E-Commerce Rules



Excerpt From: Rischard, Jean-Francois.

“High Noon: 20 Global Problems, 20 Years To Solve Them.” iBooks.


“E-Commerce Rules These days, there are two ways to picture e-commerce. One is to think of the recent troubles of the dot-coms, many of which soared and crashed around e-commerce, and to see it as a smallish analog of catalogue sales, of particular use for business-to-business transactions—but not going very far. The other picture goes like this. Imagine 1 billion connected computers worldwide, in a not too distant future. Look at them as forming not just an on-line community but a “seventh continent”—a virtual continent with no time zones and no borders, with business transacted twenty-four hours a day, seven days a week, with passports reflecting not the place where you were born as much as your PC and Internet connection.

The second view is more realistic. From a few billion dollars in the mid– 1990s, e-commerce soared to $250 billion in 2001, and many forecasts put it above $3 trillion by 2005 or so. Some predict that by 2010, e-commerce could account for 15–20 percent of retail sales. If you believe that’s too much, just remember that old-fashioned catalogue sales alone account for 10 percent of retail sales in the United States. But where e-commerce has so far been most successful is not in retail, business-to-customer sales but in the business-to-business area, which accounts for 80 percent of total e-commerce today. The scope for expansion remains very large, particularly as e-commerce growth picks up outside the United States, which has so far accounted for 70 percent of it.

Why this bullishness? Because for all its teething problems, e-commerce is driven by some enormous advantages that are bound to make it a huge phenomenon in the future:

E-commerce has a global reach—no limits of shelf space or warehousing—so it can easily outdo the real world.

Choice is greater, and prices are easily compared—recall the “nude economy” of Chapter 5.

The costs of concluding and processing transactions are significantly lower.

Transportation can be bulked or directed to the closest warehouse.

And if that isn’t enough, e-commerce aggregates players worldwide—eBay, for example, brings together bidders from around the world, completely outdoing the local flea market.36 What’s more, ecommerce easily weaves in information of direct relevance to the customer’s choice, as with http://www.Amazon.com’s automatic suggestions of other books similar to the one you’re looking at, and as with those ecommerce services that include the intervention of call centers. In the business-to-business area, e-commerce enables close cooperation between a firm, other firms, suppliers, and even customers—making everyone better off and smarter in the process (Chapter 4).

But coming with this likely future success is an urgent global issue in the making. There is a risk that e-commerce, along with its e-contracting and e-money cousins, will soar ahead of the world’s ability to come up with at least a minimum number of global rules for it. Here are a few examples of problems that need to be addressed fast, through some sort of global approach:

Taxation. This issue, discussed earlier, is complex and serious.



The impending logjam of national laws.

E-commerce brings forth an almost constant clash between the borderlessness of the “seventh continent” and the territoriality of nation-state laws (part of a more general clash alluded to in Chapter 7). People from anywhere buy from, and interact with, people from anywhere on the Internet. Yet Denmark bans advertising for children, France advertising in English, Germany comparative advertising. In a famous case, Yahoo! was sued in France for hosting web sites displaying and selling Nazi memorabilia—only to have a U.S. federal judge rule that Yahoo! could ignore the French court order.37


Adjudication of disputes.

Some countries, like those in the EU, feel that customers should be able to choose their home jurisdiction in case of disputes over an on-line transaction, rather than the home jurisdiction of the supplier, who can be anywhere. Other countries disagree. There are two ways to address these types of logjams. Technical solutions, like filtering and “IP address” tracking of users, could help nation-states enforce their rules, but remain problematic.38 And then there’s the more or less unpalatable holy grail of e-commerce: a system (which does not, and may never exist) in which users would have permanent digital identities containing details of age, sex, citizenship, tax residency, professional credentials—something that would help nation-states reclaim ground even more systematically.39 Failing to find acceptable technical solutions, nations would soon have to sit together and try to clear the logjam by unifying their laws—in such areas as advertising, hosting or jurisdictional disputes.


Building trust and confidence in e-commerce.

Nations would also do well to join forces early on a flurry of issues like electronic signatures and authentication, rules for electronic record keeping, rules on what constitutes consent, electronic copyright rules, basic principles of consumer protection in e-commerce, and, very important, rules for data privacy, data transfers, and encryption. Since e-commerce is still in its early days, it would really pay off to get countries to come together around the formulation of such rules. If this does not happen, expect a further logjam: just in the United States, for example, some forty states have independently adopted their own electronic signature rules. Extrapolate this to the world’s 190 or so nation-states, and life on the seventh continent could become really complicated.


Protecting people, businesses, and societies from cyber-crimes.

Spreading Internet-related problems—such as hacking, credit card frauds, “and viruses—are likely to set e-commerce back unless they are tackled through determined and early global action. This is an area where the potential for making nasty uses of technology has been way ahead of the ability of nations to protect their citizens.40 Particularly worrisome are cryptography, where unbreakable systems have been commercialized without any “backdoor” for government security services—and steganography, which enables data, messages, and pictures to be hidden within normal-looking Internet pictures in ways that are almost impossible to detect. (It looks like some Al-Qaeda operatives may have used this technique.)41

It is hard to do justice to the variety and complexity of e-commerce issues in so little space. The main point is the urgency of solving this emerging global issue fast—while it is still in its infancy. There have been attempts, but they have occurred at the level of less-than-global groupings—from the OECD to the less well-known Council of Europe (with its forty member states) to some smaller regional groupings. All the while, national legislators continue to produce a dense thicket of often conflicting territorial laws on subjects that aren’t well understood.”


Excerpt From: Rischard, Jean-Francois.

“High Noon: 20 Global Problems, 20 Years To Solve Them.” iBooks.