Module 7
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Learning Objectives z Understand why e-commerce raises ethical, social, and political issues z Recognize the main ethical, social, and political issues raised by e-commerce z Identify a process for analyzing ethical dilemmas z Understand the basic concepts related to privacy z Describe the different methods used to protect online privacy z Understand the various forms of intellectual property and the challenge of protecting it z Understand how governance of the Internet has evolved over time z Explain why taxation of e-commerce raises governance and jurisdiction issues z Identify major public safety and welfare issues raised by ecommerce Copyright © 2004 Pearson Education, Inc
Understanding Ethical, Social, and Political Issues in E-commerce zInternet technology and its use in ecommerce disrupts existing social and business relationships and understandings zCosts and benefits of technology must be carefully considered, especially when there are as yet no clear-cut legal or cultural guidelines Copyright © 2004 Pearson Education, Inc
Unique Features of E-Commerce Technology and Their Potential Implications Table 9.1, Page 497
Copyright © 2004 Pearson Education, Inc
3
A Model for Organizing the Issues z Issues raised by Internet and e-commerce can be viewed at individual, social and political levels z Four major categories of issues 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 easily made and distributed? Governance: Should the Internet and e-commerce be subject to public laws, and if so, who has jurisdiction Public safety and welfare: What efforts should be taken to ensure equitable access to the Internet and e-commerce? Do certain online content and activities pose a threat to public safety and welfare? Copyright © 2004 Pearson Education, Inc
Basic Ethical Concepts z Ethics: Study of principles that individuals and organizations can use to determine right and wrong courses of action z Responsibility: As free moral agents, individuals, organizations and societies are responsible for the actions they take z Accountability: Individuals, organizations and societies should be held accountable to others for the consequences of their actions z Liability: Extends the concepts of responsibility and accountability to area of law z 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 Copyright © 2004 Pearson Education, Inc
Analyzing Ethical Dilemmas z Dilemma: Situation in which there are at least two diametrically opposed actions, each of which supports a desirable outcome z Process for analyzing ethical dilemmas: 1. Identify and describe clearly the facts 2. Define the conflict or dilemma and identify the higher-order values involved 3. Identify the stakeholders 4. Identify the options that you can reasonably take 5. Identify the potential consequences of your options Copyright © 2004 Pearson Education, Inc
E-commerce and Privacy z Major ethical issue related to e-commerce and privacy: Under what conditions should we invade privacy of others z Major social issue: Development of “expectations of privacy” and privacy norms z Major political issue: Development of statutes that govern relations between recordkeepers and individuals
Copyright © 2004 Pearson Education, Inc
Information Collected at E-commerce Sites z Personally identifiable information (PII): Data that can be used to identify, locate or contact an individual z Anonymous information: Demographic and behavioral information that does not include any personal identifiers z Almost all e-commerce companies collect PII and use cookies to track clickstream behavior. Many also allow third parties such as advertising networks to engage in profiling and track visitor browsing behaviour on the Web. Copyright © 2004 Pearson Education, Inc
Personal Information Collected by E-Commerce Sites Table 9.2, Page 505
Copyright © 2004 Pearson Education, Inc
9
The Internet’s Major Personally Identifiable Information Gathering Tools Table 9.3, Page 505
Copyright © 2004 Pearson Education, Inc
10
Profiling: Privacy and Advertising Networks z Profiling: Creation of digital images that characterize online individual and group behavior z Anonymous profiles: Identify people as belonging to highly specific and targeted groups z Personal profiles: Add personal identifiers z 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 © 2004 Pearson Education, Inc
The Concept of Privacy z Privacy: The moral right of individuals to be left alone, free from surveillance or interference from other individuals or organizations z 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 © 2004 Pearson Education, Inc
Informed Consent z Consent given with knowledge of all the material facts needed to make a rational decision z 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
z Many U.S. e-commerce firms merely publish information practices as part of privacy policy without providing for any form of informed consent z In addition, many posted privacy policies are difficult to understand. Copyright © 2004 Pearson Education, Inc
Sears’ vs. Yahoo’s Opt-In/Opt-Out Privacy Policy Table 9.5, Page 513
Copyright © 2004 Pearson Education, Inc
14
Legal Protections for Privacy zMay be explicitly granted or derived from constitutions (U.S., Canada, Germany) zMay also be found in common law (U.S, England) zIn U.S, also found in federal and state laws and regulations Copyright © 2004 Pearson Education, Inc
FTC’s Fair Information Practice Principles Table 9.7, Page 515
Copyright © 2004 Pearson Education, Inc
16
FTC Recommendations Regarding Online Profiling Table 9.8, Page 516
Copyright © 2004 Pearson Education, Inc
17
European Directive on Data Protection zPrivacy protection much stronger in Europe than in U.S. zEuropean approach: Comprehensive and regulatory in nature zEuropean Commission’s Directive on Data Protection: Standardizes and broadens privacy protection in European Union countries Copyright © 2004 Pearson Education, Inc
Technological Solutions to Privacy Invasion on the Web z Many privacy-enhancing technologies being developed emphasize security z Platform for Privacy Preferences (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 Copyright © 2004 Pearson Education, Inc
Technological Protections for Online Privacy Table 9.12, Page 523
Copyright © 2004 Pearson Education, Inc
20
How P3P Works Figure 9.3(A), Page 524
Copyright © 2004 Pearson Education, Inc
21
IE 6.0’s Implementation of P3P Figure 9.3(B), Page 525
Copyright © 2004 Pearson Education, Inc
22
Intellectual Property Rights z Intellectual property: Encompasses all tangible and intangible products of human mind z Major ethical issue: How should we treat property that belongs to others z Major social issue: Is there continued value in protecting intellectual property in the Internet age? z Major political issue: If, and if so, how, should Internet and e-commerce be regulated/governed to protect intellectual property z Main types of intellectual property protection: Copyright Patent Trademark law Copyright © 2004 Pearson Education, Inc
Copyright: The Problem of Perfect Copies and Encryption z Copyright law: Protects original forms of expression (but not ideas) from being copied by others for a period of time z Look and feel copyright infringement lawsuits involve distinction between an idea and its expression z Fair use doctrine: Under certain circumstances, permits use of copyrighted materials without permission z Digital Millennium Copyright Act of 1998 (DMCA): First major effort to adjust copyright laws to Internet age z DMCA implements WIPO treaty that makes it illegal to make, distribute, or use devices that circumvent technology-based protections of copyrighted materials Copyright © 2004 Pearson Education, Inc
Fair Use Considerations to Copyright Protections Table 9.13, Page 530
Copyright © 2004 Pearson Education, Inc
25
Patents: Business Methods and Processes z Patent: Grants owner a 20-year exclusive monopoly on ideas behind an invention z Most of early inventions that made Internet and ecommerce possible were not patented by their inventors z With commercial development of Internet, came desire for patents z Business methods patents have been widely sought by Internet and e-commerce companies z Many business methods Internet patents granted are overbroad, and if enforced, would significantly impact e-commerce Copyright © 2004 Pearson Education, Inc
Trademarks: Online Infringement and Dilution z Trademark: Mark used to identify and distinguish goods, and indicate their source z Trademarks protect public by ensuring it gets what it pays for/expects to receive; protects trademark owner against piracy and misappropriation z Infringement: Use of a trademark that creates confusion with existing marks, causes consumers to make market mistakes or misrepresents origins of goods z 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 Copyright © 2004 Pearson Education, Inc
Types of Trademark Abuse on Internet z Cybersquatting: Registration of infringing domain name, or other Internet use, of existing trademark, for purpose of extorting payments from legitimate owners z Cyberpiracy: Involves same behavior as cybersquatting, but with intent of diverting traffic from legitimate site to infringing site z Metatagging: Using another’s trademarks as metatags in a misleading or confusing manner z Keywording: Using another’s trademarks as keywords on search engines in a misleading or confusing manner z Deep linking: Bypassing target site’s home page and going directly to content page z Framing: Displaying content of another site within frame or window Copyright © 2004 Pearson Education, Inc
Governance zInvolves issue of social control zPrimary questions: Who will control Internet and e-commerce What elements will be controlled and how
Copyright © 2004 Pearson Education, Inc
Who Governs E-commerce and the Internet? z 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 z 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)
Copyright © 2004 Pearson Education, Inc
Taxation z Issue of taxation of e-commerce sales illustrates complexity of governance and jurisdiction issues z National and international character of Internet sales wreaking havoc on traditional taxation schemes in U.S. based on local commerce and local jurisdictions z Unlikely that comprehensive, integrated rational approach to taxation issue will be determined for some time to come Copyright © 2004 Pearson Education, Inc
Public Safety and Welfare Issues z Protection of children and strong sentiments against pornography z Control/Censorship of certain material {EBay taken to court in France to remove Nazi related items from auctions. {Germany doesn’t permit the sale of video games with violent content.
z Equity and the Digital Divide (differences in Internet and e-commerce access among income, ethnic, and age groups) Copyright © 2004 Pearson Education, Inc
Understanding Ethical, Social, and Political Issues in E-commerce zInternet technology and its use in ecommerce disrupts existing social and business relationships and understandings zCosts and benefits of technology must be carefully considered, especially when there are as yet no clear-cut legal or cultural guidelines Copyright © 2004 Pearson Education, Inc
Unique Features of E-Commerce Technology and Their Potential Implications Table 9.1, Page 497
Copyright © 2004 Pearson Education, Inc
3
A Model for Organizing the Issues z Issues raised by Internet and e-commerce can be viewed at individual, social and political levels z Four major categories of issues 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 easily made and distributed? Governance: Should the Internet and e-commerce be subject to public laws, and if so, who has jurisdiction Public safety and welfare: What efforts should be taken to ensure equitable access to the Internet and e-commerce? Do certain online content and activities pose a threat to public safety and welfare? Copyright © 2004 Pearson Education, Inc
Basic Ethical Concepts z Ethics: Study of principles that individuals and organizations can use to determine right and wrong courses of action z Responsibility: As free moral agents, individuals, organizations and societies are responsible for the actions they take z Accountability: Individuals, organizations and societies should be held accountable to others for the consequences of their actions z Liability: Extends the concepts of responsibility and accountability to area of law z 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 Copyright © 2004 Pearson Education, Inc
Analyzing Ethical Dilemmas z Dilemma: Situation in which there are at least two diametrically opposed actions, each of which supports a desirable outcome z Process for analyzing ethical dilemmas: 1. Identify and describe clearly the facts 2. Define the conflict or dilemma and identify the higher-order values involved 3. Identify the stakeholders 4. Identify the options that you can reasonably take 5. Identify the potential consequences of your options Copyright © 2004 Pearson Education, Inc
E-commerce and Privacy z Major ethical issue related to e-commerce and privacy: Under what conditions should we invade privacy of others z Major social issue: Development of “expectations of privacy” and privacy norms z Major political issue: Development of statutes that govern relations between recordkeepers and individuals
Copyright © 2004 Pearson Education, Inc
Information Collected at E-commerce Sites z Personally identifiable information (PII): Data that can be used to identify, locate or contact an individual z Anonymous information: Demographic and behavioral information that does not include any personal identifiers z Almost all e-commerce companies collect PII and use cookies to track clickstream behavior. Many also allow third parties such as advertising networks to engage in profiling and track visitor browsing behaviour on the Web. Copyright © 2004 Pearson Education, Inc
Personal Information Collected by E-Commerce Sites Table 9.2, Page 505
Copyright © 2004 Pearson Education, Inc
9
The Internet’s Major Personally Identifiable Information Gathering Tools Table 9.3, Page 505
Copyright © 2004 Pearson Education, Inc
10
Profiling: Privacy and Advertising Networks z Profiling: Creation of digital images that characterize online individual and group behavior z Anonymous profiles: Identify people as belonging to highly specific and targeted groups z Personal profiles: Add personal identifiers z 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 © 2004 Pearson Education, Inc
The Concept of Privacy z Privacy: The moral right of individuals to be left alone, free from surveillance or interference from other individuals or organizations z 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 © 2004 Pearson Education, Inc
Informed Consent z Consent given with knowledge of all the material facts needed to make a rational decision z 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
z Many U.S. e-commerce firms merely publish information practices as part of privacy policy without providing for any form of informed consent z In addition, many posted privacy policies are difficult to understand. Copyright © 2004 Pearson Education, Inc
Sears’ vs. Yahoo’s Opt-In/Opt-Out Privacy Policy Table 9.5, Page 513
Copyright © 2004 Pearson Education, Inc
14
Legal Protections for Privacy zMay be explicitly granted or derived from constitutions (U.S., Canada, Germany) zMay also be found in common law (U.S, England) zIn U.S, also found in federal and state laws and regulations Copyright © 2004 Pearson Education, Inc
FTC’s Fair Information Practice Principles Table 9.7, Page 515
Copyright © 2004 Pearson Education, Inc
16
FTC Recommendations Regarding Online Profiling Table 9.8, Page 516
Copyright © 2004 Pearson Education, Inc
17
European Directive on Data Protection zPrivacy protection much stronger in Europe than in U.S. zEuropean approach: Comprehensive and regulatory in nature zEuropean Commission’s Directive on Data Protection: Standardizes and broadens privacy protection in European Union countries Copyright © 2004 Pearson Education, Inc
Technological Solutions to Privacy Invasion on the Web z Many privacy-enhancing technologies being developed emphasize security z Platform for Privacy Preferences (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 Copyright © 2004 Pearson Education, Inc
Technological Protections for Online Privacy Table 9.12, Page 523
Copyright © 2004 Pearson Education, Inc
20
How P3P Works Figure 9.3(A), Page 524
Copyright © 2004 Pearson Education, Inc
21
IE 6.0’s Implementation of P3P Figure 9.3(B), Page 525
Copyright © 2004 Pearson Education, Inc
22
Intellectual Property Rights z Intellectual property: Encompasses all tangible and intangible products of human mind z Major ethical issue: How should we treat property that belongs to others z Major social issue: Is there continued value in protecting intellectual property in the Internet age? z Major political issue: If, and if so, how, should Internet and e-commerce be regulated/governed to protect intellectual property z Main types of intellectual property protection: Copyright Patent Trademark law Copyright © 2004 Pearson Education, Inc
Copyright: The Problem of Perfect Copies and Encryption z Copyright law: Protects original forms of expression (but not ideas) from being copied by others for a period of time z Look and feel copyright infringement lawsuits involve distinction between an idea and its expression z Fair use doctrine: Under certain circumstances, permits use of copyrighted materials without permission z Digital Millennium Copyright Act of 1998 (DMCA): First major effort to adjust copyright laws to Internet age z DMCA implements WIPO treaty that makes it illegal to make, distribute, or use devices that circumvent technology-based protections of copyrighted materials Copyright © 2004 Pearson Education, Inc
Fair Use Considerations to Copyright Protections Table 9.13, Page 530
Copyright © 2004 Pearson Education, Inc
25
Patents: Business Methods and Processes z Patent: Grants owner a 20-year exclusive monopoly on ideas behind an invention z Most of early inventions that made Internet and ecommerce possible were not patented by their inventors z With commercial development of Internet, came desire for patents z Business methods patents have been widely sought by Internet and e-commerce companies z Many business methods Internet patents granted are overbroad, and if enforced, would significantly impact e-commerce Copyright © 2004 Pearson Education, Inc
Trademarks: Online Infringement and Dilution z Trademark: Mark used to identify and distinguish goods, and indicate their source z Trademarks protect public by ensuring it gets what it pays for/expects to receive; protects trademark owner against piracy and misappropriation z Infringement: Use of a trademark that creates confusion with existing marks, causes consumers to make market mistakes or misrepresents origins of goods z 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 Copyright © 2004 Pearson Education, Inc
Types of Trademark Abuse on Internet z Cybersquatting: Registration of infringing domain name, or other Internet use, of existing trademark, for purpose of extorting payments from legitimate owners z Cyberpiracy: Involves same behavior as cybersquatting, but with intent of diverting traffic from legitimate site to infringing site z Metatagging: Using another’s trademarks as metatags in a misleading or confusing manner z Keywording: Using another’s trademarks as keywords on search engines in a misleading or confusing manner z Deep linking: Bypassing target site’s home page and going directly to content page z Framing: Displaying content of another site within frame or window Copyright © 2004 Pearson Education, Inc
Governance zInvolves issue of social control zPrimary questions: Who will control Internet and e-commerce What elements will be controlled and how
Copyright © 2004 Pearson Education, Inc
Who Governs E-commerce and the Internet? z 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 z 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)
Copyright © 2004 Pearson Education, Inc
Taxation z Issue of taxation of e-commerce sales illustrates complexity of governance and jurisdiction issues z National and international character of Internet sales wreaking havoc on traditional taxation schemes in U.S. based on local commerce and local jurisdictions z Unlikely that comprehensive, integrated rational approach to taxation issue will be determined for some time to come Copyright © 2004 Pearson Education, Inc
Public Safety and Welfare Issues z Protection of children and strong sentiments against pornography z Control/Censorship of certain material {EBay taken to court in France to remove Nazi related items from auctions. {Germany doesn’t permit the sale of video games with violent content.
z Equity and the Digital Divide (differences in Internet and e-commerce access among income, ethnic, and age groups) Copyright © 2004 Pearson Education, Inc
