September 2001Chapter 16: Public policy: Regulation1 Chapter
16. Public Policy: Regulation Questions Answered in this Chapter:
How is the Internet currently regulated? What are the challenges
the Internet has brought to regulation? What are the main
regulation issues on the Internet today? How are the United States
and Europe working together to regulate the Internet?
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September 2001Chapter 16: Public policy: Regulation2
Introduction Overview Countries must decide how to regulate, how
much to regulate, and who should regulate the Internet within their
boundaries and with other countries Governments are trying to
regulate the Internet without hurting their economies, but also
without infringing on the rights of citizens and existing business
So far, few laws intended to regulate the Internet have been passed
Regulation challenges posed by the internet: Privacy Intellectual
Property Taxation Gambling Free Speech
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September 2001Chapter 16: Public policy: Regulation3
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September 2001Chapter 16: Public policy: Regulation4 Privacy
Overview The Code of Fair Information Practices, drafted by the
Nixon administration, was never enacted The government originally
expected the industry to regulate itself, but dot-coms are using
their customer databases as tradable assets Current Status So far,
only the Childrens Online Privacy Protection Act (COPPA) has been
passed States have the latitude to enact tough financial privacy
laws The public is overwhelmingly concerned about privacy on the
internet Privacy advocates are unsatisfied with the governments
lack of involvement, while Internet executives worry that strict
privacy regulations could mean the end of the Internet
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September 2001Chapter 16: Public policy: Regulation5 Privacy
(Contd) Proposed Legislation Over 100 bills regarding privacy on
the Internet are currently in Congress Proposed legislation ranges
from requiring websites to have a clear privacy policy to requiring
websites to obtain permission from visitors (opt-in) before
collecting any personal data Impact While many Internet companies
fear government regulation, they might actually suffer more if the
government does not get involved Government privacy regulation will
have an impact on how Internet companies generate revenue
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September 2001Chapter 16: Public policy: Regulation6
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September 2001Chapter 16: Public policy: Regulation7
Intellectual Property Overview Copyright law has been the biggest
and most immediate challenge for Internet businesses and consumers
Copyright is intended to strike a balance between protecting a
creators work and letting the public use it. It is NOT intended to
give ownership to the creator Current Status Three main aspects of
copyright laws affect the Internet: The Copyright Act of 1976 -
Gives owner of the copyright the ability to replicate &
distribute the work The Fair Use Doctrine - Gives the public the
right to fair use of the work The Digital Millennium Copyright Act
Prohibits the circumvention of copyright protection system Protects
ISPs from being liable if subscribers infringe copyright laws
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September 2001Chapter 16: Public policy: Regulation8
Intellectual Property (Contd) Proposed Legislation Since courts
have generally sided with copyright holders, much of the proposed
legislation is intended to protect the Internet users Impact The
impact of copyright law on the Internet has yet to be fully felt
Studies suggest that record companies would be hurt, rather than
helped, by file-swapping sites
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September 2001Chapter 16: Public policy: Regulation9
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September 2001Chapter 16: Public policy: Regulation10 Taxation
Overview The existing tax system for offline stores is extremely
complex e-commerce companies benefit from current tax laws in two
ways: They attract customers who do not want to pay taxes They do
not have to pay the high costs associated with collecting sales tax
Current Status The Internet Tax Freedom Act (enacted in 1998)
restricts changes to current laws and limits new taxes from being
imposed on e- commerce purchases Offline stores have begun to
protest that their online competitors do not have to charge sales
tax as they do Governments are generally against extending the tax
moratorium because of the lost tax revenue
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September 2001Chapter 16: Public policy: Regulation11 Taxation
(Contd) Proposed Legislation The House Committee studying the
problem recommended that the Internet Tax Freedom Act be extended
until 2005 Whether or not that occurs remains to be seen Impact
Preliminary evidence suggests that the Internet sales tax would
have minimal impact on consumption The biggest impact would be felt
by those States who stand to loose considerable amounts of money if
sales tax law is not passed
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September 2001Chapter 16: Public policy: Regulation12
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September 2001Chapter 16: Public policy: Regulation13
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September 2001Chapter 16: Public policy: Regulation14 Gambling
Overview The Internet poses a new challenge to gambling regulation
because of the lack of physical borders Because of its ease of use
and anonymity, Internet gambling is especially problematic for
potential addicts Gambling sites do not stimulate the local economy
as casinos do (by attracting tourist and providing jobs) Since most
gambling sites are outside the U.S., they take money away form the
U.S. Current Status The number of sites and gamblers, and amount of
time and money spent on online gambling is increasing at a great
rate There are currently no specific laws banning gambling on the
Internet
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September 2001Chapter 16: Public policy: Regulation15 Gambling
(Contd) Proposed Legislation The Internet Gambling Prohibition Act,
which would have made it a crime to operate a website that accepts
wages from Americans, was defeated in the House in July 2000.
Chances are there will be more bills to follow Impact Gambling is
currently the fourth largest offline leisure activity Gambling laws
will have a significant impact on revenue distribution between
casinos and online gambling sites If government continues to be
noncommittal about online gambling, casinos will loose their
revenues to foreign-run gambling sites
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September 2001Chapter 16: Public policy: Regulation16 Free
Speech Overview Free speech is one of the most protected rights is
the U.S. Individuals must face the consequences of how their
opinions are received by others The lack of borders makes it
difficult to determine whose free speech rules to use Current
Status Courts use the offline free speech test for Internet free
speech issues: Is the speech a direct, credible threat against a
specific target, or a direct incitement to imminent illegal action?
People must first sue the ISP for the identities of offenders
before they can sue the offenders themselves Web filters to
restrict access to inappropriate sites are being criticized by
freedom of speech activists
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September 2001Chapter 16: Public policy: Regulation17 Free
Speech (Contd) Proposed Legislation Courts will determine not only
who can sue whom for slanderous remarks, but also when ISPs have to
disclose the names of their users Impact Freedom of speech
legislation will have a chilling effect on people who feel that
they can be taken to court for what they say on the Internet On the
other hand, if people are not held responsible for what they say,
it will have a detrimental effect on the perceived veracity of the
Internet content In contrast to Newspaper journalists, Internet
journalists often publish stories without getting confirmation on
the accuracy of the story