week 7 BUS320: E-Commerce and E-Business

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E-commerce 2019: Business. Technology. Society.

Fifteenth Edition

Chapter 8

Ethical, Social, and Political Issues in E-commerce

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Learning Objectives

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

8.2 Understand basic concepts related to privacy and information rights, the practices of e-commerce companies that threaten privacy, and the different methods that can be used to protect online privacy.

8.3 Understand the various forms of intellectual property and the challenges involved in protecting it.

8.4 Understand how the Internet is governed and why taxation of e-commerce raises governance and jurisdiction issues.

8.5 Identify major public safety and welfare issues raised by e-commerce.

Slide 2 is list of textbook LO numbers and statements

The Right to Be Forgotten: Europe Leads on Internet Privacy

Class Discussion

Is Google responsible for the accuracy of links to other information? Why or why not?

Why do European and American views on privacy protection differ so dramatically?

How can the different perspectives on privacy be managed in a global environment like the Internet?

Understanding Ethical, Social, and Political Issues in E-commerce

Internet, like other technologies, can:

Enable new crimes

Affect environment

Threaten social values

Costs and benefits must be carefully considered, especially when there are no clear-cut legal or cultural guidelines

A Model for Organizing the Issues

Issues raised by Internet and e-commerce can be viewed at individual, social, and political levels

Four major categories of issues:

Information rights

Property rights

Governance

Public safety and welfare

Figure 8.1 The Moral Dimensions of an Internet Society

Figure 8.1, Page 506

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.

Full description: A diagram shows the moral dimensions of an Internet society. A bull’s-eye diagram has the center labeled The Internet and E-commerce. From the center to periphery, three surrounding circles are labeled Ethical Issues and Individual, Social Issues and Society, and Political Issues and Polity. The area surrounding the circles is divided into four quadrants. Top left quadrant is labeled Information Rights. Top right quadrant is labeled Property Rights. Bottom right quadrant is labeled as Governance, and bottom left quadrant is labeled as Public Safety and Welfare.

Basic Ethical Concepts

Ethics

Study of principles used to determine right and wrong courses of action

Responsibility

Accountability

Liability

Laws permitting individuals to recover damages

Due process

Laws are known, understood

Ability to appeal to higher authorities to ensure laws applied correctly

Analyzing Ethical Dilemmas

Process for analyzing ethical dilemmas:

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

Candidate Ethical Principles

Golden Rule

Universalism

Slippery Slope

Collective Utilitarian Principle

Risk Aversion

No Free Lunch

The New York Times Test

The Social Contract Rule

Privacy and Information Rights

Privacy

Moral right of individuals to be left alone, free from surveillance or interference from other individuals, organizations, or state

Information privacy: 4 premises

Right to control information collected about them

“Right to be forgotten”

Right to know when information is collected and give consent

“Informed consent”

Right to personal information due process

Right to have personal information stored in a secure manner

Table 8.2 The F T C’s Fair Information Practice Principles

Principle	Description
Notice/Awareness (core principle)	Sites must disclose their information practices before collecting data. Includes identification of collector, uses of data, other recipients of data, nature of collection (active/inactive), voluntary or required, consequences of refusal, and steps taken to protect confidentiality, integrity, and quality of the data.
Choice/Consent (core principle)	There must be a choice regime in place allowing consumers to choose how their information will be used for secondary purposes other than supporting the transaction, including internal use and transfer to third parties. Opt-in/opt-out must be available.
Access/Participation	Consumers should be able to review and contest the accuracy and completeness of data collected about them in a timely, inexpensive process.
Security	Data collectors must take reasonable steps to assure that consumer information is accurate and secure from unauthorized use.
Enforcement	There must be a mechanism to enforce F I P principles in place. This can involve self-regulation, legislation giving consumers legal remedies for violations, or federal statutes and regulation.

Privacy in The Public Sector: Privacy Rights of Citizens

Public sector privacy rights have long history

First Amendment

Fourth Amendment

Fourteenth Amendment

Constitutional, implied privacy rights did not cover collection and use of personal information

1974 Privacy Act

Federal and state law to protect individuals against unreasonable government intrusion

Privacy in The Private Sector: Privacy Rights of Consumers

Privacy issues rose with first large-scale, nationwide computerized systems

Credit card systems, credit rating agencies

Piecemeal federal and state privacy legislation, applying to specific industries

Spoke versus Robins: what harm must be shown in order to sue?

Historically, few claims to privacy in public, open markets such as in e-commerce

Emergence of Internet has created enormous collections of personal data

Ideal environment for business and government to invade personal privacy of consumers

Google, Amazon, Netflix, etc.

Information Collected by Websites

Data collected includes

Personally identifiable information (P I I)

Anonymous information

Types of data collected

Name, address, phone, e-mail, social security

Bank and credit accounts, gender, age, occupation, education

Preference data, transaction data, clickstream data, browser type

Key Issues in Online Privacy of Consumers

Top concerns

Profiling and ad targeting

Social network privacy

Sharing of information by marketers

Mobile phone privacy

Digital assistant privacy

Marketing: Profiling, Behavioral Targeting, and Retargeting (1 of 2)

Profiling

Creation of data images that characterize online individual and group behavior

Anonymous profiles

Personal profiles

Facial recognition a new dimension

Advertising networks

Track consumer and browsing behavior on Web

Dynamically adjust what user sees on screen

Build and refresh profiles of consumers

Google’s new privacy policy

Marketing: Profiling, Behavioral Targeting, and Retargeting (2 of 2)

Business perspective:

Increases effectiveness of advertising, subsidizes content

Enables sensing of demand for new products

Critics’ perspective:

Undermines expectation of anonymity and privacy

Enables price discrimination

Social Networks: Privacy and Self-Revelation

Social networks

Encourage sharing personal details

Pose unique challenge to maintaining privacy

Facebook

Massive database

Serving ads to users not on Facebook

Sharing information with third parties

Personal control over personal information versus Organization’s desire to monetize social network

Mobile Devices: Privacy Issues

Mobile apps

Funnel personal information to mobile advertisers for targeting ads

Track and store user locations

Track users’ use of other apps

Persistent location tracking

U.S. Supreme Court rules that police need warrant prior to searching a cell phone for information

Consumer Privacy Regulation: the F T C (1 of 2)

Fair Information Practice (F I P) principles

Informed consent: Opt-in and opt-out

Harm-based approach

“Do Not Track” mechanism

Recent emphasis is to give consumer rights regarding collected personal information

Consumer Privacy Regulation: the F T C (2 of 2)

F T C’s current privacy framework

Scope:

Applies to all commercial entities

Privacy by Design:

Companies should promote consumer privacy throughout the organization and at all stages in the development of products

Simplified Choice

Companies should simplify consumer choice

Greater Transparency

Consumer Privacy Regulation: the Federal Communications Commission (F C C)

2015 classification of broadband I S P s as similar to public utility services and subject to F C C regulation

2016 F C C approved new privacy rules for broadband I S P s

Must notify users of privacy options or obtain user consent to collect information

Service cannot be contingent on users surrendering privacy

2017 Congress voted to repeal privacy rules for broadband I S P s

Privacy Policies

Website Terms of Use Notices

Recent study showed these polices would take average reader 8 hours to read policies

Have conflicting statements

Little oversight and comparison between policies of different companies

Privacy Protection in Europe (1 of 2)

European privacy protection much stronger than in U.S

2016 General Data Protection Regulation (GDPR)

Replaces Data Protection Directive of 1998

Applies to all organizations that operate in EU

Protects wide variety of PII

Strengthens citizens’ rights to their own personal data

Strengthens oversight of firms to ensure compliance

Environment has turned against U.S. firms like Facebook and unfettered collection and use of personal data

Industry Self-Regulation

Privacy seal programs

Network Advertising Initiative (N A I)

Ad Choices Program

In general, self-regulation has not succeeded in reducing American fears of privacy invasion or reducing the level of privacy invasion

Technology Solutions

Solutions include

Intelligent Tracking Protection (I T P)

Differential privacy software

Privacy default browsers

Message encryption

Spyware blockers

Pop-up blockers and ad blockers

Secure e-mail, anonymous remailers

Cookie managers

Public key encryption

Privacy Protection

Privacy protection as a business

Personal Data Economy (P D E)

Internet of Me

Life Management tools

Privacy advocacy groups

Limitations on The Right to Privacy (1 of 2)

Law enforcement and surveillance

Edward Snowden and NSA Prism program

Legislation that strengthens ability of law enforcement to monitor Internet users without their knowledge

CALEA, USA Patriot Act, Cyber Security Enhancement Act, Homeland Security Act, USA Freedom

Limitations on The Right to Privacy (2 of 2)

Apple’s iPhone 6 and encryption controversy

Supreme Court cases limiting law enforcement’s ability to obtain data from mobile phones without a warrant

Riley versus California

United States versus Jones

Use of personal data by government agencies is widespread

Insight on Technology: Apple: Defender of Privacy?

Class Discussion

Are there circumstances that warrant the invasion of personal digital information and property?

Is the All Writs Act of 1789 applicable to today’s technology-driven privacy issues?

Should citizens charged with a crime or convicted criminals have any rights to privacy?

How does Apple’s views on privacy differ from those of Facebook’s and Google’s?

Intellectual Property Rights

Intellectual property:

All tangible and intangible products of human mind

Major ethical issue:

How should we treat property that belongs to others?

Major social issue:

Is there continued value in protecting intellectual property in the Internet age?

Major political issue:

How can Internet and e-commerce be regulated or governed to protect intellectual property?

Intellectual Property Protection

Main types of protection:

Patent

Trademark law

Trade secrets law

Goal of intellectual property law:

Balance two competing interests-public and private

Maintaining this balance of interests is always challenged by the invention of new technologies

Protects original forms of expression (not ideas) from being copied by others for a period of time

Fair use doctrine

First major effort to adjust copyright laws to Internet age

Implements W I P O treaty that makes it illegal to make, distribute, or use devices that circumvent technology-based protections of copyrighted materials

Safe-harbor provisions

Patents

Grant owner 20-year monopoly on ideas behind an invention

Invention must be new, non-obvious, novel

Encourages inventors

Promotes dissemination of new techniques through licensing

Stifles competition by raising barriers to entry

E-commerce Patents

1998 State Street Bank & Trust v. Signature Financial Group

Business method patents

2014 Alice Corporation lawsuit

Supreme Court rules that software does not make a basic business method or abstract idea patentable

E-commerce patents

Amazon: One-click purchasing

Akamai: Internet content delivery global hosting system

Trademarks

Identify, distinguish goods, and indicate their source

Purpose

Ensure consumer gets what is paid for/expected to receive

Protect owner against piracy and misappropriation

Infringement

Dilution

Federal Trademark Dilution Act and Trademark Dilution Revision Act

Uniform Rapid Suspension System (U R S)

Trademarks and the Internet

Cybersquatting and brand-jacking

Anticybersquatting Consumer Protection Act (A C P A)

Cyberpiracy

Typosquatting

Metatagging

Keywording

Linking and deep linking

Framing

Trade Secrets

Business procedures, formulas, methods of manufacture and service delivery

May not be unique or novel

Trade secrets are

(a) secret

(b) have commercial value to owner

2016 Defend Trade Secrets Act

Who Governs the Internet and E-commerce?

Mixed mode environment

Self-regulation, through variety of Internet policy and technical bodies, co-exists with limited government regulation

I C A N N : Domain Name System

Internet can be easily controlled, monitored, and regulated from a central location

Taxation

Non-local nature of Internet commerce complicates governance and jurisdiction issues

Sales taxes

Governments in Europe and U.S. rely on sales taxes

As e-commerce grew, states began to argue their inability to tax remote e-commerce sales was siphoning away billions of tax dollars

Supreme Court ruled in South Dakota versus Wayfair that states could tax online sales even when seller did not have physical location in the state

Internet Tax Freedom Act

Insight on Business: Internet Sales Tax Battle

Class discussion:

Given the nature of the Internet, should sales tax be based on the location of the consumer rather than the seller?

What are the different approaches Amazon has taken with respect to sales taxes?

Are bricks-and-clicks retailers disadvantaged by local sales tax laws?

Do you agree with the decision in the South Dakota versus Wayfair case?

Net Neutrality

All Internet activities charged the same rate, regardless of bandwidth used

Netflix and YouTube together consume about 50% of bandwidth in United States

Prior to 2015, I S P s could throttle high-volume users

February 2015, F C C ruled that broadband I S P s should be viewed and regulated as public utilities

Under Trump administration, net neutrality regulations have been repealed, but many states are attempting to reinstate them via state laws and regulations

Public Safety and Welfare

Protection of children against pornography and privacy infringement

Passing legislation that will survive court challenges has proved difficult

Efforts to control gambling and restrict sales of drugs and cigarettes

Prevent All Cigarette Trafficking Act

Unlawful Internet Gambling Enforcement Act

Increase in number of states allowing online gambling

Insight on Society: The Internet Drug Bazaar

Class discussion:

What’s wrong with buying prescription drugs online, especially if the prices are lower?

What are the risks and benefits of online pharmacies?

What are the challenges in regulating online pharmacies?

How has law enforcement attempted to deal with the sale of illegal drugs on the darknet?

Careers in E-commerce

Position: E-commerce Privacy Research Associate

Qualification/Skills

Preparing for the Interview

Possible Interview Questions

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