Ethical, Social, and Political Issues in

E-Commerce
Chapter 8

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

Why does e-commerce raise

ethical, social, and political
issues?
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 other individuals
Internet technology and its use in ecommerce disrupt existing social and
organizational relationships and
understandings

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 nations abilities to control their information
destiny

Universal
standards

Increases vulnerability to viruses and hacking

Increases the likelihood of information crime

Unique Features of E-Commerce Technology and their

Potential Ethical, Social, and Political Implications
(cont.)
ECommerce
Technolog
y
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

Unique Features of E-Commerce Technology and their

Potential Ethical, Social, and Political Implications
(cont.)
ECommerce
Technology
Dimension

Potential Ethical, Social, and Political

Significance

Personalization Opens up the possibility of intensive invasion of privacy for

/ customization 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

A Model for Organizing the Issues

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 the information collected?

The Internets Major

Information Gathering Tools
(Table 8.3)
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

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)
Federal and state privacy laws are
summarized in Table 8.4

Privacy Protection Concepts

Informed consent
Consent given with knowledge of all material
facts needed to make a rational decision
Opt-in vs. opt-out
FTCs fair information practice principles:
Notice/awareness
Choice/consent
Access/participation consumers should be
able to review and contest accuracy and
completeness of data about them
Security must take reasonable steps to
ensure accuracy and security of data
Enforcement must be a mechanism in place
to enforce FIP

FTC Recommendations
Regarding Online Profiling
(Table 8.6)
Notice
Complete transparency to user by providing
disclosure and choice options
Choice
Opt-in for PII, opt-out for non-PII
Access
Security
Enforcement
Done by third parties
Restricted collection
No collection of information about sensitive financial
or medical topics, sexual behavior or sexual
orientation, or use of SSNs

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?

Intellectual Property Rights

Once intellectual works become digital, it

becomes difficult to control access, use,

distribution, and copying
The major ethical issue related to ecommerce 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:
Copyrights
Patents
Trademarks

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
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

The Digital Millennium

Copyright Act (DMCA) of
1998
The Digital Millennium Copyright Act (DMCA)

of 1998 is 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

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 ecommerce processes?
Why are e-commerce patents so

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 and Net neutrality