My first forecast, on “Video in the Year 2000”, with the ubiquitous switchable, editable videophone, has yet to come about. Most of us still lack the bandwidth necessary for more than matchbox size Skype images, Courtesy of Ian Brown you can now read my third, attempt, on the potential impact of a world of ubiquitous intelligent systems as well as on-line communications: “Learning for Change“. Yesterday I was in a “heavy” conversation on the introversion of current debate on cybersecurity, information governance, privacy and anti-corruption legislation. There was great concern that inexperienced ministers will be maneuovred into expediting the flight of wealth-creating business offshore because they lack the global vision of those who built an Empire, (often by mistake), on the back of trade (not the other way round). I was asked to put my 2004 paper on “The Global Electronic Bazaar” on line so that one of those prsent could quote from it to an American audience,
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The Global Electronic Bazaar – the evolution of e-commerce regulation
[note this was written in 2004 for the IMIS Journal, the majority of whose readers live and work south of Equator or East of Egypt. Many, perhaps most, see the UK as a bunch of foggy islands off a corrupt, bureacratic and decaying continent at the far end of the world from the action. And the American readers saw us as even more out of touch than the Federal Government in Washington ]
“Most discussion of electronic commerce policy assumes that after a period of confusion there will be the global legal frameworks negotiated through the World Trade Organisation under which the language will be American, the values those of Hollywood, CNN and the Star Ship Enterprise and the legal frameworks will be based on those of the United States.
But the dotcom boom and bust was also the zenith of Pax Americana. The Western model of the Information Society is no longer the only one, even if Europe and America could agree what it was.
The Far East (Japan, Korea, China and Japan) now has more broadband users that the rest of the world added together. More-over many more of them already have “real broadband” (i.e. 8 megs and above, suitable for broadcast quality video) unlike the “not-quite-so-painfully-slow-Internet access” (at one meg or less) of most of the Western world. They are now driving the growth of interactive visually based products and services, including the underlying products and service concepts just as they now dominate the production of high street consumer goods. Meanwhile India is coming to dominate the market for English-language support services. And the non-western world has much the same disrespect for western intellectual property protection regimes as the United States had for those of the “Old World” during the 19th and early part of the 20th centuries.
Over half the world’s retail outlets do not yet have electricity let alone a telephone line. They are leapfrogging the west into a world of low cost, mobile communications because they cannot afford, and do not need, the cost of fixed infrastructures. The impact will be dramatic as they also leapfrog the world of Windows and Internet browsers into a world of open-source, mobile electronic commerce, accessed by GSM video-phones, with smart cards and TV zapper controls triggering audio-visual responses based on local language and pictograms.
We read dramatic claims of the growth of trade over the Internet but even the forecasts are minuscule when compared to the volumes of transactions taking place over the financial trading networks of London, New York or Tokyo, the reservations systems of the airlines or the global EDI networks of the Banks and Insurance Companies. Many of these use Intranets and Extranets but these bear as much relationship to the public Internet as do the secure communications networks which link the US military with its aerospace suppliers, for which Arpanet was wartime standby and “hot testbed”. More-over transactions over digital TV and data mobiles appear to be growing much more rapidly than those over traditional Internet connected PCs,.
UK market research indicates that over 80% of consumer purchases are made within 10 miles of home. Distance selling [from simple mail order upwards] has long been common in states with scattered populations [from the Highlands and Islands of Scotland to the mid-West of America]. But indications from Finland and Sweden [the two western nations furthest into mass use of the Internet and both also heavy users of mail order to far flung communities] are that the bulk of Internet transactions traffic is again local. Global consumer transactions remain a rarity. Amazon.com is not the worlds’ favorite bookshop and it has found it necessary to set up national operations in its main markets. Meanwhile payment problems mean that many websites, particularly in the United States, no longer accept payment from credit cards issued outside their jurisdiction.
With 60 million Chinese users, the main languages of the Information Society now appear to be, in order, English, Mandarin, Cantonese, Spanish, Gujerati, Spanish, Arabic, Japanese and German. One of the oldest messages of international trade is that you sell in the language of the customer, you buy in your own. Those wishing to sell premium-added-value to some of the world’s wealthiest communities need to handle others many more languages – from Finnish to Hebrew.
The Global Electronic Market place is more likely to have the feel of an oriental bazaar than of a western shopping mall. Business is as likely to be conducted under Chinese, Indian or Islamic Law as it is under Common or Roman Law. Meanwhile, most Americans, including most American businessmen, have never been out of the United States. They find it hard to understand that the majority of the world’s population does not speak English, know how to use Windows or wish its electronic commerce, education and entertainment to be policed by American lawyers .
The image of the Internet and of Electronic Commerce as outside the law is misleading – as many have discovered to their cost. The image of untraceable anonymity is also misleading. Even the idea that the United States does not have data protection is wrong. It may be outside the Federal Constitution but many States, including California, have handed out multi-million million dollar fines to those who breach state data protection or fair trading laws, claiming to protect customer information and then sell it.. When Americans accuse the Europeans of hypocrisy over Data Protection they have a much better case than many assume.
Those whose facilities are used to access content that is already illegal under existing laws around the world can, under a wide variety of circumstances, be held liable. The UK Government by no means alone in pronouncing that the same law applies [or should apply] on-line as off-line. In consequence the Internet has lurched over barely five years from being the least regulated to the most regulated [at least in theory] medium the world has ever known. Corporate lawyers advise that you should not place on your website any material that could not safely be included in an advertisement any of the newspapers where you aim to do business – and you should refuse orders from where you do not know the law – or at least take care to be paid in advance and not to subsequently visit lest you be detained, pending the resolution of cases decided in absentia..
In most nations of the world the Corporation or Internet Service Provider who has been warned they are carrying illegal content becomes liable if they fail to take action – although there are significant differences as to what is illegal and the action expected. The ISP may also share liability for breach of copyright, libel and slander as well as breaches of consumer protection laws, particularly those applying to mail order, alias distance selling. The international transfer of personal data may also be an offence under local data protection legislation.
It has been said that you should not e-mail anything you would not be willing to shout across a crowded room of strangers – whatever the claimed security rating of the system. When we look at frameworks for Secure Electronic Commerce the concepts of keys in escrow to recover or unscramble confidential traffic should come last not first. The first role of a Trusted Third Party is to provide the electronic equivalent of the letter of introduction: “this man is good for $10,000”. The second is to authenticate traffic: “this man is who he says he is, is authorized to do this and is now legally bound by what he has agreed”. Most businesses in most parts of the world would not trust a third party who was liable to pass their keys to the local government let alone use only keys which can be broken by current or former members of the Cold War security services.
Doing business on the same day in a variety of currencies and languages and under a variety of legal systems, has been common in the world’s great trading centres for several millennia. How long will it take for IT to catch up with human nature. And when it does, and the worlds of mass communication, consumer distance selling and electronic commerce finally converge – which third party would YOU trust to hold your purse in the Global Electronic Bazaar?
Hence the concern of the banks, who may not be liked but are usually trusted far more than governments, to ensure that their trust networks, like Identrus, are truly international as well as truly secure.
Current policy discussion is all too often driven by those seeking to protect current positions or to promote investment in technologies and infrastructures which may, or may not, meet business to business and business to consumer needs. We are on an evolutionary path where the pace, direction and timing of change are uncertain and moving too soon may be worse [in closing opportunities] than moving too late [to halt abuses].
We can see the signs of regulatory creep in all directions – from Financial Services to Communications Infrastructure.
We need to expose all such moves to the basic tests for any regulatory proposal:
Who is it intended to protect against what?
Is it cost effective and fair?
Can you explain it to the public?
Is it do-able?
We also need to ensure that both regulation and law are technology independent and not built around assumptions of continuity or change that may be equally wrong.
Meanwhile the legal frameworks for cross-border disputes have moved on little, if at all, since the last days of Pax Britannica – when the captain of the tramp steamer was agent for the owners of the goods on board. In the event of dispute, the law of the nation with the biggest gunboat in wireless distance applied. In the event of stand-off, the compromise was usually adjudication in London – initially because the Royal Navy had more gunboats, later because the American and Japanese could never agree and after World War Two because American lawyers were so introverted and expensive. The standard of fairness set in those days has meant that the reputation of London as a place for disputes resolution has survived. The largest court case in London in recent years was two middle eastern trading houses suing each other under the Sharia.
Hence the concern of so many players that neither the UK government nor the European Union nor the United States should jeopardize the ability of those doing business across borders over the Internet to decide for themselves where they wish any disputes to be adjudicated, under what law and in which language. That desire flies in the face of practical politics but the stand-off between vested interests and lobby groups around the world probably guarantees the failure of any alternative.
The politics of the global electronic bazaar will change as the economic balance of power between west and east changes. But they are unlikely to ever be more than a rationalization of the compromises reached by those who really do want to do business electronically direct with customers or suppliers in other nations. Meanwhile the freight forwarders, scrivenors, notaries and their equally numerous Chinese, Arab and Indian equivalents will retain the business of those who do not open local subsidiaries and need guidance to find practical ways of handling the incompatible demands of governments around the world.
[That was written nearly seven years ago. The world has indeed moved on and prdiciton has been over-taken by reality (e.g. more Chinese on the Internet than the EU added together). But our introverted western debates on regulating the on-line world reamin prserved in aspic].