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8.1 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. Entire sections of daily newspapers and weekly magazines are devoted to the social impact of the Internet. But why is this so? 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. Internet technology and its use in e-commerce disrupt existing social and business relationships and understandings.

Consider for instance Table 1.2 (in Chapter 1 ), which lists the unique features of Internet technology. Instead of considering the business consequences of each unique feature, Table 8.1 examines the actual or potential ethical, social, and/or political consequences of the technology.

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. These costs and benefits must be carefully considered by those seeking to make ethical and socially responsible decisions in this new environment. The question is: How can you as a manager make reasoned judgments about what your firm should do in a number of e-commerce areas—from securing the privacy of your customer’s clickstream to ensuring the integrity of your company’s domain name?

Table 8.1 Unique Features of E-Commerce Technology and their Potential Ethical, Social, and/or Political Implications

E-Commerce Technology Dimension	Potential Ethical, Social, and Political Significance
Ubiquity—Internet/Web technology is available everywhere: at work, at home, and elsewhere via mobile devices, anytime.	Work and shopping can invade family life; shopping can distract workers at work, lowering productivity; use of mobile devices can lead to automobile and industrial accidents. Presents confusing issues of “nexus” to taxation authorities.
Global reach—The technology reaches across national boundaries, around the Earth.	Reduces cultural diversity in products; weakens local small firms while strengthening large global firms; moves manufacturing production to low-wage areas of the world; weakens the ability of all nations—large and small—to control their information destiny.
Universal standards—There is one set of technology standards, namely Internet standards.	Increases vulnerability to viruses and hacking attacks worldwide, affecting millions of people at once. Increases the likelihood of “information” crime, crimes against systems, and deception.
Richness—Video, audio, and text messages are possible.	A “screen technology” that reduces use of text and potentially the ability to read by focusing instead on video and audio messages. Potentially very persuasive messages that may reduce reliance on multiple independent sources of information.
Interactivity—The technology works through interaction with the user.	The nature of interactivity at commercial sites can be shallow and meaningless. Customer e-mails are frequently not read by human beings. Customers do not really “co-produce” the product as much as they “co-produce” the sale. The amount of “customization” of products that occurs is minimal, occurring within predefined platforms and plug-in options.
Information density—The technology reduces information costs, and raises quality.	While the total amount of information available to all parties increases, so does the possibility of false and misleading information, unwanted information, and invasion of solitude. Trust, authenticity, accuracy, completeness, and other quality features of information can be degraded. The ability of individuals and organizations to make sense out of this plethora of information is limited.
Personalization/Customization—The technology allows personalized messages to be delivered to individuals as well as groups.	Opens up the possibility of intensive invasion of privacy for commercial and governmental purposes that is unprecedented.
Social technology—The technology enables user content generation and social networking.	Creates opportunities for cyberbullying, abusive language, and predation; challenges concepts of privacy, fair use, and consent to use posted information; creates new opportunities for surveillance by authorities and corporations into private lives.

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 e-commerce is shown in Figure 8.1 . 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 e-commerce over the past 10 years can be loosely categorized into four major dimensions: information rights, property rights, governance, and public safety and welfare.

8.1 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. Entire sections of daily newspapers and weekly magazines are devoted to the social impact of the Internet. But why is this so? 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. Internet technology and its use in e-commerce disrupt existing social and business relationships and understandings.

Consider for instance Table 1.2 (in Chapter 1 ), which lists the unique features of Internet technology. Instead of considering the business consequences of each unique feature, Table 8.1 examines the actual or potential ethical, social, and/or political consequences of the technology.

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. These costs and benefits must be carefully considered by those seeking to make ethical and socially responsible decisions in this new environment. The question is: How can you as a manager make reasoned judgments about what your firm should do in a number of e-commerce areas—from securing the privacy of your customer’s clickstream to ensuring the integrity of your company’s domain name?

Table 8.1 Unique Features of E-Commerce Technology and their Potential Ethical, Social, and/or Political Implications

E-Commerce Technology Dimension	Potential Ethical, Social, and Political Significance
Ubiquity—Internet/Web technology is available everywhere: at work, at home, and elsewhere via mobile devices, anytime.	Work and shopping can invade family life; shopping can distract workers at work, lowering productivity; use of mobile devices can lead to automobile and industrial accidents. Presents confusing issues of “nexus” to taxation authorities.
Global reach—The technology reaches across national boundaries, around the Earth.	Reduces cultural diversity in products; weakens local small firms while strengthening large global firms; moves manufacturing production to low-wage areas of the world; weakens the ability of all nations—large and small—to control their information destiny.
Universal standards—There is one set of technology standards, namely Internet standards.	Increases vulnerability to viruses and hacking attacks worldwide, affecting millions of people at once. Increases the likelihood of “information” crime, crimes against systems, and deception.
Richness—Video, audio, and text messages are possible.	A “screen technology” that reduces use of text and potentially the ability to read by focusing instead on video and audio messages. Potentially very persuasive messages that may reduce reliance on multiple independent sources of information.
Interactivity—The technology works through interaction with the user.	The nature of interactivity at commercial sites can be shallow and meaningless. Customer e-mails are frequently not read by human beings. Customers do not really “co-produce” the product as much as they “co-produce” the sale. The amount of “customization” of products that occurs is minimal, occurring within predefined platforms and plug-in options.
Information density—The technology reduces information costs, and raises quality.	While the total amount of information available to all parties increases, so does the possibility of false and misleading information, unwanted information, and invasion of solitude. Trust, authenticity, accuracy, completeness, and other quality features of information can be degraded. The ability of individuals and organizations to make sense out of this plethora of information is limited.
Personalization/Customization—The technology allows personalized messages to be delivered to individuals as well as groups.	Opens up the possibility of intensive invasion of privacy for commercial and governmental purposes that is unprecedented.
Social technology—The technology enables user content generation and social networking.	Creates opportunities for cyberbullying, abusive language, and predation; challenges concepts of privacy, fair use, and consent to use posted information; creates new opportunities for surveillance by authorities and corporations into private lives.

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 e-commerce is shown in Figure 8.1 . 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 e-commerce over the past 10 years can be loosely categorized into four major dimensions: information rights, property rights, governance, and public safety and welfare.

Figure 8.1 The Moral Dimensions of an Internet Society

The introduction of the Internet and e-commerce impacts individuals, societies, and political institutions. These impacts can be classified into four moral dimensions: property rights, information 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?

8.1 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. Entire sections of daily newspapers and weekly magazines are devoted to the social impact of the Internet. But why is this so? 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. Internet technology and its use in e-commerce disrupt existing social and business relationships and understandings.

Consider for instance Table 1.2 (in Chapter 1 ), which lists the unique features of Internet technology. Instead of considering the business consequences of each unique feature, Table 8.1 examines the actual or potential ethical, social, and/or political consequences of the technology.

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. These costs and benefits must be carefully considered by those seeking to make ethical and socially responsible decisions in this new environment. The question is: How can you as a manager make reasoned judgments about what your firm should do in a number of e-commerce areas—from securing the privacy of your customer’s clickstream to ensuring the integrity of your company’s domain name?

Table 8.1 Unique Features of E-Commerce Technology and their Potential Ethical, Social, and/or Political Implications

E-Commerce Technology Dimension	Potential Ethical, Social, and Political Significance
Ubiquity—Internet/Web technology is available everywhere: at work, at home, and elsewhere via mobile devices, anytime.	Work and shopping can invade family life; shopping can distract workers at work, lowering productivity; use of mobile devices can lead to automobile and industrial accidents. Presents confusing issues of “nexus” to taxation authorities.
Global reach—The technology reaches across national boundaries, around the Earth.	Reduces cultural diversity in products; weakens local small firms while strengthening large global firms; moves manufacturing production to low-wage areas of the world; weakens the ability of all nations—large and small—to control their information destiny.
Universal standards—There is one set of technology standards, namely Internet standards.	Increases vulnerability to viruses and hacking attacks worldwide, affecting millions of people at once. Increases the likelihood of “information” crime, crimes against systems, and deception.
Richness—Video, audio, and text messages are possible.	A “screen technology” that reduces use of text and potentially the ability to read by focusing instead on video and audio messages. Potentially very persuasive messages that may reduce reliance on multiple independent sources of information.
Interactivity—The technology works through interaction with the user.	The nature of interactivity at commercial sites can be shallow and meaningless. Customer e-mails are frequently not read by human beings. Customers do not really “co-produce” the product as much as they “co-produce” the sale. The amount of “customization” of products that occurs is minimal, occurring within predefined platforms and plug-in options.
Information density—The technology reduces information costs, and raises quality.	While the total amount of information available to all parties increases, so does the possibility of false and misleading information, unwanted information, and invasion of solitude. Trust, authenticity, accuracy, completeness, and other quality features of information can be degraded. The ability of individuals and organizations to make sense out of this plethora of information is limited.
Personalization/Customization—The technology allows personalized messages to be delivered to individuals as well as groups.	Opens up the possibility of intensive invasion of privacy for commercial and governmental purposes that is unprecedented.
Social technology—The technology enables user content generation and social networking.	Creates opportunities for cyberbullying, abusive language, and predation; challenges concepts of privacy, fair use, and consent to use posted information; creates new opportunities for surveillance by authorities and corporations into private lives.

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 e-commerce is shown in Figure 8.1 . 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 e-commerce 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?

To illustrate, imagine that at any given moment, society and individuals are more or less in an ethical equilibrium brought about by a delicate balancing of individuals, social organizations, and political institutions. Individuals know what is expected of them, social organizations such as business firms know their limits, capabilities, and roles, and political institutions provide a supportive framework of market regulation, banking, and commercial law that provides sanctions against violators.

Now, imagine we drop into the middle of this calm setting a powerful new technology such as the Internet and e-commerce. Suddenly, individuals, business firms, and political institutions are confronted by new possibilities of behavior. For instance, individuals discover that they can download perfect digital copies of music tracks from Web sites without paying anyone, something that, under the old technology of CDs, would have been impossible. This can be done, despite the fact that these music tracks still legally belong to the owners of the copyright—musicians and record label companies. Then, business firms discover that they can make a business out of aggregating these digital musical tracks—or creating a mechanism for sharing musical tracks—even though they do not “own” them in the traditional sense. The record companies, courts, and Congress were not prepared at first to cope with the onslaught of online digital copying. Courts and legislative bodies will have to make new laws and reach new judgments about who owns digital copies of copyrighted works and under what conditions such works can be “shared.” It may take years to develop new understandings, laws, and acceptable behavior in just this one area of social impact. In the meantime, as an individual and a manager, you will have to decide what you and your firm should do in legal “gray” areas, where there is conflict between ethical principles but no clear-cut legal or cultural guidelines. How can you make good decisions in this type of situation?

Before examining the four moral dimensions of e-commerce in greater depth, we will briefly review some basic concepts of ethical reasoning that you can use as a guide to ethical decision making, and provide general reasoning principles about the social and political issues of the Internet that you will face in the future.

Basic Ethical Concepts: Responsibility, Accountability, and Liability

Ethics is at the heart of social and political debates about the Internet. Ethics is 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. When faced with alternative courses of action, what is the correct moral choice? Extending ethics from individuals to business firms and even entire societies can be difficult, but it is not impossible. As long as there is a decision-making body or individual (such as a board of directors or CEO in a business firm, or a governmental body in a society), their decisions can be judged against a variety of ethical principles.

ethics

the study of principles that individuals and organizations can use to determine right and wrong courses of action

If you understand some basic ethical principles, your ability to reason about larger social and political debates will be improved. In western culture, there are four basic principles that all ethical schools of thought share: responsibility, accountability, liability, and due process. Responsibility means that as free moral agents, individuals, organizations, and societies are responsible for the actions they take. Accountability means that individuals, organizations, and societies should be held accountable to others for the consequences of their actions. The third principle—liability—extends the concepts of responsibility and accountability to the area of law. 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 is 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.

responsibility

as free moral agents, individuals, organizations, and societies are responsible for the actions they take

accountability

individuals, organizations, and societies should be held accountable to others for the consequences of their actions

liability

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

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

You can use these concepts immediately to understand some contemporary Internet debates. For instance, consider the 2005 U.S. Supreme Court decision in the case of Metro-Goldwyn-Mayer Studios v. Grokster, et al. MGM had sued Grokster and other P2P networks for copyright infringement. The court decided that because the primary and intended use of Internet P2P file-sharing services such as Grokster, StreamCast, and Kazaa was the swapping of copyright-protected music and video files, the file-sharing services should be held accountable and shut down. Although Grokster and the other networks acknowledged that the most common use of the software was for illegal digital music file-swapping, they argued that there were substantial, nontrivial uses of the same networks for legally sharing files. They also argued they should not be held accountable for what individuals do with their software, any more than Sony could be held accountable for how people use VCRs, or Xerox for how people use copying machines. Ultimately, the Supreme Court ruled that Grokster and other P2P networks could be held accountable for the illegal actions of their users if it could be shown that they intended their software to be used for illegal downloading and sharing, and had marketed the software for that purpose. The court relied on copyright laws to arrive at its decisions, but these laws reflect some basic underlying ethical principles of responsibility, accountability, and liability.

Underlying the Grokster Supreme Court decision is a fundamental rejection of the notion that the Internet is an ungoverned “Wild West” environment that cannot be controlled. Under certain defined circumstances, the courts will intervene into the uses of the Internet. No organized civilized society has ever accepted the proposition that technology can flaunt basic underlying social and cultural values. Through all of the industrial and technological developments that have taken place, societies have intervened by means of legal and political decisions to ensure that the technology serves socially acceptable ends without stifling the positive consequences of innovation and wealth creation. The Internet in this sense is no different, and we can expect societies around the world to exercise more regulatory control over the Internet and e-commerce in an effort to arrive at a new balance between innovation and wealth creation, on the one hand, and other socially desirable objectives on the other. This is a difficult balancing act, and reasonable people will arrive at different conclusions.

Analyzing Ethical Dilemmas

Ethical, social, and political controversies usually present themselves as dilemmas. A dilemma is a situation in which there are at least two diametrically opposed actions, each of which supports a desirable outcome. When confronted with a situation that seems to present an ethical dilemma, how can you analyze and reason about the situation? The following is a five-step process that should help:

dilemma

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

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). For example, supporters of the use of advertising networks such as DoubleClick argue that the tracking of consumer movements on the Web increases market efficiency and the wealth of the entire society. Opponents argue this claimed efficiency comes at the expense of individual privacy, and advertising networks should cease their activities or offer Web users the option of not participating in such tracking.

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

Although you are the only one who can decide which ethical principles you will follow and how you will prioritize them, it is helpful to consider some ethical principles with deep roots in many cultures that have survived throughout recorded history:

· 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.

None of these rules is an absolute guide, and there are exceptions and logical difficulties with all of them. Nevertheless, actions that do not easily pass these guidelines deserve some very close attention and a great deal of caution because the appearance of unethical behavior may do as much harm to you and your company as the actual behavior.

Now that you have an understanding of some basic ethical reasoning concepts, let’s take a closer look at each of the major types of ethical, social, and political debates that have arisen in e-commerce.