Self regulation vs. government regulation

Bowie, N., & Jamal, K. (2006). PRIVACY RIGHTS ON THE INTERNET: SELF-REGULATION OR GOVERNMENT REGULATION?. Business Ethics Quarterly, 16(3), 323-342. Retrieved from Business Source Premier database.

Norman Bowie a strategic management and philosophy professor at the University of Minneapolis, Minnesota, and Dr. Karim Jamal a professor at the University of Alberta School of Business provide us information about e-commerce and privacy on the web. In this article we learn that the major reason people are afraid to shop online is that they do not trust companies with their personal information. Since there are major concerns about e-commerce, a study is conducted to see whether government regulated e-commerce or self-regulation is the better way to go.

Before getting into which system is better we learn about what is considered to be elements of a good privacy policy. These elements include: notice/awareness, choice/consent, access/participation, integrity/security, and enforcement/redress. Without notice/awareness a site can collect information about a user for future advertising and never disclose to the user what information was collected. While analyzing the choice/consent element we learn that the opt-in method is better than the opt-out. Using an opt-in method users must sign up to disclose their information to third parties. The opt-out method differs in that it discloses your information to third parties unless you state otherwise. By having the element of access/participation we are given the choice to exercise our rights to privacy. The integrity/security element makes it so that what we decide about our privacy will be obeyed by sites. The last element enforcement/redress punishes those who violate the choices we make about our privacy.

After describing these elements the article goes on to describe the differences about privacy between the United States(US) and the European Union(EU). In the US the only regulations in place pertain to the health care industry, the financial service industry, and information collected about children. As a result, some firms in the US have adopted Web seals to help provide more assurance. The four most common Web seals are TRUSTe, BBB Online, Web Trust of Certified Public Accountants, and PricewaterhouseCoopers’s Privacy Seal. In Europe regulations requires that information collected be specific, explicit, and used for a legitimate reason. In addition, a user must give their consent. Consent is considered on an opt-out and opt-in manner depending on where you live in the European Union.

After explaining some of the differences the article goes on to compare which system used is better. A study was done to evaluate 100-high traffic sites in the United States and 56-high traffic European Union sites. In conclusion of this evaluation, the results of the study are then compared against each other. The main thing that this study compares between the two countries is the amount of spam and mail internet users receive after visiting opt-in and opt-out sites. In this study the majority of spam came from five sites, while the majority of mail came from one site. Through this comparison we were also able to see that the self-regulated US has less spam and mail than the government-regulated EU.

One site that is specifically analyzed is eBay. In the eBay study we learn about the dangers that come with seals provided by a website. EBay discloses that it tracks activity and that the personal  information collected is sold to third parties. In the end, we learn that minimum expectations can be met through privacy seals without the need for government regulation.

After stating that privacy is the biggest reason why people do not like to shop online, I think the article did a superb job explaining what good elements of privacy are thought to be. In addition, I think that the article explained the differences between privacy in the US and the EU well. In my opinion one flaw to their data is that they only evaluated 56-high traffic sites in the EU compare to 100-high traffic sites in the US. Although averages were used in the study, these numbers could have reflected different numbers if the same amount of sites were used. Also, what is considered to be a high traffic site in one country may have fewer hits than a high traffic site in the other country. Overall, the article did explained elements of privacy well, and provided useful information about the differences between privacy in the US and the EU.


1 Comment (+add yours?)

  1. southwerk
    Oct 02, 2010 @ 15:30:20

    I fully agree with your criticism. The sample is too small for the results to be convincing.

    But Google is pressing for identification of all web users with a code so that surfing the web anonymously will no longer possible.

    I’m going to have to come out in favor of government regulation. What the private companies intend to do erases any trace of the ability to hide your information.

    James Pilant


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