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e-Commerce Collusion? The Trustbusters Take Aim

Privacy Concerns: Can Gaming Be Prevented?
Fortnightly Magazine - September 1 2000

importantly, cyber tools are readily available to individuals or groups to attack and disrupt our infrastructures, whether for fun, profit, revenge, or political or strategic gain."

Charles Maglione, industry director at Proxicom, an e-commerce industry consultant and developer, while acknowledging that security is a real concern, said that software and middleware in place provide more than sufficient security.

Other executives simply called for the FTC to oversee industry-affiliated exchanges. But even the FTC's involvement presents a technological challenge, said analysts.

"How will a slow-moving government bureaucracy like the FTC be able to enforce its laws in the warp speed, point-and-click world of e-commerce procurement?" critics asked.

Energy E-comm.Com's Dar highlights some of the e-commerce challenges for regulators.

"[For example, suppose that], using the Net, a U.S.-domiciled merchant of gas, electricity, and bandwidth sells a bundled offering that has convergent pricing with a participating swap feature and cash flow financing to a multi-facility industrial with plants in the U.S. and Canada," he said.

"The transaction occurs on a server in the Grand Caymans; the payment is made via an encrypted disbursement account in the Bahamas to a receiving account in London, which uses a website sitting on a host facility in Ireland." The transaction originated via an e-mail proposal delivered by the U.S. merchant's U.K. arm to the U.K. parent of this industrial. The email server sits in Houston.

"What regulatory authority governs this transaction: the FERC, the FCC, the CFTC, the IRS, the FTC, or no one? Or is this transaction illegal?" he asked.

Dar questioned whether U.S. regulatory agencies will be able to track business transactions in cyberspace, and said international regulatory obstacles may deny the government access to corporate transaction data. Enforcement of reporting also may be difficult.

"I don't think the U.S. government is going to send in the Marines to attack Caribbean-based corporate data havens," he joked.

Market Power: Is Smart Software the Equalizer?

Many e-commerce executives, quizzed by the FTC about market power issues, saw a possible solution in software that scans various markets for the best price. They claimed that these programs would eliminate the need for regulatory oversight because they make it impossible for B2B marketplaces to collude by making the price available at all times to all participants.

In their present form, these software programs, known as "shop bots," compare prices among multiple electronic vendors, and in some cases, traditional retail vendors, as well. In response to a query such the title or brand/product description, a shopping bot will return a sorted list of prices and product descriptions, sometimes including comparative shipping costs, according to Jared Hansen, of the marketing department at Brigham Young University.

According to Hansen, there are four basic types of shopping bots, although only the first is truly a searching "bot"; the others are compiled guides and directories: (1) pure search engine price/product locators; (2) vendor-partnered shopping guides; (3) category-specific comparison services; and (4) human-based interaction.

But other e-commerce executives argued that "shop bots" pose regulatory obstacles of their own because of copyright issues.

For example, when auction giant eBay