Chapter Fourteen: E-Commerce: Regulatory, Ethical, and Social Environments 14-1

Online File W14.1 Framework for Ethical Issues

REFERENCES FOR ONLINE FILE W14.1Mason, R. O. “Four Ethical Issues in the Information

Age.” MIS Quarterly (March 1986).Mason, R. O., et al. Ethics of Information Management.

Thousand Oaks, CA: Sage Publications, 1995.

Privacy Accuracy

• What information about oneself should an individual be required to reveal to others?

• Who is responsible for the authenticity, fidelity, and accuracy of information collected?

• What kind of surveillance can an employer use on its employees?

• How can we ensure that information will be processed properly and presented accurately to users?

• What things can people keep to themselves and not be forced to reveal to others?

• How can we ensure that errors in databases, data transmissions, and data processing are accidental and not intentional?

• What information about individuals should be kept indatabases, and how secure is the information there?

• Who is to be held accountable for errors in information, and how should the injured party be compensated?

Property Accessibility

• Who owns the information? • Who is allowed to access the information?• What are the just and fair prices for its exchange? • How much should be charged for permitting accessibility

to information?• Who owns the channels of information? • How can accessibility to computers be provided for

employees with disabilities?• How should one handle software piracy (copying

copyrighted software)?• Who will be provided with equipment for accessing

information?• Under what circumstances can one use proprietary

databases?• What information does a person (or an organization)

have a right or a privilege to obtain—under what conditions and with what safeguards?

• Can corporate computers be used for private purposes?

• How should experts who contribute their know-ledge to create knowledge bases be compensated?

• How should access to information channels be allocated?

14-2 Part 5: E-Commerce Strategy and Implementation

Online File W14.2 Website Quality Guidelines

◗ Present original and unique content of genuine value to visitors.◗ Use metadata, including title and description, which accurately describes the contents of a Web page.◗ Do not make pages for the search engine, but for users and customers.◗ Don’t deceive your users by displaying different content for them than you display to search engines.◗ Don’t use tricks to improve search engine rankings.◗ Don’t participate in deceitful link schemes that are designed to increase your website’s ranking or PageRank.◗ Avoid links to Web spammers, offensive content, or bad online neighborhoods.◗ Don’t use unauthorized computer programs to submit pages or check rankings.

Online File W14.3 Intellectual Property Websites—International Sites

REFERENCES FOR ONLINE FILE W14.2Google. “Webmaster Guidelines.” 2007. google.com/

support/webmasters/bin/answer.py?answer=35769(accessed March 2011).

Google. “Report a Spam Result.” 2007. google.com/contact/spamreport.html (accessed March 2011).

Yahoo! “Search Basics.” 2007. help.yahoo.com/help/us/ysearch/basics/basics-18.html (accessed March 2011).

Berkman Center for Internet & Society cyber.law.harvard.edu/homeOxford Intellectual Property Research Centre oiprc.ox.ac.ukInstitute for Intellectual Property, Tokyo iip.or.jp/e/index.htmlStanford University’s Copyright & Fair Use Center fairuse.stanford.edu

Chapter Fourteen: E-Commerce: Regulatory, Ethical, and Social Environments 14-3

Online File W14.4 Representative EC Patents

The most well-known patents in e-commerce include the following:

◗ Amazon.com’s 1-Click. This patent for expedited online ordering, which was granted in 1999, was criticized as a minorinnovation. Reexamination in 2007 invalidated all but 5 of its 26 claims.

◗ EBay’s Buy It Now. In 2003, a jury found that eBay’s expedited auction purchase capability infringed on Merc-Exchange’spatent. As part of the case, the Supreme Court ruled that patent holders aren’t necessarily entitled to an injunctionshutting down an infringer’s operations.

◗ Priceline’s “Name Your Price” (C2B). This patent was assigned to Priceline in 1999. Shortly thereafter, Priceline suedMicrosoft and Expedia for copying its patented business. Expedia settled and agreed to pay a royalty in 2001.

◗ Google Search technology. The Google PageRank patent was granted in 2001. Google holds dozens of patents.◗ IBM holds hundreds of patents related to EC and IT. Example: Electronic Commerce with Shopping List Builder (U.S.

Patent 6249773). This patent governs a method for engaging in e-commerce over a network from an e-commerce siteand comprises the steps of storing data representing an inventory of items for sale at the e-commerce site; storinghistoric and active shopping lists of respective shoppers at the e-commerce site; providing logged-on shoppers with ashopping list builder tool for constructing entirely new shopping lists and for constructing new shopping lists from saidstored shopping lists; accepting completed active shopping lists from the logged-on shoppers; consummating purchasesof products on the accepted lists; and delivering the purchased products to the shoppers. The method can further com-prise the step of storing authorization data, enabling shoppers to purchase the items at the e-commerce site on credit.Shoppers can use the shopping list builder to create, modify, delete, and merge named lists. A permanent cumulativeshopping list can be compiled for each shopper.

◗ Akamai. Akamai’s Internet content delivery Global Hosting System is a broad patent, granted in 2000 and coveringtechniques for expediting the flow of information over the Internet. Akamai sued Digital Island (subsequently acquired byCable & Wireless) for violating the patent and, in 2001, a jury found in its favor. In 2004, Akamai settled the suit.

◗ BEA Systems Inc. Pricing Engine for Electronic Commerce (U.S. Patent 7496543). This pricing engine for electroniccommerce allows the owner of an electronic marketplace to dynamically change the pricing available at the electronicmarketplace on several factors, including, but not limited to, manufacturer preferences, e-marketplace preferences, thelocation of a buyer, identity of a buyer, order volume, and so on. A buyer can access the e-marketplace through theInternet, input a request for a quote, and then receive a price schedule based on the previously mentioned factors.

◗ Peter Kasan: E-Commerce Shopping Cart (U.S. Patent 7225148), Granted, 2007. A system and method are providedfor monitoring the keystroke and mouse-click actions of a visitor to an e-commerce website. After receiving a signal thatrepresents an attempt to terminate the online session between a visitor and the e-commerce website, and an e-commerceshopping cart contains at least one good or service, or if the shopping cart has items removed from it, or even if theshopping cart is empty, the visitor is prompted to respond to one or more prompts in a display screen.

For a list of patents, see FreePatentsOnline (freepatentsonline.com).

14-4 Part 5: E-Commerce Strategy and Implementation

ONLINE FILE W14.5Application Case

PROTECTION PITTED AGAINST PRIVACYIn February 2007, Republican Congressman Lamar Smithintroduced a bill called the Stopping Adults Facilitating theExploitation of Today’s Youth Act (SAFETY). As the nameimplies, the purpose of the law is to combat the exploitationof children (child pornography). SAFETY would require ISPs tomonitor and retain information about users’ identities andtheir online activities. At a minimum, SAFETY would requireretention of the name and address of the subscriber orregistered user to whom an IP address, user identification, ortelephone number was assigned. The law would also requireWeb labeling by owners of sexually explicit websites, whichwould have to post warning labels on their pages or faceimprisonment. This bill never became law. The StoppingAdults Facilitating the Exploitation of Today’s Youth Act(SAFETY) of 2009 (introduced February 13, 2009) will keepInternet content hosting providers or e-mail service providersfrom facilitating access to, or the possession of, childpornography and require providers of electronic communica-tion or remote computing services to retain certain userrecords for at least two years.

Because there is no limit on how broad the rules can be(recall the discussion of interpretation of laws), the U.S.Attorney General would have been able to force ISPs to keeplogs of Web browsing, instant message exchanges, and e-mailconversations indefinitely. SAFETY’s broad wording alsowould permit private litigants to obtain records in civilcases, such as divorces and employment disputes. That raisesadditional privacy concerns, civil libertarians say.

Privacy advocates and Internet industry groups opposethe law. They cite numerous data breaches, concerns aboutgovernment surveillance, and monitoring of employees inthe workplace as reasons against the law. Employees of anyISP who failed to store that information would face finesand prison terms of up to 1 year, the bill says. The U.S.Justice Department could order the companies to storethose records forever.

Supporters of the proposal focus on protection. Theystate that it is necessary to help track criminals because ifpolice cannot respond immediately to reports of illegalactivity, Internet providers could delete relevant logs. Theycite cases of child molestation. To rebut, industry representa-tives said there was no evidence that ISPs had dragged theirfeet when responding to subpoenas from law enforcement.

Typically, ISPs discard log files that are no longerrequired for business reasons, such as network monitoring,fraud prevention, or customer billing disputes. But whencontacted by law enforcement, ISPs preserve the data.Currently, the Electronic Communication TransactionalRecords Act of 1996 regulates data preservation. It requiresISPs to retain any record in their possession for 90 days“upon the request of a governmental entity.” ISPs mustcomply with a federal law to report child pornographysightings to the National Center for Missing and ExploitedChildren, which forwards that report to the appropriatepolice agency.

When adopting its data retention rules, the EuropeanParliament approved the requirement that communicationsproviders in its 25 member countries, even those that hadalready enacted their own data retention laws, retaincustomer data for a minimum of 6 months and a maximum of2 years. This Europe-wide requirement, which should havetaken effect in 2008, applied to a broad range of traffic andlocation data, including the identities of the customers’correspondents; the date, time, and duration of phone calls,VoIP calls, or e-mail messages; and the location of the deviceused for the communications. The content of thesecommunications is not supposed to be retained. In February2009, a court ruled that the directive was adopted on anappropriate legal basis (Court of Justice 2009). A 2009directive is now in the works that will do away with a timeconstraint for retaining data. Human and privacy rightsregarding the directive are still being debated (WorkingGroup on Data Retention 2009).

Two obstacles to these laws requiring massive dataretention practices are identity theft and the cost ofimplementing and securing such systems.

Questions1. What are some of the ways in which the SAFETY Act

might infringe on an individual’s privacy rights?

2. What are some of the key elements in SAFETY?

3. Use a search engine to find recent issues relating tothe status of SAFETY.

Chapter Fourteen: E-Commerce: Regulatory, Ethical, and Social Environments 14-5

Online File W14.6 Representative U.S. Federal Privacy Legislation

Legislation Content

Privacy Act of 1974 Prohibits the government from collecting information secretly. Information collected must be used only for a specific purpose.

Privacy Protection Act of 1980 Provides privacy protection in computerized and other documents.Electronic Communications Privacy Act

of 1986Prohibits private citizens from intercepting data communication

without authorization.Computer Security Act of 1987 Requires security of information regarding individuals.Computer Matching and Privacy Act

of 1988Regulates the matching of computer files by state and federal

agencies.Video Privacy Protection Act of 1988 Protects privacy in transmission of pictures.Fair Health Information Practices Act

of 1997Provides a code of fair information.

Consumer Internet Privacy Protection Act of 1997

Requires prior written consent before a computer service can disclose subscribers’ information.

Federal Internet Privacy Protection Act of 1997 (H.R. 1367)

Prohibits federal agencies from disclosing personal records over the Internet.

Communications Privacy and ConsumerEmpowerment Act of 1997 (H.R. 1964)

Protects privacy rights in online commerce.

Data Privacy Act of 1997 (H.R. 2368) Limits the use of personally identifiable information and regulates spamming.

Computer Security Enhancement Act of 2000

Policy on digital signature.

Financial Services Modernization Act of 1999

Bans dissemination of consumer information without consumer consent.

E-Government Act of 2002 Regulates personal collection by federal agencies.Health Insurance Portability and

Accountability Act of 1996 (HIPAA)Regulates data collection, storage, and use in the health care

system.

REFERENCES FOR ONLINE FILE W14.5Court of Justice. “Judgment of the Court of Justice in Case

C-301/06.” Press release, February 10, 2009. statewatch.org/eu-data-retention.htm (accessed March 2011).

Legal Information Institute. U.S. Code Collection. CornellLaw School. law.cornell.edu/uscode (accessed March2011).

Lemos, R. “Bill Would Require ISPs to Track Users.”SecurityFocus, February 19, 2007. securityfocus.com/brief/439 (accessed March 2011).

Library of Congress. “Internet Stopping Adults Facilitatingthe Exploitation of Today’s Youth Act (SAFETY) of

2007.” February 6, 2007. thomas.loc.gov/cgi-bin/query/z?c110:H.R.837: (accessed March 2011).

McCullagh, D. “GOP Revives ISP-Tracking Legislation.”CNET News.com. February 6, 2007. news.com.com/GOP+revives+ISP-tracking+legislation/2100-1028_3-6156948.html (accessed March 2011).

Working Group on Data Retention. “After Ruling on DataRetention: Activists Remain Confident.” Statewatch.org,February 20, 2009. statewatch.org/news/2009/feb/04eu-datret-ecj-german-wgdr.htm (accessed March 2011).

14-6 Part 5: E-Commerce Strategy and Implementation

Online File W14.7 Censorship in the United States, China, and Around the Globe

Censorship in the United StatesOn February 4, 2010, the House passed the Cybersecurity Act of 2009, which gives the president the ability to “declare acybersecurity emergency” and shut down or limit Internet traffic in any “critical” information network “in the interest ofnational security.” The bill does not define a critical information network or a cybersecurity emergency. That definitionwould be left to the president. The bill also grants the secretary of commerce “access to all relevant data concerning[critical] networks without regard to any provision of law, regulation, rule, or policy restricting such access.” This meanshe or she can monitor or access any data on private or public networks without regard to privacy laws.

On June 25, 2010, Joe Lieberman’s “Kill Switch” Cybersecurity bill passed a key Senate committee after backersmade concessions aimed at blunting widespread criticism that the measure would give the U.S. president broad authorityto shut down key parts of the Internet. The full Senate has yet to vote on the bill (Aquino 2009).

In June 2010, another move to regulate the Internet under a new government-controlled system accelerated intohigh gear with the announcement that the government’s cybersecurity strategy revolves around issuing Internet users withID “tokens” without which they will not be able to visit websites. Opponents claim that the latest salvo against Webfreedom which, in combination with Senator Joe Lieberman’s “kill switch” bill, will serve to eviscerate the free Internet aswe know it (Watson and Jones 2010).

Opponents also claim that overreaching government intrusion in private matters has a chilling effect on freespeech and promotes “self-censorship”—oppression far worse than government censorship. They cite Obama desires ofCongress to approve a bill in 2011 that requires all services that enable communications—including encrypted e-mailtransmitters (like BlackBerry), social networking websites (like Facebook), and software that allows direct “peer-to-peer” messaging (like Skype), to be technically capable of complying if served with a wiretap order. The mandatewould include being able to intercept and unscramble encrypted messages. Furthermore, private businesses (such as,banks) and employers are now regularly enhancing their data harvesting activities of private information of employeesand loan applicants. SocialMiner, a new software application from Cisco Systems, allows businesses to monitor socialnetworking sites such as Facebook and Twitter. The software has raised concerns over the prospect of employers spyingon the personal lives of their employees (Tencer 2010). Related to this is the possible misuse of personal information,whether private, public, or secret (see Weitzner, et al. 2008). The Washington Post reported in January 2010 that the“FBI illegally collected more than 2,000 U.S. telephone call records,” using methods that FBI general counsel ValerieCaproni admitted “technically violated the Electronic Communications Privacy Act when agents invoked nonexistentemergencies to collect records.”

Censorship in ChinaIt is well known that the People’s Republic of China is the world’s leader in brut Internet censorship, which conducts itscensorship under the guise of a wide variety of laws and administrative regulations, known as the “Golden Shield.” Morethan 60 Internet regulations and censorship systems are vigorously implemented by provincial branches of state-ownedInternet service providers (ISPs), business companies, and organizations, and tens of thousands of enforcers. Theescalation of the government’s effort to neutralize critical online opinions came after a series of large antigovernmentprotests, religious and ethnic riots, many of which were organized or publicized using instant messaging services, chatrooms, text messages, and Twitter.

The regime not only blocks website content but also monitors the Internet access of individuals. AmnestyInternational notes that China “has the largest recorded number of imprisoned journalists and cyber-dissidents in theworld.” The offenses of which they are accused include communicating with groups abroad online, opposing thepersecution of the Falun Gong, signing online petitions, and calling for reform and an end to corruption.

In June 2010, the Chinese government issued a white paper guaranteeing freedom of expression on the Internet aslong as it is balanced with national security. For details, see Jie and Xing (2010).

Censorship in Other CountriesWith worldwide attention on Chinese Internet censorship, Australia’s Kevin Rudd’s plans to crack down on its own Internetcontent appear to have drawn favorable attention from no less than the Chinese government. In March 2010, Ruddendorsed an “online ombudsman” and more restrictive hate speech laws to deal with inappropriate Internet contentthrough mandatory filtering legislation of “dangerous” websites. Many Australians are worried that a new era of domesticInternet censorship will put them in some very bad company. Joining this club of intrusive censors will grant legitimacy toregimes that are using censorship for political, as well as, prurient purposes. No doubt that the Chinese heartily approve ofwhat is going on in Australia. Indeed, the language attributed to the prime minister in the article referenced previouslysounds suspiciously like that used by the CCP itself to justify its own censorship (Electronic Frontiers 2010).

(continued)

Chapter Fourteen: E-Commerce: Regulatory, Ethical, and Social Environments 14-7

Online File W14.7 (continued)

Chinese-style “Golden Shield” Internet censorship also arrived in New Zealand in February 2010. Two majorinternational news websites, renowned for exposing the truths that government-approved mainstream media attempts toconceal, were found to have been selectively blocked by ISPs (e.g., Woosh, Orcon, Slingshot and Telecom) using AsiaNetcom for their international Internet traffic. To date, alternative New Zealand ISPs (e.g., Telstraclear, Vodafone, andWorldxchange Communications) were not affected by the censorship. It is interesting to note that Asia Netcom wasformerly owned by China Netcom, a subsidiary of China Telecom, China’s largest ISP and government-approved Internetcensor. Note that this international news website is completely banned on China Netcom throughout China (Swinney2010). North Korea and Iran’s governments have been increasingly oppressive with regard to the Internet. Internetcensorship in North Korea is a big issue, simply because only a very small percentage of people have access to it. The fewpeople that do have access to the Internet find that it is incredibly censored. The Iranian government has delegatedresponsibility to the ISPs who filter sites that are critical of the government, sites with pornographic content, andpolitical bloggers. Iran recently blocked access to YouTube and Twitter during the recent elections in an effort to cool the“democracy movement” and voting activism. Australian bloggers have been imprisoned over their content (Thooghun 2011).

REFERENCES FOR ONLINE FILE W14.7Aquino, S. “Should Obama Control the Internet?” April 2,

2009. motherjones.com/politics/2009/04/should-obama-control-Internet (accessed March 2011).

Electronic Frontiers. “Oz Internet Censorship GetsNoticed in China.” March 11, 2010. openInternet.com.au/2010/03/11/oz-Internet-censorship-gets-noticed-in-china (accessed March 2011).

Jie, Y., and W. Xing. “Freedom of Expression on theInternet Guaranteed.” China Daily, June 9, 2010.

Swinney, C. “Internet Censorship: Major Truth-ProvidingWebsites Blocked by Asia Netcom to New ZealandUsers.” February 7, 2010. infonews.co.nz/news.cfm?l=1&t=0&id=47706 (accessed March 2011).

Tencer, D. “Banks Spying on Your Bill, Rent Payments,Paychecks: Report.” November 6, 2010. rawstory.com/

rs/2010/11/banks-spying-bills-rent-payments(accessed March 2011).

Thooghun. “Global Internet Censorship 77.” hubpages.com/hub/Global-Internet-Censorship (accessed March2011).

Watson P. J., and A. Jones. “Cybersecurity MeasuresWill Mandate Government ‘ID’ Tokens to Use Internet.”June 28, 2010. prisonplanet.com/cybersecuritymeasures-will-mandate-government-id-tokens-to-use-the-Internet.html (accessed March 2011).

Weitzner, D. J., H. Abelson, T. Berners-Lee, J. Feigenbaum,J. A. Hendler, and G. J. Sussman. “InformationAccountability.” Communications of the ACM ( June 2008).

14-8 Part 5: E-Commerce Strategy and Implementation

Online File W14.8 How to Go Green in a Data Center and the Related Supply Chain

The following are steps organizations can take to have a greener data center:

◗ Identify those desktops to virtualize. Virtualization is a trend in enterprise data centers in which servers are consolidated(integrated) so they can be shared. Most stand-alone servers (in a physical environment) are highly underutilized.Virtualization technology optimizes the capacity and processing power of servers so fewer servers are needed to providethe necessary processing power. The result is savings in energy, space, and recycling. For a video on virtualization, visitnews.zdnet.com/2422-13569_22-155248.html.

◗ Identify and turn off unused computers, which is typically 8 to 10 percent of computers.◗ Enable power management features, if available.◗ Replace old servers with new energy-efficient servers.◗ Replace disk technology (replace disks drives with less than 70GB capacity with those with more than 500GB capacity).◗ Move old data to tape because tape provides 20 to 200 times more terabytes per kilowatt hour (TB/KW).

The result of Sun Microsystems consolidating and moving to more efficient data centers was a hardware reductionthat provided a more than 450 percent increase in computing power using about one-half of the servers, and a more than240 percent increase in storage capacity using about one-third of the storage devices.

Green computing is a mind-set that asks how we can satisfy the growing demand for network computing withoutputting undue stress on the environment. There is an alternative way to design a processor and a system such that they donot increase demands on the environment, but still provide an increased amount of processing capability to customers tosatisfy their business needs.

Going green can start with simple adjustments. A common-sense approach to reducing household expenses is to turn offthe lights whenever you leave a room. This “power-management” approach can be applied to servers, workstations, and datacenters, which are often left fully functional and operating 24/7/365 even though that may not be necessary. One basic solutionis to introduce energy management processes that adjust to changes in the demand for computing power. For example, somecompanies have implemented working-hours power management and the less-consuming after-hours power management.

There are also complex changes. One such emerging trend is the greening of the supply chain. A green supply chainincludes procurement, manufacturing, warehousing, distribution, service, and recycling in an environmentally friendlymanner. Here are two examples:

◗ In 2008, a 147,000-square-foot warehouse was built in Tampa Bay, Florida, according to the environmentally sustainablebuilding standards of the U.S. Green Building Council (USGBC). See usgbc.org. The USGBC is a nonprofit community ofleaders helping companies design and build green buildings.

◗ Far from a fad or feel-good initiative, green sourcing is fast emerging as a strategic business imperative. An electronicsmanufacturer’s relationship with its suppliers (sources) is a major issue for executives, customers, and shareholders. Andthey are relying on procurement to proactively manage it. Sourcing and procurement have always been about more thanjust price. Factoring green priorities into existing processes is a natural extension of the nonprice process, and aneffective way to drive green goals. Companies are including green criteria in their requests for proposals (RFPs) andcreating clear metrics for measuring them as part of supplier performance management.

There is a growing level of commitment among both small and midsize firms toward the adoption of applications thatwould support more environmentally friendly supply chain initiatives. For example, the market intelligence firm IDCquestioned 250 decision makers at small and midsize enterprises involved in the manufacturing, wholesale, anddistribution industries and found that even among the smallest of the supply chain companies, support for greeninitiatives is emerging. According to the survey, small and midsize companies will seek to use manufacturing applicationsthat support a renewable way of producing products, mobile-enabled applications that help conserve energy, and humanresource applications that will help train workforces in the areas of green manufacturing (reported by Van der Pool 2008).

REFERENCES FOR ONLINE FILE W14.8bizjournals.com/boston/stories/2008/07/14/daily33.ht

ml (accessed March 2011).Van der Pool, L. “IDC: Small, Midsize Businesses Move

Toward Green Supply Chain.” Boston Business Journal,July 16, 2008.