New hybrid regulatory frameworks for the Internet Henry H. Perritt, Jr. Dean Chicago-Kent College of Law Illinois Institute of Technology

Why does the Internet present new challenges? Low economic barriers to entry  proportionally more small enterprises Lower transaction costs  more small-value transactions Inherently global exposure  stress on traditional geographic jurisdictional criteria

What’s wrong with traditional public law regulation? High transaction costs (uncertainty, remote legal systems) threaten to swamp value of transactions Remote actors undermine enforcement ability Diversity of requirements difficult to satisfy

What’s wrong with pure private self-regulation? Disparate economic power threatens consumer rights Race to the bottom undermines mandatory rules Private governments not accountable

What are the alternatives? Tolerate diverse legal requirements Comprehensive treaties Tolerate “lawlessness” Develop new hybrid public/private regimes

Hybrid frameworks Public law Private law Minimum substantive requirements Backup compliance policing Private law Prescribe detailed rules Provide first-level enforcement and dispute resolution

Examples EC/USG data privacy “safe harbor” negotiations ICANN Credit card chargebacks

Prospects for the future Harmonization reduces jurisdictional pressure OECD privacy guidelines OECD consumer protection guidelines Consumer protection the next big opportunity Dispute resolution approaches Credit card chargebacks – OECD paper Ebay escrow, insurance possibilities