Ethical, Social and Political issues in E-Commerce

Legal Issues Versus Ethical Issues Ethics: The branch of philosophy that deals with what is considered to be right and wrong
What is unethical is not necessarily illegal Ethics are supported by common agreement in a society as to what is right and wrong, but they are not subject to legal sanctions

Businesses that fail to adhere to ethical standards will suffer some consequences including:

a damaged reputation
long-term loss of trust that can result in loss of business.

 Major ethical/legal issues

Privacy Intellectual property rights Free speech versus censorship Consumer and merchant protection against fraud

 EC ethical issues Non-work-related use of the Internet Employees use e-mail and the Web for non-work-related purposes The time employees waste while surfing non-work-related Web sites during working hours is a concern

 Make sure that Web content and activity comply with the laws in other countries Make sure that the companys Web content policy is consistent with other company policies Appoint someone to monitor Internet legal and liability issues Have attorneys review Web content to make sure that there is nothing unethical, or illegal, on the companys Web site

Privacy: The right to be left alone and the right to be free of unreasonable personal intrusions
1. The right of privacy is not absolute. Privacy must be balanced against the needs of society 2. The publics right to know is superior to the individuals right of privacy

Consumer privacy is becoming the most publicized security issue replacing theft and fraud as top concerns in e-commerce. Without trust, most prudent business operators and clients may decide to forgo use of the Internet and revert back to traditional methods of doing business.

 Collecting information about individuals over the Internet:

By reading an individuals newsgroup postings By looking up an individuals name and identity in an Internet directory By reading an individuals e-mail

 By conducting surveillance on employees

By wiretapping wireline and wireless communication lines and listening to employees

By asking an individual to complete a Web site registration By recording an individuals actions as they navigate the Web with a browser, usually using cookies

 Web site registration Most B2C and marketing Web sites ask visitors to fill out registration forms including: names addresses phone numbers e-mail addresses hobbies, etc.

 There are few restraints on the ways in which the site can use this information Use it to improve customer service or its own business Or sell the information to another company that could use it in an inappropriate or intrusive manner

 Privacy of employees
Monitoring employees e-mail and Web activities
wasting time may disclose trade secrets

77% of companies monitor their employees communications

 Protection of privacy
Notice/awareness Choice/consent Access/participation Integrity/security Enforcement/redress

 Opt-out clause: Agreement that requires computer users to take specific steps to prevent collection of information Opt-in clause: Agreement that requires computer users to take specific steps to allow collection of information

 Intellectual property: Creations of the mind, such as inventions, literary and artistic works, and symbols, names, images, and designs used in commerce
Rights to intellectual property are easy to violate on the Internet, resulting in billions of dollars of losses to the owners of the rights.

 Copyright protection approaches

Using software to produce digital content that cannot be copied
Cryptography Tracking copyright violations

Digital watermarks: Unique identifiers imbedded in digital content that make it possible to identify pirated works

Societal Issues
Digital divide: The gap between those who have and those who do not have the ability to access electronic technology in general, and the Internet and EC in particular

 Other societal issues

Education
Virtual universities Companies use the Internet to retrain employees Home-bound individuals can get degrees

 Public safety and criminal justice e-911 systems collaborative commerce e-procurement e-governmentcoordinating, information sharing, and expediting legal work and cases intelligent homes, offices, and public buildings e-training of law enforcement officers

 Health aspects safer and healthier to shop from home than to shop in a physical store some believe that exposure to cellular mobile communication radiation may cause health problems collaborative commerce can help improve health care

Political: Power and influence of Government agencies and regulatory bodies, public opinion, pressure groups, Internet governance must device policies and enforce them. Legal: Trading laws and restrictions, advertising standards and controls, taxation laws must be implemented.
Consumer and merchant protection against fraud: The success of E-Commerce depends on the protection provided to consumers and merchants

MP3.com, Napster, and Intellectual Property Rights

The Problem
Before the advent of the Web, people made audiotape copies of music and videos to give to friends and family or used them for their own personal enjoyment Such activities were ignored by the producers, distributors, and artists who had the legal rights to the content

MP3.com, Napster, and Intellectual Property Rights (cont.)

MP3.com enabled users to listen to music from any computer with an Internet connection without paying royalties Using peer-to-peer (P2P) technology, Napster supported the distribution of music and other digitized content among millions of users

MP3.com, Napster, and Intellectual Property Rights (cont.)

MP3 and Napster claimed to be supporting what had been done for years and were not charging for their services Popularity of MP3.com and P2P services was too great for the content creators and owners to ignore

MP3.com, Napster, and Intellectual Property Rights (cont.)

To the creators and owners, the Web was becoming a vast copying machine MP3.coms and Napsters services could result in the destruction of many thousands of jobs and millions of dollars in revenue

MP3.com, Napster, and Intellectual Property Rights (cont.)

The Solution December 2000, EMusic (emusic.com) filed a copyright infringement lawsuit against MP3.com In 2001, Napster faced similar legal claims, lost the legal battle, and was forced to pay royalties for each piece of music it supportedNapster collapsedin October 2003 it reopened as for fee only

MP3.com, Napster, and Intellectual Property Rights (cont.)

Existing copyright laws were written for physical, not digital, content The Copyright Infringement Act states, the defendant must have willfully infringed the copyright and gained financially The no financial gain loophole in the Act was later closed

MP3.com, Napster, and Intellectual Property Rights (cont.)

The Results In 1997, the No Electronic Theft Act (NET) was passed, making it a crime for anyone to reproduce and distribute copyrighted works applied to reproduction or distribution accomplished by electronic means even if copyrighted products are distributed without charge, financial harm is experienced by the authors or creators of a copyrighted work

MP3.com, Napster, and Intellectual Property Rights (cont.)

MP3.com suspended operations in April 2000 and settled the lawsuit Napster suspended service and settled its lawsuits tried to resurrect itself as an online music subscription service with the backing of Bertelsmann AG filed for bankruptcy in June 2002 purchased by Roxio with plans to revive Napster into a royalty-paying framework

MP3.com, Napster, and Intellectual Property Rights (cont.)

What we can learn
All commerce involves a number of legal, ethical, and regulatory issues EC adds to the scope and scale of these issue What constitutes illegal behavior versus unethical, intrusive, or undesirable behavior?