The federal government has thus far taken a restrained approach to regulating online business, and according to a White House policy analyst it will remain that way - so long as the industry makes an honest effort at self-regulation and informing consumers about the rules of the game.
"The private sector should take the lead, and the government should play a modest, minimalist role," said Brian Kahin, a senior policy analyst at the White House Office of Science and Technology Policy, who spoke Wednesday at the conference on Computers, Freedom and Privacy in Austin, Texas.
Kahin stressed that for Internet-based electronic commerce to succeed, the industry will have to take the lead in setting responsible policies that protect the privacy of consumers in their interactions with Web sites. "I have confidence in self-regulation," he said. "Otherwise we may be in for a major international policy problem."
In a talk entitled "The Future of Internet Policy," Kahin said there are strong incentives for this new industry to regulate itself, not the least of which is the fear and uncertainty that government restrictions would bring. Even for established companies like AT&T and IBM, policy decisions can be difficult given the constantly shifting strategic environment and "heterogeneity of businesses" on the Net. "They don't have a consistent industry perspective," Kahin noted.
Self-regulation will especially be a problem for smaller players, he explained, in an environment where "business needs and opportunities come first."
Kahin characterized the Internet as a unique convergence of three dynamic elements: a publishing medium for information, the Internet community, and a distributed computing platform. This convergence, he said, "creates a black hole, and affects global electronic commerce ... in ways we don't fully understand."
Moreover, Kahin said the Internet has caused fundamental, structural changes in the ways businesses plot strategy - a "virtualization of value," he called it, where regional and national markets converge, and the value chain uses hyperlinks. Indeed, he said, an environment exists that leads phone companies into battles with cable providers over the delivery of such services as video-on-demand to consumers' set-top boxes and WebTVs.
At the same time, Kahin pointed out that on the Internet, unlike TV, "video is no longer the driver," and that the text and still images that make up the Web have created low barriers of entry for businesses and consumers alike. This "commonality of bits", he added, has led to an unprecedented access to information, and a "superabundance" of text. And while the ability to gather, process, and analyze information about customers' buying habits may be a boon to advertisers, all of this "metadata" can present serious privacy threats to unknowing consumers.
To make consumers more aware of the types of information they are disclosing as they conduct online transactions, Kahin said that metadata can also be used to create an infrastructure such that "users can express their privacy preferences and look for labels and interact with policies better."
"But there is an ambiguity towards labels," Kahin said. "There are semantic issues, and it's all very complex. How do you organize labeling? It's a classic infrastructure development problem," he said.
Though Kahin did not name them, industry groups such as Truste have organized to create a logo system that will identify sites that comply with responsible information-gathering guidelines. Truste recently did away with the three-tiered logo system that was originally proposed, partly due to the semantic issues - and the rankings they might suggest - that Kahin referred to.
Further, there are also consumer-privacy initiatives working their way through the Internet standards process, such as the Platform for Privacy Preferences Project - which aims to establish a cross-platform means by which Web sites and users can communicate their privacy practices and preferences respectively.
Kahin suggested that Netizens could play a more significant, participatory role in the process.
"If you put the process (of creating labels and logos) on the Net, you make it more efficient and can enable a distributed consensus," Kahin said.
