congress.

Third-party cookie

 is used to track users across hundreds or thousands of other Web sites who are members of the
advertising network.

Profiling

 the creation of digital images that characterize online individual and group behavior.

Anonymous profiles

 identify people as belonging to highly specific and targeted groups, for example, 20- to 30-year-
old males, with college degrees and incomes greater than $30,000 a year, and interested in
high-fashion clothing (based on recent search engine use).

Personal profiles

 a personal e-mail address, postal address, and/or phone number to behavioral data.
Increasingly, online firms are linking their online profiles to personal offline consumer data
collected by database firms tracking credit card purchases, as well as established retail and
catalog firms.

A different kind of profiling and a more recent form of behavioral targeting is Google’s results-
based personalization of advertising.
 Google has a patent on a program that allows advertisers using Google’s AdWords program to
target ads to users based on their prior search histories and profiles, which Google constructs based on
user searches, along with any other information the user submits to Google or that Google can obtain,
such as age, demographics, region, and other Web activities (such as blogging).

Google also applied for a second patent on a program that allows Google to help advertisers select
keywords and design ads for various market segments based on search histories, such as helping a
clothing Web site create and test ads targeted at teenage females. In 2007, Google began using
behavioral targeting to help it display more relevant ads based on keywords. According to Google, the
feature is aimed at capturing a more robust understanding of user intent, and thereby delivering a
better ad.

Google’s Gmail

 a free e-mail service, offers a powerful interface, and more than 7 gigabytes of free storage.

Google’s Chrome browser has a Suggest feature that automatically suggests related queries and
Web sites when the user enters search terms. Critics pointed out this was a “key logger” device that
would record every keystroke of users forever. Google has since announced it will anonymize the data
within 24 hours. In 2010, Google began “personalizing” search results without asking users.

Opt-in

 the default option

Deep packet inspection

 another technology for recording every keystroke at the ISP level of every Internet user (no
matter where they ultimately go on the Web), and then using that information to make
suggestions, and target ads
 The leading firm in this technology was NebuAd.

Profiling

 permits targeting of ads, ensuring that consumers see advertisements mostly for products and
services in which they are actually interested.
 permits data aggregation on hundreds or even thousands of unrelated sites on the Web.

The cookies placed by ad networks are persistent, and they can be set to last days, months, years,
or even forever. Their tracking occurs over an extended period of time and resumes each time the
individual logs on to the Internet. This clickstream data is used to create profiles that can include
hundreds of distinct data fields for each consumer. Associating so-called anonymous profiles with
personal information is fairly easy, and companies can change policies quickly without informing the
consumer.
Private Industry Self-Regulation

 The online industry formed the Online Privacy Alliance (OPA) in 1998 to encourage self-
regulation in part as a reaction to growing public concerns and the threat of legislation being
proposed by the government and privacy advocacy groups. OPA has developed a set of privacy
guidelines that members are required to implement.

Network Advertising Initiative (NAI)

 The advertising network industry has also formed an industry association to develop privacy
policies.
 Two objectives
o to offer consumers a chance to opt out of advertising network programs (including e-
mail campaigns)
o to provide consumers redress from abuses.
 NAI’s Web site
o Networkadvertising.org
 where consumers can use a global opt-out feature to prevent network
advertising agencies from placing their cookies on a user’s computer. If a
consumer has a complaint, the NAI has a link to the Truste.org Web site where
the complaints can be filed.

Technological Solutions

One of the most powerful browser-based protections is a built-in Do Not Track capability.
Microsoft, Mozilla, Google, and Apple have all introduced a default Do Not Track capability. Microsoft
ships its browser with the default set to “Do Not Track.” Others may follow this precedent in time. Most
of these tools emphasize security—the ability of individuals to protect their communications and files
from illegitimate snoopers.

 Spyware blockers – detects and removes spyware, adware, keyloggers, and other malware
 Pop-up blockers - prevents calls to ad servers that push pop-up, pop-under, and leave behind
ads; restricts downloading of images at user request
 Secure e-mail – e-mail and document encryption
 Anonymous e-mailers – send e-mail without trace
 Anonymous surfing – surf without a trace
 Cookie managers – prevents client computers from accepting cookies
 Disk/file erasing program – completely erases hard drive and floppy files
 Policy generators – automates the development of an OECD privacy compliance policy
 Public key encryption – program that encrypts your mail and documents

5.3 INTELLECTUAL PROPERTY RIGHTS

Intellectual Property

 encompasses all the tangible and intangible products of the human mind.
 The major ethical issue related to e-commerce and intellectual property concerns how we (both as
individuals and as business professionals) should treat property that belongs to others.

Types of Intellectual Property Protection

 Copyright
 Patent
 Trademark Law

The goal of intellectual property law is to balance two competing interest

Public interest

 is served by the creation and distribution of inventions, works of art, music, literature, and
other forms of intellectual expression.

Private interest

 is served by rewarding people for creating these works through the creation of a time-limited
monopoly granting exclusive use to the creator.

Copyright: The Problem of Perfect Copies and Encryption

Copyright Law

 protects original forms of expression such as writings (books, periodicals, lecture notes), art,
drawings, photographs, music, motion pictures, performances, and computer programs from
being copied by others for a period of time.

Copyright does not protect ideas— just their expression in a tangible medium such as paper,
cassette tape, or handwritten notes.

Computer Software Copyright Act

 provides protection for source and object code and for copies of the original sold in commerce,
and sets forth the rights of the purchaser to use the software while the creator retains legal title

Copyright Protection

 is clear-cut: it protects against copying of entire programs or their parts

“Look and Feel” Copyright Infringement Lawsuits

 are precisely about the distinction between an idea and its expression. .

The Doctrine of Fair Use

 permits teachers and writers to use copyrighted materials without permission under certain
circumstances.
  Fair Use Considerations
o Character of Use – nonprofit or educational use versus for profit use
o Nature of the Work – creative work such as plays or novels receive greater protection
than factual accounts
o Amount of Work Used - a stanza from a poem or a single page from a book would be
allowed but not the entire
o Market Effect of Use – Will the use harm the marketability?
o Context of Use – a last-minute, unplanned use in a classroom versus a planned
infringement

The Digital Millennium Copyright Act of 1998

 was the first major effort to adjust the copyright laws to the Internet age.
o Title I, WIPO Copyright and Performances and Phonographs Treaties Implementation
 makes it illegal to circumvent technological measures to protect works for
either access or copying or to circumvent any electronic rights management
information.
o Title II, Online Copyright Infringement Liability Limitation
 requires ISP’s to “take down” sites they host if they are infringing copyrights
and requires search engines to block access to infringing sites.
o Title III, Computer Maintenance Competition Insurance
 permit users to make a copy of a computer program for maintenance or repair
of the computer.
o Title IV, Miscellaneous Provisions
 requires the Copyright Office to report to Congress on the use of copyright
materials for distance education
 Allow libraries to make a digital copy of works for internal use only
 Extends musical copyrights to include “webcasting”

World Intellectual Property Organization (WIPO)

 a worldwide body formed by the major copyright-holding nations of North America, Europe,
and Japan—began in 1995.
 WIPO is an organization within the United Nations.

The DMCA attempts to answer two vexing questions in the Internet age.

 First, how can society protect copyrights online when any practical encryption scheme
imaginable can be broken by hackers and the results distributed worldwide?
 Second, how can society control the behavior of thousands of ISPs, who often host infringing
Web sites or who provide Internet service to individuals who are routine infringers?
ContentID

Google announced a filtering system aimed at addressing the problem.

It requires content owners to give Google a copy of their content so Google can load it into an
auto-identification system.

Cyberlocker

 an online file storage service dedicated to sharing copyrighted material (often movies) illegally.

PATENTS: BUSINESS METHODS AND PROCESSES

A patent grants the owner a 20-year exclusive monopoly on the ideas behind an invention. The
congressional intent behind patent law was to ensure that inventors of new machines, devices, or
industrial methods would receive the full financial and other rewards of their labor and still make
widespread use of the invention possible by providing detailed diagrams for those wishing to use the
idea under license from the patent’s owner. Obtaining a patent is much more difficult and time-
consuming than obtaining copyright protection (which is automatic with the creation of the work).
Patents must be formally applied for, and the granting of a patent is determined by Patent Office
examiners who follow a set of rigorous rules. Ultimately, fcourts decide when patents are valid and
when infringement occurs. Patents are very different from copyrights because patents protect the ideas
themselves and not merely the expression of ideas. There are four types of inventions for which patents
are granted under patent law: machines, man-made products, compositions of matter, and processing
methods.

Three things that cannot be patented

 Laws of Nature
 Natural Phenomena
 Abstract Ideas

In order to be granted a patent, the applicant must show that the invention is new, original, novel,
nonobvious, and not evident in prior arts and practice.

The danger of patents is that they stifle competition by raising barriers to entry into an industry.
Patents force new entrants to pay licensing fees to incumbents, and thus slow down the development of
technical applications of new ideas by creating lengthy licensing applications and delays.

E-commerce Patents

Samuel F. B. Morse

 who patented the idea of Morse code and made the telegraph useful, most of the inventions
that make the Internet and ecommerce possible were not patented by their inventors.
 TRADEMARKS: ONLINE INFRINGEMENT AND DILUTION

Trademark law

 a form of intellectual property protection for trademarks

 The purpose of trademark law is twofold
o First, trademark law protects the public in the marketplace by ensuring that it gets what
it pays for and wants to receive.
o Second, trademark law protects the owner—who has spent time, money, and energy
bringing the product to the marketplace— against piracy and misappropriation.

Trademarks

 a mark used to identify and distinguish goods and indicate their source.

The Test for Infringement is Twofold

 market confusion
 bad faith

Use of a trademark that creates confusion with existing trademarks, causes consumers to make
market mistakes, or misrepresents the origins of goods is an infringement. In addition, the intentional
misuse of words and symbols in the marketplace to extort revenue from legitimate trademark owners
(“bad faith”) is prescribed.

Federal Trademark Dilution Act (FTDA)

 which created a federal cause of action for dilution of famous marks. This legislation dispenses
with the test of market confusion (although that is still required to claim infringement), and
extends protection to owners of famous trademarks against dilution

Dilution

 any behavior that would weaken the connection between the trademark and the product.

Trademark Dilution Revision Act (TDRA)

 which allows a trademark owner to file a claim based on a “likelihood of dilution” standard,
rather than having to provide evidence of actual dilution.

Trademarks and the Internet

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 to, or “dilutive” of, that trademark. The act does not establish criminal sanctions. It
proscribes using “bad-faith” domain names to extort money from the owners of the existing
trademark (cybersquatting), or using the bad-faith domain to divert Web traffic to the bad-faith
domain that could harm the good will represented by the trademark, create market confusion,
or tarnish or disparage the mark (cyberpiracy). The act also proscribes the use of a domain name
that consists of the name of a living person, or a name confusingly similar to an existing personal
name, without that person’s consent, if the registrant is registering the name with the intent to
profit by selling the domain name to that person. Trademark abuse can take many forms on the
Web.

Cybersquatting

 registering domain names similar or identical to trademarks of others to extort profits from
legitimate holders.

Cyberpiracy

 involves the same behavior as cybersquatting, but with the intent of diverting traffic from the
legitimate site to an infringing site.
 registering domain names similar or identical to trademarks of others to divert web traffic to
their own sites

Metatagging

 using trademarked words in a site’s metatags

 The legal status of using famous or distinctive marks as metatags is more complex and subtle
 The use of trademarks in metatags is permitted if the use does not mislead or confuse
consumers. Usually this depends on the content of the site

Keywording

 Racing trademarked keywords on web pages either visible or invisible

 The permissibility of using trademarks as keywords on search engines is also subtle and depends
(1) on the extent to which such use is considered to be a “use in commerce” and causes “initial
customer confusion” and (2) on the content of the search results.

Linking

 refers to building hypertext links from one site to another site bypassing the home page. This is
obviously a major design feature and benefit of the Web.

Deep linking

 involves bypassing the target site’s home page and going directly to a content page.

Framing
  involves displaying the content of another Web site inside your own Web site within a frame or
window. The user never leaves the framer’s site and can be exposed to advertising while the
target site’s advertising is distorted or eliminated.

Challenge: Balancing the Protection of Property with Other Values

The challenge in intellectual property ethics and law is to ensure that creators of intellectual
property can receive the benefits of their inventions and works, while also making it possible for their
works and designs to be disseminated and used by the widest possible audience. Protections from
rampant theft of intellectual property inevitably lead to restrictions on distribution, and the payments to
creators for the use of their works— which in itself can slow down the distribution process. Without
these protections, however, and without the benefits that flow to creators of intellectual property, the
pace of innovation could decline. In

5.4 GOVERNANCE

Governance has to do with social control

The Department of Information and Communications Technology (abbreviated as DICT; Filipino:

Kagawaran ng Teknolohiyang Pang-Impormasyon at Komunikasyon)

 is the executive department of the Philippine government responsible for the planning,
development and promotion of the country's information and communications technology (ICT)
agenda in support of national development.

The following agencies are attached to the DICT for purposes of policy and program coordination:

 National Telecommunications Commission (NTC)

 National Privacy Commission

 Cybercrime Investigation and Coordination Center (CICC) Taxation

Net Neutrality

 “Net neutrality” is more a political slogan than a concept.

 It means different things to different people.

Currently, all Internet traffic is treated equally (or “neutrally”) by Internet backbone owners in the
sense that all activities and files—word processing, e-mailing, video downloading, music and video files,
etc.—are charged the same flat rate regardless of how much bandwidth is used.

There are three basic ways to achieve a rationing of bandwidth using the pricing mechanism:

Cap Plans (also known as “tiered plans”)

  Cap pricing plans place a cap on usage, say 300 gigabytes a month in a basic plan, with more
bandwidth available in 50-gigabyte chunks for, say, an additional $50 a month. The additional
increments can also be formalized as tiers where users agree to purchase, say, 400 gigabytes
each month as a Tier II plan. Additional tiers could be offered. A variation on tier pricing is to
offer speed tiers

Usage Metering

 An alternative to cap plans is metered or usage-based billing

One variation on metering is congestion pricing, where, as with electric “demand pricing,” the price
of bandwidth goes up at peak times, say, Saturday and Sunday evening from 6:00 P.M. to 12 midnight—
just when everyone wants to watch a movie

“highway” or “toll” pricing

 pricing where the firms that use high levels of bandwidth for their business pay a toll based on
their usage of the Internet.

Highway pricing is a common way for governments to charge trucking companies based on the
weight of their vehicles to compensate for the damage that heavy vehicles inflict on roadways.

Key Concepts

Understand why e-commerce raises ethical, social, and political issues.

Internet technology and its use in e-commerce disrupts existing social and business relationships
and understandings. Suddenly, individuals, business firms, and political institutions are confronted by
new possibilities of behavior for which understandings, laws, and rules of acceptable behavior have not
yet been developed. Many business firms and individuals are benefiting from the commercial
development of the Internet, but this development also has costs for individuals, organizations, and
societies. These costs and benefits must be carefully considered by those seeking to make ethical and
socially responsible decisions in this new environment, particularly where there are as yet no clear-cut
legal or cultural guidelines. Recognize the main ethical, social, and political issues raised by e-commerce.

The major issues raised by e-commerce can be loosely categorized into four major dimensions:

• Information rights—What rights do individuals have to control their own personal information when
Internet technologies make information collection so pervasive and efficient?

• Property rights—How can traditional intellectual property rights be enforced when perfect copies of
protected works can be made and easily distributed worldwide via the Internet?

• Governance—Should the Internet and e-commerce be subject to public laws? If so, what law-making
bodies have jurisdiction—state, federal, and/or international?
 • Public safety and welfare—What efforts should be undertaken to ensure equitable access to the
Internet and ecommerce channels? Do certain online content and activities pose a threat to public
safety and welfare?

Identify a process for analyzing ethical dilemmas.

Ethical, social, and political controversies usually present themselves as dilemmas. Ethical
dilemmas can be analyzed via the following process:

• Identify and clearly describe the facts.

• Define the conflict or dilemma and identify the higher-order values involved.

• Identify the stakeholders.

• Identify the options that you can reasonably take.

• Identify the potential consequences of your options.

• Refer to well-established ethical principles, such as the Golden Rule, Universalism, Descartes’ Rule of
Change, the Collective Utilitarian Principle, Risk Aversion, the No Free Lunch Rule, the New York Times
Test, and the Social Contract Rule to help you decide the matter.

Understand basic concepts related to privacy.

To understand the issues concerning online privacy, you must first understand some basic
concepts:

• Privacy is the moral right of individuals to be left alone, free from surveillance or interference from
others.

• Information privacy includes both the claim that certain information should not be collected at all by
governments or business firms, and the claim of individuals to control the use of information about
themselves.

• Due process as embodied by the Fair Information Practices doctrine, informed consent, and opt-
in/opt-out policies also plays an important role in privacy.

Identify the practices of e-commerce companies that threaten privacy.

Almost all e-commerce companies collect some personally identifiable information in addition
to anonymous information and use cookies to track clickstream behavior of visitors. Advertising
networks and search engines also track the behavior of consumers across thousands of popular sites,
not just at one site, via cookies, spyware, search engine behavioral targeting, and other techniques
Describe the different methods used to protect online privacy.
There are a number of different methods used to protect online privacy. They include:

• Legal protections deriving from constitutions, common law, federal law, state laws, and government
regulations.

• Industry self-regulation via industry alliances, such as the Online Privacy Alliance and the Network
Advertising Initiative, that seeks to gain voluntary adherence to industry privacy guidelines and safe
harbors. Some firms also hire chief privacy officers.

• Privacy-enhancing technological solutions include spyware and pop-up blockers, secure e-mail,
anonymous remailers, anonymous surfing, cookie managers, disk file-erasing programs, policy
generators, and public key encryption programs.

Understand the various forms of intellectual property and the challenge of protecting it.

There are three main types of intellectual property protection: copyright, patent, and
trademark law.

• Copyright law

Protects original forms of expression such as writings, drawings, and computer programs from
being copied by others for a minimum of 70 years. It does not protect ideas—just their expression in a
tangible medium.

“Look and feel” copyright infringement lawsuits are precisely about the distinction between an
idea and its expression. If there is only one way to express an idea, then the expression cannot be
copyrighted. Copyrights, like all rights, are not absolute. The doctrine of fair use permits certain parties
under certain circumstances to use copyrighted material without permission. The Digital Millennium
Copyright Act (DMCA) was the first major effort to adjust copyright law to the Internet age. The DMCA
implements a World Intellectual Property Organization treaty, which declares it illegal to make,
distribute, or use devices that circumvent technology-based protections of copyrighted materials, and
attaches stiff fines and prison sentences for violations.

• Patent law

Ggrants the owner of a patent an exclusive monopoly to the ideas behind an invention for 20
years. Patents are very different from copyrights in that they protect the ideas themselves and not
merely the expression of ideas. There are four types of inventions for which patents are granted under
patent law: machines, man-made products, compositions of matter, and processing methods. In order
to be granted a patent, the applicant must show that the invention is new, original, novel, nonobvious,
and not evident in prior arts and practice. Most of the inventions that make the Internet and e-
commerce possible were not patented by their inventors. This changed in the mid-1990s with the
commercial development of the World Wide Web. Business firms began applying for “business
methods” and software patents.

• Trademark protections
 The purpose of trademark law is twofold. First, trademark law protects the public in the
marketplace by ensuring that it gets what it pays for and wants to receive. Second, trademark law
protects the owner who has spent time, money, and energy bringing the product to market against
piracy and misappropriation.

Trademarks are granted for a period of 10 years and can be renewed indefinitely. Use of a
trademark that creates confusion with existing trademarks, causes consumers to make market mistakes,
or misrepresents the origins of goods is an infringement. In addition, the intentional misuse of words
and symbols in the marketplace to extort revenue from legitimate trademark owners (“bad faith”) is
proscribed.

The 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 to, or “dilutive” of, that trademark. Trademark abuse can take many forms on the Web.
The major behaviors on the Internet that have run afoul of trademark law include
cybersquatting, cyberpiracy, metatagging, keywording, linking, and framing.

Understand how governance of the Internet has evolved over time.

Governance has to do with social control: who will control e-commerce, what elements will be
controlled, and how the controls will be implemented.

Explain why taxation of e-commerce raises governance and jurisdiction issues.

E-commerce raises the issue of how—and if—to tax remote sales. The national and international
character of Internet sales has wreaked havoc on taxation schemes. E-commerce has benefited from a
tax subsidy since its inception. E-commerce merchants have argued that this new form of commerce
needs to be nurtured and encouraged, and that in any event, the crazy quilt of sales and use tax regimes
would be difficult to administer for Internet merchants.