Chapter 11 The Environment of Electronic Commerce International Legal Ethics and Tax Issues 1 Learning Objectives In this chapter you will learn about International electronic commerce Laws that govern electronic commerce activities Ethics issues that arise for companies conducting electronic commerce Taxes that are levied on electronic commerce 2 International Nature of Electronic Commerce Any business that engages in electronic commerce instantly becomes an international business Customers lack of inherent in strangers on the Web is logical and to be expected Business trust is an important successful factor of attracting customers 3 International Nature of Electronic Commerce Businesses engaging in electronic commerce must be aware of the differences in language and customs that make up the culture of any region in which they do business The barriers to international electronic commerce include language culture and infrastructure issues 4 Language Issues Only way to do business effectively in other cultures is to adapt to those cultures The first step to reach foreign customers is to provide local language versions of its Web site This may mean translating the Web site into another language or regional dialect 5 Language Issues Cont About 80 of the content available on the Internet today is in English More than 40 of current Internet users do not read English The most used non English languages for U S companies are Spanish German Japanese French and Chinese Global Reach offers Web site globalization service and maintains current information about languages on the Web 6 Language Issues Cont One Approach is to have a Web server that can detect the default language setting of the browser and automatically redirect the browser to the set of Web pages created in that language Another approach is to include links to multiple language versions on the home page 7 Language Issues Cont Firms that provide Web page translation services include Alis Technologies Berlitz LexFusion Rubric Ltd Transparent Language and Worldpoint Interactive Idiom Technologies sells software that automates the process of maintaining Web pages in multiple language versions 8 Culture Issues The combination of language and customs is often called culture Some errors stemming from subtle language and cultural standards are culture issues On the Web designers must be very careful when choosing icons that represent common actions Even colors or Web page design elements can be troublesome 9 Culture Issues Cont A site that strongly reflects a cultural design preference is the Swedish home page of Bokus com Softbank has devised a way to introduce electronic commerce to a reluctant Japanese population Nike realized that it had to create special Web pages to foreign customers 10 Culture Issues Cont Some part of the world have cultural environments that are extremely inhospitable to electronic commerce initiatives People s Republic of China and Singapore are wrestling with the issues presented by the growth of the Internet as a vehicle for doing business 11 Infrastructure Issues Internet infrastructure includes the computers and software connected to the Internet and the communications networks over which message packets travel Regulations in some countries have inhibited the development of the telecommunications infrastructure or limited the expansion of that infrastructure 12 Infrastructure Issues Cont Local connection costs through the existing telephone networks in many countries are very high This can have a profound effect o the behavior of electronic commerce participants The OECD statements have provided guidance for businesses and government to support international electronic commerce 13 Infrastructure Issues Cont In 1998 business and government leaders in several European countries began pushing for flatrate telephone line Internet access charges The information flows can be very complex for an international trade transaction Companies such as NextLinx Syntra and Vastera sell software designed to automate much of the international trade process 14 The Legal Environment of Electronic Commerce Businesses that operate on the Web must comply with the same laws and regulations that govern the operations of all businesses The Web extends a company s reach beyond traditional boundaries thus it faces many more laws than before The Web increases the speed and efficiency of business communications Web businesses that violate the laws can face rapid and intense reactions from many customers 15 Borders and Jurisdiction Territorial borders in the physical world serve a useful purpose in traditional commerce In the physical world geographic boundaries almost always coincide with legal and cultural boundaries The relationship between geographical boundaries and legal boundaries can be discussed in terms of four elements power effects legitimacy and notice 16 Power Power in the form of control over physical space and the people and objects that reside in that space is a defining characteristic of statehood Effective law enforcement requires power The ability of a government to exert control over a person or corporation is called jurisdiction The level of power asserted by a government is limited to that which is accepted by the culture that exists within its geographic boundaries 17 Effects Laws in the physical world are grounded in the relationship between physical proximity and the effects of a person s behavior Government provided trademark protection is a good example The characteristics of laws are determined by the local culture s acceptance of or reluctance to various kinds of effects 18 Legitimacy Most people agree that the legitimacy right to create and enforce laws derives from the mandate of those who are subject to those laws Legitimacy is the idea that those subject to laws should have some role in formulating them 19 Notice The physical boundary when crossed provides notice that one set of rules has been replaced by a different set of rules Borders provide this notice in the physical world The legal systems of most countries include a concept called constructive notice 20 Jurisdiction on the Internet Jurisdiction is more difficult on the Internet because traditional geographic boundaries do not exist Thus power effects legitimacy and notice do not translate very well to the virtual world of electronic commerce People or corporations that wish to enforce their rights based on either contract or tort law must