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The Privacy Conundrum
The need to protect consumers' privacy online is nearly indisputable. But global business is about to get a little more expensive, now that the privacy debate has arrived. According to a group of industry experts, the privacy debate will require costly solutions for both online and offline companies everywhere.
Speaking at the Global Privacy Summit last week in Washington, DC, experts gathered to hammer out the costs of complying with a growing body of regulatory proposals to enforce privacy, for both Web sites, as well as personal data, collected by any number of companies.
For companies willing to offer significant protection of personally collected data as well as consumer business transactions, it can be a competitive advantage. Austin Hill, president and CEO of Zero Knowledge, an Internet security company asserted: "What’s happened in the Internet is before we even got finished putting up our new businesses, all of the standards and rules started shifting, and it hasn’t settled yet."
Companies caught in today's shifting privacy debate are attempting to quash consumer concerns about the treatment of their data by hiring chief privacy officers or posting more detailed privacy policies. However, these same companies are concurrently questioning whether taking these actions is really sufficient enough.
"What we are seeing is this rising fear — are we able to make these decisions? Is that (solution) going to protect two years from now?" Hill said. The best defense for the uncertain fate of privacy regulation, Hill suggested, is preparation. "From a technology perspective, [companies that] invest in an infrastructure...will be better suited to adapt to rapidly changing legislation."
Privacy is not simply relegated to the concerns of Internet or e-commerce companies. David Merenbach, privacy director at Intuit, asked how proposed privacy regulations could impact companies that have been dealing with consumer data for years. "The cost associated with these different issues is huge," he said.
Merenbach argued that with regulatory requirements for privacy updates for customers, shareholders, and annual privacy reviews, companies could be forced to shell out millions. Such costs could potentially be prohibitive and create a market barrier for small companies trying to compete.
For global companies, the privacy problem looms large, given the patchwork of privacy laws and regulations around the world. David Aaron, former Undersecretary of Commerce — and chief negotiator of the "safe harbor" deal enabling U.S. companies to comply with Europe's privacy directive — said that companies complying with the new directive will need to invest heavily in privacy solutions, in order to provide Europeans with assurances of adequate privacy.
With the growth of mobile commerce, the costs will increase even more, Aaron said. "I think the one not talked about much is security…The real cost of handling the security dimension and protecting data externally is going to multiply where we move into m-commerce," he added
Two potential challenges the industry will face are the enforcement of existing privacy laws, and those yet to come, as well as the standardization of current privacy policies.
"When we look at who is the best at enforcement of regulatory compliance, it may not be the regulators," said Elizabeth Krentzman, national director for Deloitte and Touche's regulatory consulting practice. "It may be computer hackers and class action lawsuits." Krentzman noted that the cost of any compliance with policies, whether it is through forced regulation, or security threats, "Costs can potentially be open ended." Therefore companies may be forced to pick and choose solutions, she added.
Ireland's Business Community Totally Wired
Ireland's business community is almost fully wired to the Internet, according to a new study released Monday. Ninety-six percent of Irish companies have access to the Internet, an increase of 11 percent from last year and a 22 percent increase over 1998, according to the Information Society of Ireland.
A majority of companies, nearly 88 percent, are chiefly using the Internet to access information, while 73 percent reported using the Net for research. Yet a large number of businesses are actively using the Web for communicating with suppliers and procurement. Sixty-three percent reported communicating via the Internet and e-mail with suppliers, while 53 percent of company executive's surveyed said they use the Internet to procure goods and services. The survey is based on interviews with 503 chief executives across four different business sizes throughout Ireland.
The survey also revealed that 77 percent of Irish businesses now have Web sites, but engagement with e-commerce remains low. Only 20 percent of businesses with Web sites reported online storefronts as a reason for developing a Web site.
Ireland also is one step closer to streamlining its telecommunications industry. Minister for Public Enterprise Mary O' Rourke introduced the 2000 Communications Regulation Bill aimed at stepping up telecommunications competition. "This Bill will ensure that Ireland's communications industry has a regulatory regime which protects the interests of the consumer while providing a catalyst for enterprise in a competitive market," O' Rourke said. The bill would chiefly replace the Office of the Director of Telecommunications Regulation with a Commission for Communications Regulation. The new commission would act as a telecom watchdog, increasing the number of regulators from one to three, and would create a more transparent process for license applications.
Additionally, the O'Rourke proposal would call for unbundling the local loop, which would open the dominant telecom provider, Eircom, to competition in telephone and internet access services. O'Rourke's bill closely tracks European Union regulatory directives for telecommunications that call for further privatization of the telecom industry by 2002.
WTO Upholds Patent Ruling
U.S. Trade representative Charlene Barshefsky announced Monday that the World Trade Organization upheld its decision that Canadian patent law violated WTO rules. The United States filed a dispute settlement case against Canada for not complying with the TRIPS agreements that provides a patent term of 20 years from the date of issue. The previous Canadian Patent held that for patent applications filed before Oct. 1, 1989, the term was 17 years. After an initial victory in May, Canada Appealed the WTO's ruling in favor of the United States in June.
Australia Lags In Research and Development
Australia's Chief scientist Robin Batterham is calling for more funding for education and research as a "technology brain drain" is creating a shortage of skilled workers, leaving Australia lagging behind other countries in research and development. In his Capability Review, Batterham warns that Australia should take the opportunity to develop a strong science, engineering and technology base or be left behind. He noted that the country's research and development is well below the Organization for Economic Cooperation and Development average. "Australia's knowledge base and subsequent science capability is crucial not only to the development of new economy industries, but also to the competitiveness of Australia in existing old economy industries,'' the paper states. Battheram recommends increasing funding for the Australian Research Council and the university research infrastructure. He also urges the creation of innovation centers to help universities commercialize research.
- by Maureen Sirhal
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