Value-Chain Report

Automakers get (the same) e-ligion

Imagine having the freedom to say whatever you want about any individual or company without regard for truth. And imagine being able to use a fake name, so that no one knew you were the one who said those things. Pretty cool, huh? That's nothing. Now try imagining something really neat -- being able to secretly change things that other people wrote, without them or anyone else who reads the material knowing that it's bogus. Or better yet, you could pretend that you're someone else -- say, a prominent CEO -- spouting off on your pet issue. Now that's really out there. On top of all that, imagine being able to sell products in any state in the land, without the purchasers having to pay sales tax of any kind. What a deal, huh? Now stop imagining, and open your eyes. All those things are real today, courtesy of that late 20th century invention -- the Internet. That's right, the boon of our existence in the latter half of the final decade of this century -- the Internet -- much ballyhooed for its ability to irrevocably alter the state of commerce, in fact has a dark side that is only now coming to light. Some of the blame for the Internet's rampant abuse of the First Amendment can be laid at the door of our government. In a no-holds-barred effort to promote the new technology, Washington has taken a somewhat laissez faire attitude toward this new electronic hydra, whose twin heads pose opportunity and danger. True, new technologies often come with the risk of abuse. But in most cases, the government has seen fit to control them. This is true even with the news media, which, despite its free-press and free speech rights, must observe certain rules regardless. This is why we have a body of libel law, a Privacy Act, and a host of other regulations that guide the press' conduct in an open society. Admittedly, Congress has done more than pay lip service, passing several laws governing electronic media. There is a law designed to protect children from online pornography. There also are the Digital Millennium Copyright Act, and the Electronic Communications Privacy Act. Unfortunately, some users who hide behind the anonymity of the Internet continue to act as if neither the old laws nor the new ones apply to the new medium. As a result, abuses abound. Some examples:

  • Richard Scrushy, CEO of HealthSouth Corp., Birmingham, Ala., got a rude surprise at an investment conference last fall when analysts tipped him to a series of Internet missives about him and his firm that were anything but flattering. One cyber-detractor claimed the company was a house of cards starting to collapse. Some suggested that the company should be investigated for fraudulent billing practices. Executives were accused of spouse-swapping. The CEO tracked some of the accusers down and is suing to put an end to the cyber-attacks.
  • Author Lynn Manning Ross was shocked to find a scathing review of her book about Internet business planning among's popular Web-based book reviews, purportedly written by Amazon chief executive Jeff Bezos. Entitled "Stupid Book. . .Don't Waste Your time!", the unfriendly missive had in fact been keyed by an anonymous hacker who had "stolen" Bezos' e-mail address. Part of the problem lies with Amazon's policy of not screening review submissions before they go online.
  • The Securities and Exchange Commission (SEC) last October sued 44 individuals and companies for praising stocks on the Web, sometimes anonymously and without disclosing their financial ties to the companies they were touting.
  • Hackers disrupted the Web sites of the Federal Bureau of Investigation and the U.S. Senate in May, forcing the government to shut down both sites. Last January the Clinton Administration proposed spending $1.5 billion to set up a "cyber corps" of computer security experts to deal with the problem of online government security breaches.
  • A Palo Alto, Calif., man was charged by the SEC with offering phony securities over his Web site, promising investors a chance to make $3 million in less than a year with a $35,000 investment.
  • The M.H. Meyerson & Co. brokerage firm is suing Internet users for posting defamatory messages about the company in a plan to drive down its share price. One online writer claimed Meyerson was "a freaking scam" and "money laundering scums." Meyerson shares fell from over $21 to under $5 in one month. Despite all this apparent chaos, one thing's for sure. The laws governing the responsibility and accountability that come with our rights of expression haven't been repealed for the Internet. Companies are fighting back, filing volleys of suits against their cyber-detractors, seeking to expose those that would libel them or otherwise do them unjust harm. Publicly traded companies are filing a barrage of "John Doe" lawsuits that enable them, via subpoena, to unmask the identities of their online critics. Still, it's likely that some Internet users will continue to act irresponsibly, posting information that either is untrue or inflammatory. "Perhaps it's going to be 'let the reader beware,' and 'know your source,''" advises Richard Ravin, a member of the Roseland, N.J. law firm Ravin, Sarasohn, Cook, Baumgarten, Fisch & Rosen, and head of its Internet, computer, and intellectual property department. In fact, there are signs that the problem of "who wrote what" is likely to compound. A new product from Third Voice, a Redwood City, Calif. firm, allows users to write and view information such as messages or notes that were attached to Web sites by other independent users. Third Voice claims the product, a Web browser add-on, empowers users to comment on Web site content, but some critics have labeled it "Web graffiti." And of course there's the impending issue of taxation of e-commerce. Reacting to the federal government's free-ride attitude toward the Internet, the states, concerned over the loss of tax dollars to rapidly snowballing Web-based sales, are trying to do something about the fact that everything sold over the Internet is tax-free. Although Congress last year passed a three-year moratorium on taxation of e-commerce, state leaders such as Virginia Governor James Gilmore III have stated, "We do need to be sensitive to the argument that one type of commerce ought not to be advantaged over another." Observes Internet legal expert Ravin, who is co-chairman of the Internet law committee of the New York Bar Association, "Congress is taking another look at the tax issue."
    Anonymous, also known as IW senior editor Doug Bartholomew, is based in San Francisco and covers information technology and software issues.
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