E-business Today.
E-business is potentially worldwide in scope. There are no national or territorial
boundaries on the internet. The jurisdictional exposure to uncertain and possibly conflicting
laws is great. The ease of access to e-business businesses through the internet coupled with their
24x7 availability presents a strong likelihood that customers from around the world will visit
sites. This global exposure and related legal risks associated with the absence of territorial
boundaries as well as business hour limitations need to be kept in mind.
E-business websites are private property. They may be thought of as a piece of virtual
real estate in cyberspace. Because they are positioned in cyberspace there is an implied
invitation to visit them. They are intended to be visited. Visitation is encouraged further by
advertising. This is one reason why websites need to implement applicable Terms of Use so that
customers and visitors are on notice as to the house rules applicable to the websites, their
content, services and use. Website Terms of Use have become the principal legal strategy for
managing the legal risks associated with e-business or virtual business websites.
Another major characteristic of e-commerce business applications is to recognize their
dependence on information technology. The risks of computer errors, hackers, computer viruses,
denial of service attacks, power outages, computer malfunctions and unplanned downtime need
to be appreciated. Security, reliability and scalability are thus very important to e-commerce
businesses and promise to become increasingly more important in the years ahead. Cyber
security has become increasingly more important as the risks become increasingly more
threatening.
Another factor is the anonymous nature of the relationship between e-buyers and esellers.
Fraud is much more of a risk in e-business transactions because of the anonymous
character of the relationship. There are concerns over possible export control violations,
customers being children or other persons who are not competent to enter into a contract with the
seller, or being someone using another party’s identity or account number. Identity theft has
become a major concern. These concerns are more problematic because of the anonymous,
virtual relationship that exists in e-business transactions. It is also important to recognize that
brand names and branding strategies are much more important in e-business. E-business
companies need to recognize the importance of a trust relationship with their customers. Trust
has emerged as a critical success factor.
It is important to recognize that most e-business applications involve intellectual property
considerations. Linking, framing, caching and downloading, for example, all implicate the
copyright laws. Access to and use of most of website content also may require copyright
analysis. Patent, trademark, domain name and trade secret issues may also need to be
considered. The intellectual property analysis should be an integral part of the early planning
and design for new e-business applications.
E-commerce business models are usually based on the network effect. Network effects
arise when the value of the e-business application increases with the addition of each participant.
Supply and demand do not have the traditional economic relationship. E-business agreements
tend to be short in duration with due regard to rapidly changing market conditions and advancesin technology. Exponential improvements in technology keep occurring year after year. These
differences need to be appreciated.
E-business transaction data and site usage data are becoming increasingly more valuable.
“Click-histories” and customer data are considered to be very valuable commercially. Likewise,
privacy policies and procedures are given more heightened concern in e-business transactions
compared to other brick and mortar transactions.
The internet is a communications medium. First Amendment issues may arise. Much of
e-business is carried out through electronic agreements and electronic communications which
implicate some specific legal issues and requirements. Electronic communication and
transactions are being carried out at internet speed. The speed of these communications and
transactions also needs to be appreciated. There is less time for reflection and more potential for
mistakes. Computer software errors and data input errors, for example, may cause serious
problems.
Finally, the internet affords dramatic possibilities for opening up societies that are
relatively insular and closed to the outside world, although that promise remains unfulfilled
particularly in countries that block unfettered access to the internet or that control ISPs.32
However, there are many countries that block access to the internet, or regulate the content that
may be seen by citizens in their country.33 Efforts to obstruct content stand starkly in the way of
the free flow of information and technology that has led new markets to emerge, in part, as new
technologies have matured.
These are some of the principal characteristics of e-business that make it different. These
differences are useful to keep in mind when developing legal risk management strategies for
today’s e-business applications and tomorrow’s potential problems.
In the emerging global economy, e-commerce and e-business have increasingly become
a necessary component of business strategy and a strong catalyst for economic
development. The integration of information and communications technology
(ICT) in business has revolutionized relationships within organizations and those between
and among organizations and individuals. Specifically, the use of ICT in business
has enhanced productivity, encouraged greater customer participation, and enabled
mass customization, besides reducing costs.
With developments in the Internet and Web-based technologies, distinctions between
traditional markets and the global electronic marketplace-such as business
capital size, among others-are gradually being narrowed down. The name of the
game is strategic positioning, the ability of a company to determine emerging opportunities
and utilize the necessary human capital skills (such as intellectual resources)
to make the most of these opportunities through an e-business strategy
that is simple, workable and practicable within the context of a global information
milieu and new economic environment. With its effect of leveling the playing field,
e-commerce coupled with the appropriate strategy and policy approach enables
small and medium scale enterprises to compete with large and capital-rich businesses.
