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

Learning Objectives Understand why e-commerce raises ethical, social, and political issues Understand basic concepts related to privacy and information rights 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

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

Potential Ethical, Social, and Political Significance Unique features of e-commerce technology and their potential ethical, social, and/or 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

Potential Ethical, Social, and Political Significance E-Commerce Technology Dimension Potential Ethical, Social, and Political Significance Richness Reduces use of text and potentially the ability to read by focusing on video and audio messages 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 Increases likelihood of individual information overload

Potential Ethical, Social, and Political Significance 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 and fair use Creates new opportunities for surveillance by authorities and other organizations into private lives

The moral dimensions of an internet society (figure 8.1)

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? Do people have the “right to be forgotten”? Can personal information be edited or deleted from the Web?

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

Social networks and privacy Social networks pose a unique challenge for maintaining personal privacy because they encourage people to reveal details about their lives and to share them with friends Facebook has created a massive database of friends, preferences, Likes, posts, and activities Facebook is a prime example of management pushing the envelope of privacy and experiencing a number of public relations reversals and growing government concern For instance, they deployed facial recognition technology without any previous notice which compromised its users’ privacy by allowing them to be tagged in photos without their consent The result of these public conflicts is suggests that social network participants do have a strong expectation of privacy and they want to control how their information is used

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 e-mail 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 In a recent survey, over 90% of respondents said being in control of who can get personal information, and controlling what information is collected, is “very important” Around 94% of Americans do not believe government agencies, business firms, or other institutions can keep their information private and secure

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)

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

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 8.5 US Federal Trade Commission (FTC) recommendations regarding online profiling are summarized in Table 8.7

Ftc recommendations regarding online profiling (Table 8.7) Notice – provide disclosure and choice options on the host Web site Choice – opt-in for PII, opt-out for non-PII Access – reasonable provisions to allow inspection and correction Security – reasonable efforts to secure information from loss, misuse, or improper access Enforcement – done by independent third parties Restricted collection – stricter rules for collecting sensitive financial or medical information, sexual behavior or sexual orientation, or use of social security numbers

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?

Technological solutions A number of privacy-enhancing technologies have been developed for protecting users during interactions with Web sites Spyware blockers Pop-up blockers Ad blockers Secure e-mail and anonymous remailers Anonymous surfing Cookie managers Disk/file erasing programs Policy generators Public key encryption

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 From a social point of view, the main questions are: Is there continued value in protecting intellectual property in the Internet age? Should society make certain technology illegal just because it has an adverse impact on some intellectual property owners? There are three main types of intellectual property protection: Copyright Patent Trademark

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

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, writers, and others to use copyrighted materials without permission under certain circumstances (fair use): Character of use – nonprofit or educational use vs. for-profit use Nature of the work – creative works vs. factual accounts Amount of work used - small amount vs. entire work Market effect of use – will the use harm the marketability of the original product? Context of use – last minute use vs. planned infringement

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 Limits liability of ISPs and search engines for copyright infringement if they comply with safe harbors 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”

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 8.15

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

Governance Governance of both the Internet and e-commerce has gone through four stages: Government control period (1970-1994) Privatization (1995-1998) 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 – thousands of different rates just in the US Net neutrality – ISPs should treat all data on the Internet in the same manner, and not discriminate or price differentially by content, protocol, platform, hardware, or application