1. Ethical, Social, and Political Issues in E-Commerce
Chapter 8

2. Learning Objectives
Recognize the main ethical, social, and political issues raised by e-commerce
Understand basic concepts related to privacy
Identify the practices of e-commerce companies that threaten privacy
Describe the different methods used to protect online privacy
Understand the various forms of intellectual property and the challenges involved in protecting it
Understand how governance of the Internet has evolved over time

3. Why is the Internet at the root of so many contemporary controversies?
Part of the answer lies in the underlying features of the Internet technology itself, and the ways in which it has been exploited by organizations and individuals
Internet technology and its use in e-commerce disrupt existing social and organizational relationships and understandings

4. Potential Ethical, Social, and Political Significance
Unique Features of E-Commerce Technology and their Potential Ethical, Social, and Political Implications (Table 8.1)
E-Commerce
Technology
Dimension
Potential Ethical, Social, and Political Significance
Ubiquity
Work and shopping can invade family life
Shopping can distract workers at work lowering productivity
Use of mobile devices can lead to automobile or industrial accidents
Global reach
Reduces cultural diversity in products
Weakens local small firms while strengthening large global firms
Easier to move manufacturing production to low-wage areas of the world
Weakens nation’s abilities to control their information destiny
Universal standards
Increases vulnerability to viruses and hacking
Increases the likelihood of “information” crime

5. Potential Ethical, Social, and Political Significance
Unique Features of E-Commerce Technology and their Potential Ethical, Social, and Political Implications (cont.)
E-Commerce
Technology
Dimension
Potential Ethical, Social, and Political Significance
Richness
Reduces use of text and potentially the ability to read
Enables development of persuasive messages that may reduce reliance on multiple independent sources of information
Interactivity
Interaction with commercial sites may be shallow and meaningless
Customers do not really “co-produce” the product
Amount of customization is minimal
Information density
Total amount of information increases, but so does the possibility of false or misleading information, unwanted information, and invasion of solitude
Overall information quality may decline
Individual information overload

6. Potential Ethical, Social, and Political Significance
Unique Features of E-Commerce Technology and their Potential Ethical, Social, and Political Implications (cont.)
E-Commerce
Technology
Dimension
Potential Ethical, Social, and Political Significance
Personalization/ customization
Opens up the possibility of intensive invasion of privacy for commercial and governmental purposes that is unprecedented
Social technology
Creates opportunities for cyberbullying, abusive language, and predation
Creates new challenges to privacy
Creates new opportunities for surveillance by authorities and other organizations into private lives

8. Privacy and Information Rights
Privacy is the moral right of individuals to be left alone, free from surveillance or interference from other individuals or organizations, including the state
Information privacy is a subset of privacy
Important issues:
What information is collected?
Is the information personally identifiable?
How is collected information used?

9. The Internet’s Major Information Gathering Tools (Table 8.3)
Smart phones and apps
Advertising networks
Social networks
Cookies
Spyware
Search engine behavioral targeting
Shopping carts
Forms
Site transaction logs
Search engines
Digital wallets (single sign-on services)
Digital rights management (DRM)
Trusted computing environments

10. Mobile and Location-Based Privacy Issues
There are numerous examples of privacy concerns related to mobile devices and location-based information:
In 2012, investigators discovered that iOS and Android apps were funneling location information to mobile advertisers, along with users’ address books and photos
Twitter announced that anyone using its “Find Friends” feature on smartphones was also sending every phone number and address in their address books to the company
In April 2011, a furor erupted over news that Apple iPhones and iPads and Google Android smartphones were able to track and store user location information
According to a 2012 survey, 42% of smartphone users said privacy and security are their top concerns

11. Profiling and Behavioral Targeting
Marketers would like to know who goes online, what they are interested in, and what they buy
Profiles characterize online individual and group behavior
Anonymous profiles (highly specific and targeted groups)
Personal profiles
Additions to offline marketing techniques
Can track purchases and all browsing behavior on the Web
Dynamically adjust what the user sees on the screen
Can build and continually refresh images or consumer profiles
Spyware can be used to report all consumer Internet use back to advertising firms
Objections have been raised to Google’s integration of personal information from all of its services
Deep packet inspection is a technology for recording every keystroke at the ISP level of every Internet user (no matter where they ultimately go on the Web)

12. E-Commerce Surveillance
Today, the online and mobile behavior, profiles, and transactions of consumers are routinely available to a wide range of government agencies and law enforcement authorities
Striking a balance between security and liberty is at the center of the privacy debate
Law enforcement authorities have long claimed the right to monitor any form of electronic communication pursuant to a court order and judicial review and the reasonable belief that a crime is being committed
Some recent legislation has tried to strengthen individual privacy protections, but others have required online companies to retain and share even more consumer data with government agencies

13. Legal Protections
In the US, Canada, and Germany, rights to privacy are explicitly granted in, or can be derived from, founding documents such as constitutions
In England and the US, there is also protection of privacy in the common law (a body of court decisions)
Some of the major federal and state privacy laws are summarized in Table 8.4
US Federal Trade Commission (FTC) recommendations regarding online profiling are summarized in Table 8.6

15. The European Data Protection Directive
In Europe, privacy protection is much stronger than it is in the US
In the US, private organizations and businesses are permitted to use PII gathered in commercial transactions for other business purposes without the prior consent of the consumer
Privacy laws are often enforced through individuals suing to recover damages (this is expensive and rarely done)
The European approach is more comprehensive and regulatory in nature (enforced by data protection agencies)
For example, European countries do not allow business firms to use PII without the prior consent of consumers
How may this difference impact a global online retail company?

16. Intellectual Property Rights
Once intellectual works become digital, it becomes difficult to control access, use, distribution, and copying
The major ethical issue related to e-commerce and intellectual property concerns how we (individuals and organizations) should treat property that belongs to others
There are three main types of intellectual property protection:
Copyright
Patent
Trademark

17. Copyrights
In the US, 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 protection is for a period of 95 years for corporate-owned works, and life plus 70 years for works created by individuals
Since the first federal Copyright Act of 1790, the intent behind copyright laws has been to encourage creativity and authorship by ensuring that people receive financial and other benefits from their work

18. Fair Use Doctrine
There are situations where strict copyright observance could be harmful to society, potentially inhibiting other rights such as right to freedom of expression or thought
The doctrine of fair use permits teachers and writers to use copyrighted materials without permission under certain circumstances (fair use):
Character of use
Nature of the work
Amount of work used
Market effect of use
Context of use

19. The Digital Millennium Copyright Act (DMCA) of 1998
The Digital Millennium Copyright Act (DMCA) of 1998 was the first major effort to adjust the copyright laws to the Internet age
For example, the DMCA includes sections that:
Makes it illegal to circumvent technological measures to protect works
Requires ISPs to “take down” sites they host if they are infringing on copyrights
Permits users to make a copy of software for maintenance or repair of the computer
Allows libraries to make digital copies of works for internal use
Extends musical copyrights to include “webcasting”

20. Patents
“whoever invents or discovers any new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof, may obtain a patent thereof, subject to the conditions and requirements of this title.” – Section 101, U.S. Patent Act
A patent grants the owner a 20-year exclusive monopoly on the ideas behind an invention
What are some examples of “patentable” e-commerce processes?
Why are e-commerce patents so controversial?
A list of selected e-commerce patents is in Table 8.12

21. Trademarks
A trademark is “any word, name, symbol, or device, or any combination thereof … used in commerce … to identify and distinguish … goods … from those manufactured or sold by others and to indicate the source of the goods.” – The Trademark Act, 1946
Internet and Trademark Law Examples (Table 8.13)
Cybersquatting
Cyberpiracy
Metatagging and keywording
Linking and framing

22. Governance
Governance of both the Internet and e-commerce has gone through four stages:
Government control period ( )
Privatization ( )
Self-regulation (1995-present)
Governmental-regulation (1998-present)
What are the benefits of stronger Internet regulation?
What are the benefits of reduced regulation?
Other issues include online commerce taxation and Net neutrality