Technical Constraints of Regulating
Commercial Activity on the Internet

Daniel Dardailler

Joseph Reagle

World Wide Web Consortium

Agenda

• Intro to the W3C
• eCommerce - Factoids
• eCommerce - T&S Projects
• eCommerce - Example Transaction
• Technical Constraints on Regulating eCommerce
• Constraints - Location, Identity
• Constraints - Transactions, Relationships & Time
• Observations on Addressing Constraints
• The W3C-T&S Philosophy

Introduction to the W3C

• A Collection of Research Groups
  • MIT (USA), INRIA (France), Keio University (Japan)
• Goal “To help the Web reach its maximum potential.”
• Organized according to:
  • Architecture (computer to computer)
  • User Interface (human to computer)
  • Technology and Society (human to human with computers in between)

Electronic Commerce (1)

• Online Penetration Continues
  • Online households worldwide will rise from 23.4 million in 1996 to 66.6 million in 2000. Jupiter
• Advertising is Increasing
  • Advertisers spent US$157 million during the first 3 quarters of 96. Coopers & Lybrand
  • Online ad market is expected to grow to $5.48 billion by 2002. Frost & Sullivan

Electronic Commerce (2)

• eCommerce is Expected to Expand
  • Sales over the Web: 1996, US$600 million; 1997 US$3 billion. IDC
  • Internet Shopping Market: 96, US$75 million; 97, US$3 billion. Datamonitor

Projects in the T&S Domain

• PICS (Platform for Internet Content Selection)
• JEPI (Joint Electronic Payment Initiative)
• DSIG (Digital Signature)
• IPR (Intellectual Property)
• Privacy and Demographics
• Access for People with Disabilities

Figure - Who to Regulate:

Technical Constraints on Regulation

• Location - where are the parties?

• Identity - who are the parties?

• Transactions - how to track? (size, number)

• Relationships - who to trust?

• Time - how to regulate in this rapidly changing domain?

• (an approach common to all of the following slides is to defer, study, or take a hands-off approach)

Technical Constraints on Regulation

• Location - where are the parties?

• Identity - who are the parties?

• Transactions - how to track? (size, number)

• Relationships - who to trust?

• Time - how to regulate in this rapidly changing domain?

• (an approach common to all of the following slides is to defer, study, or take a hands-off approach)

Constraints on Location

• Generalized Problem

  • how to retain control and sovereignty while participating on a global network?

• Example Problems

  • content control, taxation, fraud, market regulation, gambling, cryptography

• Attempted Solutions

  • staying off the network
  • exercising local control
  • exercising global control

Constraints on Identity

• Generalized Problem

  • how to identify those one wishes to regulate?

• Example Problems

  • authenticity, responsibility, liability, enforcement

• Attempted Solutions

  • investigative methods (after the fact)
  • disallowing anonymity, remailers, and requiring record keeping at ISPs
  • promoting/inhibiting GAK/cryptography

Constraints on Transactions and Time

• Generalized Problem

  • are network transactions so different that previous regulation loses relevance? (size, number, speed, media)

• Example Problems

  • content control, commerce/taxation, auditing fraud, liability

• Attempted Solutions

  • recast new problems in light of old problems (Internet is TV)
  • invent new models

Constraints on Relationships

• Generalized Problem

  • how to govern relationships agents develop outside the view of regulators (trust relationship, business/revenue models)

• Example Problems

  • link semantics {IPR, endorsement, off-label drug usage}, privacy, commerce, fraud, liability

• Attempted Solutions

  • self regulation
  • require relationships to be confirmed or governed by traditional methods

Observations on Constraints (over-generalized but useful)

• the Internet is global

• governments are realizing a significant portion of their constituents and market are moving to cyberspace

• commerce motivates convergence; culture motivates divergence

• technologists - mechanism not policy regulators - policy not mechanism

• regulators often focus on fixed targets and choke points (ISPs and telcos)

• relying upon previous regulatory models can be misleading (print, speech, broadcast)

• often policies can motivate unintended consequences, or lead to regulatory arbitrage

W3C Approach

• W3C mission: “realize the full potential of the Web”

• we integrate technology with an understanding of how policy may inhibit or promote the growth of the Web, we encourage input from the policy community

• we wish to provide tools which encourages all cultures to feel free to use the Web while maintaining an inter-operable network architecture that encourages diversity without cultural fragmentation or domination

• we provide feedback to policy makers regarding what is technically possible, how effective the technology may be in satisfying policy requirements, and the possible unintended consequences of proposed policies