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The Internet, Information and the Culture of Regulatory Change: a Modern Renaissance

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The Internet, Information and the Culture of Regulatory Change: a Modern Renaissance THE INTERNET, INFORMATION AND THE CULTURE OF REGULATORY CHANGE: A MODERN RENAISSANCE Christopher Paul Boam* The Internet's fundamental characteristics-a * 304 million people have Internet access- borderless, faceless and paperless environment- 45% are in the United States and Canada;' support its seemingly limitless use as a tool for * nearly one-third of U.S. households are reg- business but also present significant challenges. ular Internet users; The same technology that allows the smallest en- * in 1998, the "Internet economy" generated trepreneurs to enter millions of households over $300 billion in total revenue in the throughout the world also subjects them to innu- United States alone; merable, conflicting foreign laws and jurisdic- * "commercial activity" on the Internet is ex- tions, magnifying the legal impact of content er- pected to reach $100 billion in revenues in rors. The ability to enter the households of 1999; millions of unknown persons poses difficult chal- * North American retailers generated $14.9 lenges of identification, privacy and security. And billion in online sales in 1998 and expect at to magnify concerns, once a business "enters" least $36 billion in 1999 (a 145% increase); these households, the opportunity to conclude 0 Internet traffic continues to increase-visi- thousands of transactions without face-to-face tors to retail sites rose 300% in 1998 and on- contact and signed paper contracts raises addi- line retail orders grew by 200%.2 tional issues of transaction validation and authen- Of course, this kind of data changes from tication. It is precisely this "equality of access" to month to month, but updates of both actual and new markets and customers that renders tradi- projected data consistently show ever-increasing tional notions of the relevant "geographic" mar- commercial activity. ket and customer ineffective. The collective im- Out of this ever-increasing growth has come the pact of these peculiar characteristics of the desire for regulation and application of tradi- Internet on traditional notions of business not tional legal notions to a very new paradigm. Op- only offers the greatest opportunities but also ex- ponents of Internet regulation proclaim that horts the most challenging legal issues. neither the law nor its mechanisms of enforce- The Internet's recent effect on traditional busi- ment could hope to keep pace with the techno- ness is due in part to the rapidity of its growth as a logical change of the Internet. True enough, the medium and in part to the potential for business very infrastructure, applications and variations on growth. For a perspective on the Internet's busi- content (and the legal issues that come with those ness potential and consumer reach, consider the variations) have changed greatly since the In- following: ternet was developed by the Advanced Research * Mr. Boam practices administrative and corporate law ITAL ECONOMY, at http://www.esa.doc.gov/de2k.htm (June with a specialization in telecommunications and new technol- 2000). ogy issues. He received his B.S. from the University of Scran- 2 See State of Online Retailing, Summary of Key Findings, ton in 1992 and his J.D. from the Catholic University of SHOP.ORO RESEARCH, at http://www.shop.org/research/sum- America in 1998. Mr. Boam has published articles in many mary.htm (July 1999); Shop.org Releases New Market Figures in a domestic and international journals on the topics of telecom- Study by The Boston Consulting GROUP, SHOP.ORG RESEARCH, at munications and Internet law. Most recently, he published an http://www.shop.org/nr/99/071999.html (July 19, 1999); article titled The Internet and Jurisdiction:International Principles Michele Masterson, Shop. org Suggestionsfor Successful E-Tailing, Emerge But Confrontation Looms, in the JOURNAL OF WORLD IN- E-COMMERCE GUIDE, at http://ecommerce.internet.com (July TELLECTUAL PROPERTY, at 3J. WORLD INTELL. PROP. 1 (2000). 1999). 1 See UNITED STATES DEPARTMENT OF COMMERCE, THE Dic- COMMLAW CONSPECTUS [Vol. 9 Projects Agency of the U.S. Defense Department. for companies to identify and respond to cus- To apply law to a virtual environment would be as tomer preferences and demand. However, the fruitless as an attempt to "grasp" a river-once availability of, and access to, customer informa- you place your hand into the flow, the water you tion and the increasing economic value of such 3 grasped is gone. information has raised concerns among consum- The purpose of this paper is twofold. The first ers and regulators regarding the potential for mis- two sections of the article outline legal develop- use of private information. Consequently, the pri- ments regulating content and asserting jurisdic- vacy of customers is a critical issue that any tion over the Internet. The third section of the Internet business must address at the outset. How- paper suggests that Internet regulation is a gras- ever, a few other initial concerns are vital predi- pable "river." Despite the fact that the Internet cates. may never be regulated like a broadcast medium, we can and should try to develop regulations. Any A. The Concern for Privacy Must Begin With attempt to set legal policy for the Internet should Security and Self Regulation be centralized with delegated regulatory tasks closely monitored. Policy-making at the national The technical nature of the Internet medium level should, in the near term, pursue a goal to- poses one of the most potentially difficult chal- ward international standard setting. When you lenges to its utilization. Given that e-commerce is consider the widely divergent ways in which con- dependent on computer-based applications, any tent regulation and jurisdictional notions have de- venture can become mired in issues of content veloped, the second suggestion is likely self-evi- portability, transmission speed and the all-impor- dent. tant element of transactional security. The key to security in business transactions I. REGULATION OF CONTENT IN THE where the customer is unseen is both identifying DIGITAL FRONTIER and then retaining the trust of the customer. The same is true for the Internet. The importance of Information is the basic commodity of the elec- this issue cannot be overemphasized. Most often, tronic superhighway. The key to success in the Internet-based businesses will require first-time emerging electronic marketplace will be a com- customers to enter basic information about them- pany's ability to gather and utilize information selves, at the very least: a username, a password from and about its customers quickly and effi- (to use the system with your username in the fu- ciently. Such data is a prerequisite for conducting ture) and an e-mail address. Once the customer e-commerce. Traditional face-to-face verification decides to perform a transaction on the site, the techniques, such as hand-checking credit cards, business typically requests additional information, driver's licenses or signatures are unavailable. In including name, address, phone number and the absence of any cash transactions, the identifi- method of payment. With the privilege of asking cation of customers and authentication of transac- consumers for this information comes the obliga- tions and payments become even more impor- tion to ensure the security of the information tant. The collection and use of customer from unwanted use or intrusion. Internet business information also offer tremendous opportunities security issues are commonly divided among hard- 3 For instance, in one attempt to visually represent the tion, CAIDA also has developed a tool for viewing an infra- breadth and speed of global Internet connectivity, the Coop- structure map of multiple Internet backbone providers si- erative Association for Internet Data Analysis ("CAIDA"), a multaneously and for "updating and correcting that may be cooperative nonprofit research organization, published a invalid or out of date." COOPERATIVE ASSOCIATION FOR IN- graphical representation-a "snapshot"-of the Internet TERNET DATA ANALYSIS, ABOUT MAPNET, at http://www.caida. core taken from data collected during a 16-day period in Jan. org/tools/visualization/mapnet/Backbones (last updated 2000. COOPERATIVE ASSOCIATION FOR INTERNET DATA ANALY- Aug. 7, 2000). With the assistance of various backbone prov- SIS, VISUALIZING INTERNET TOPOLOGY AT A MACROSCOPIC iders supplying data and information on their trunk routes, SCALE, at http://www.caida.org/analysis/topology/as-core_ the Mapnet software will overlay all routes or select routes network (last updated Jan. 19, 2001). The visualization is a individually on a world map. Id. The lack of high-speed composite of 220,533 Internet Protocol ("IP") addresses routes connecting to mid-Asia, Africa and southern South (374,013 links and 154,104 target destination IP addresses) America gives a stark representation of who are the "haves" from paths obtained in the merger of three separate sets of and "have-nots" with regard to high-speed Internet connec- data. Id. In addition to the graphical topology representa- tivity. 20011 The Internet, Information and the Culture of Regulatory Change ware (physical security concerns) and privacy con- in early 2000, federal law enforcement authorities cerns. increasingly sought the help of computer profes- Among the hardware-related security issues to sionals to combat "cyber-assaults." Following the consider are: securing the web server 4 and busi- incursion of the "Love bug" virus, which brought ness data, securing transactional information (be- down computer networks across the globe in tween the server and consumer), and in some April 2000, a special multination session in Paris cases, securing the consumer's computer or net- was convened to discuss Internet security and co- work. Security risks to e-commerce run the gamut operative enforcement.9 All countries participat- from "eavesdropping" and "packet sniffing" of ing in the conference, including the United transactional data,5 to cracking passwords and ex- States, Japan, Russia, France, Great Britain, Swe- ploiting system flaws by hackers.
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