E-Commerce: All About Privacy

The right to be left alone in cyberspace is probably a state of nirvana. At issue today is the protection of personal information, a much narrower definition of privacy. Even at that, the issue is complex and the stakes are high.

In the context of electronic commerce, this complexity arises from the number of paradoxes that must be managed. I can think of at least three.

First, there is the paradox of the Internet channel. An open architecture, interoperable technologies, shared resources and free exchange of information characterize this distribution medium. That same openness which propelled the revolution of the century makes online privacy a true challenge.

Then, there is the paradox of security. Contrary to common belief, security and privacy do not necessarily go hand in hand. Without security there can be no privacy. However, security does not ensure privacy. It may even infringe upon it. A case in point is Intel's plan to embed in its next-generation Pentium III chips, a serial number that would transmit online. While this unique identifier helps protect against identity theft, its strict implementation would have left a trail of a user's activities on the Net. As a result of a public outcry last month, the largest manufacturer of chips in the world changed the settings of this security feature.

Last but not least is the service paradox. In this new electronic world, instant gratification and personalized services are expected. Personalization software improves customer service by tailoring offerings to the unique needs of individuals. At the same time, there are privacy implications because the technology involves the collection and use of personal data. While it is possible to anonymize the information by separating the names and addresses of individuals from their expressed preferences, it is usually more difficult and costly to do.

The challenges are real. Yet, without an adequate level of e-privacy there may be no e-commerce. The European Directive that came into effect on October 25, 1998 restricts the flow of data to countries with inadequate provisions for the protection of personal information. This has left many countries including the U.S. in a conundrum. Also, survey after survey has shown that more people would embrace electronic commerce if they had better assurances about their privacy.

Sweeping laws which are either too general to be enforceable or too restrictive to be progressive are not the answer to a complex problem for which we do not have all the answers.

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