Chapter 5

E-commerce Security and Payment System

Learning Objectives
5.1 Understand the scope of e-commerce crime and security problems, the key dimensions
of e-commerce security, and the tension between security and other values.
5.2 Identify the key security threats in the e-commerce environment.
5.3 Describe how technology helps secure Internet communications channels and protect
networks, servers, and clients.
5.4 Appreciate the importance of policies, procedures, and laws in creating security.
5.5 Identify the major e-commerce payment systems in use today.
5.6 Describe the features and functionality of electronic billing presentment and payment
systems.

The Rise of the Global Cyberattack

• Class Discussion
• Have you or anyone you know been the subject of a cybercrime? If so, what happened?
• Do you think an agreement among countries akin to the Geneva Convention will be an effective
deterrent for cybercrime? Why or why not?
• What steps have you taken to protect yourself online?

The E-commerce Security Environment

• Scope of the problem
• Overall size of and losses due to cybercrime unclear
•McAfee/Center for Strategic and International Studies study: Global economic impact of
cybercrime and cyberespionage between $455 billion to $600 billion
• Reports by security product providers indicate increasing cybercrime
• Online credit card fraud one of the most high-profile forms
• Underground economy marketplaces sell stolen information, malware and more

What is Good E-commerce Security?

• To achieve highest degree of security
• New technologies
• Organizational policies and procedures
• Industry standards and government laws
• Other factors
• Time value of money
• Cost of security v s potential loss
• Security often breaks at weakest link

Figure 5.1 The E-commerce Security Environment

 Table 5.3 Customer and Merchant Perspectives on the Different Dimensions of
E-commerce Security
​
Dimension Customer’s Perspective Merchant’s Perspective

Integrity Has information I transmitted or received Has data on the site been altered without
been altered? authorization? Is data being received from customers
valid?

Nonrepudiation Can a party to an action with me later deny Can a customer deny ordering products?
taking the action?

Authenticity Who am I dealing with? How can I be What is the real identity of the customer?
assured that the person or entity is who they
claim to be?

Confidentiality Can someone other than the intended Are messages or confidential data accessible to anyone
recipient read my messages? other than those authorized to view them?

Privacy Can I control the use of information about What use, if any, can be made of personal data
myself transmitted to an collected as part of an e-commerce transaction? Is the
e-commerce merchant? personal information of customers being used in an
unauthorized manner?

Availability Can I get access to the site? Is the site operational?

The Tension between Security and Other Values

• Ease of use
• The more security measures added, the more difficult a site is to use, and the slower it becomes
• Public safety and criminal uses of the Internet
• Use of technology by criminals to plan crimes or threaten nation-state

Security Threats in the E-commerce Environment

• Three key points of vulnerability in e-commerce environment:
 • Client
• Server
• Communications pipeline (Internet communications channels)

Figure 5.2 A Typical E-commerce Transaction

Figure 5.3 Vulnerable Points in an E-commerce Transaction

Malicious Code
• Exploits and exploit kits
• Mal Advertising
• Drive-by downloads
• Viruses
• Worms
• Ransomware
• Trojan horses
• Backdoors
• Bots, botnets
Potentially Unwanted Programs
• Browser parasites
• Monitor and change user’s browser
• Adware
• Used to call pop-up ads
• Spyware
• Tracks users keystrokes, e-mails, IMs, etc.

Phishing
• Any deceptive, online attempt by a third party to obtain confidential information for financial gain
• Tactics
• Social engineering
• E-mail scams and Business Email Compromise (BEC) phishing
• Spear phishing
• Used for identity fraud and theft

Example of “Nigerian letter” scam

Hacking, Cybervandalism, and Hacktivism

• Hacking
• Hackers v s crackers
• White hats, black hats, grey hats
• Tiger teams
• Goals: cybervandalism, data breaches
• Cybervandalism:
• Disrupting, defacing, destroying Web site
• Hacktivism
Data Breaches
• Organization loses control over corporate information to outsiders
• Over 1,575 breaches in 2017, 45% increase over 2016
• Yahoo and Equifax two of the most notorious; Facebook breach in 2018 exposed personal
information of 30 million
• Leading causes
• Hacking
• Unauthorized access
• Employee error/negligence

Credit Card Fraud/Theft

• Stolen credit card incidences about 0.9% on the Web and about 0.8% of mobile transactions
• Hacking and looting of corporate servers is primary cause
• Central security issue: establishing customer identity
• E-signatures
• Multi-factor authentication
• Fingerprint identification

Identity Fraud/Theft
• Unauthorized use of another person’s personal data for illegal financial benefit
• Social security number
• Driver’s license
• Credit card numbers
• Usernames/passwords
• 2017: Almost 17 million U.S. consumers suffered identity fraud

Spoofing, Pharming, and Spam (Junk) Websites

• Spoofing
• Attempting to hide true identity by using someone else’s e-mail or IP address
• Pharming
• Automatically redirecting a URL to a different address, to benefit the hacker
• Spam (junk) websites
• Offer collection of advertisements for other sites, which may contain malicious code

Sniffing and Man-In-The-Middle Attacks

• Sniffer
• Eavesdropping program monitoring networks
• Can identify network trouble spots
• Can be used by criminals to steal proprietary information
• E-mail wiretaps
• Recording e-mails at the mail server level
• Man-in-the-middle attack
 • Attacker intercepts and changes communication between two parties who believe they are
communicating directly

Denial of Service (DoS) and Distributed Denial of Service (DDoS)

Attacks
• Denial of service (DoS) attack
• Flooding website with pings and page request
• Overwhelm and can shut down site’s web servers
• Often accompanied by blackmail attempts
• Botnets
• Distributed Denial of Service (DDoS) attack
• Uses hundreds or thousands of computers to attack target network
• Can use devices from Internet of Things, mobile devices
• DDoS smokescreening

Insider Attacks
• Largest threat to business institutions come from insider embezzlement
• Employee access to privileged information
• Poor security procedures
• Insiders more likely to be source of cyberattacks than outsiders

Poorly Designed Software

• Increase in complexity of and demand for software has led to increase in
flaws and vulnerabilities
• SQL injection attacks
• Zero-day vulnerability
• Heartbleed bug; Shellshock (BashBug); FREAK

Social Network Security Issues

• Social networks an environment for:
• Viruses, site takeovers, identity fraud, malware-loaded apps, click hijacking, phishing, spam
• Manual sharing scams
• Sharing of files that link to malicious sites
• Fake offerings, fake Like buttons, and fake apps

Mobile Platform Security Issues

• Little public awareness of mobile device vulnerabilities
• 2017: Over 26,500 different mobile malware variants identified by Symantec
• Vishing
• Smishing
• SMS spoofing
• Madware
Insight on Technology: Think Your Smartphone is Secure?
• Class Discussion
• What types of threats do smartphones face?
• Are there any vulnerabilities specific to mobile devices?
• What qualities of apps make them a vulnerable security point in smartphone use?
• Are apps more or less likely to be subject to threats than traditional PC software programs?

Cloud Security Issues

• DDoS attacks
• Infrastructure scanning (find vulnerability)
• Lower-tech phishing attacks yield passwords and access
• Use of cloud storage to connect linked accounts
• Lack of encryption and strong security procedures

Internet of Things Security Issues

• Challenging environment to protect
• Vast quantity of interconnected links
• Near identical devices with long service lives
• Many devices have no upgrade features
• Little visibility into workings, data, or security

Technology Solutions
• Protecting Internet communications
• Encryption
• Securing channels of communication
• SSL, TLS, VPNs, Wi-Fi
• Protecting networks
• Firewalls, proxy servers, IDS, IPS
• Protecting servers and clients
• OS security, anti-virus software

Figure 5.5 Tools Available to Achieve E-commerce Security

Encryption
• Encryption
• Transforms data into cipher text readable only by sender and receiver
• Secures stored information and information transmission
• Provides 4 of 6 key dimensions of e-commerce security:
• Message integrity
• Nonrepudiation
• Authentication
• Confidentiality

Symmetric Key Cryptography

• Sender and receiver use same digital key to encrypt and decrypt message
• Requires different set of keys for each transaction
• Strength of encryption: Length of binary key
• Data Encryption Standard (DES)
• Advanced Encryption Standard (AES)
• Other standards use keys with up to 2,048 bits

Public Key Cryptography

• Uses two mathematically related digital keys
• Public key (widely disseminated)
• Private key (kept secret by owner)
• Both keys used to encrypt and decrypt message
• Once key used to encrypt message, same key cannot be used to decrypt message
• Sender uses recipient’s public key to encrypt message; recipient uses private key to decrypt it

Figure 5.6 Public Key Cryptography: A Simple Case

Public Key Cryptography Using Digital Signatures and Hash Digests

• Sender applies a mathematical algorithm (hash function) to a message and then encrypts the
message and hash result with recipient’s public key
 • Sender then encrypts the message and hash result with sender’s private key-creating digital
signature-for authenticity, nonrepudiation
• Recipient first uses sender’s public key to authenticate message and then the recipient’s private
key to decrypt the hash result and message

Figure 5.7 Public Key Cryptography with Digital Signatures

Digital Envelopes
• Address weaknesses of:
• Public key cryptography
• Computationally slow, decreased transmission speed, increased processing time
• Symmetric key cryptography
• Insecure transmission lines
• Uses symmetric key cryptography to encrypt document
• Uses public key cryptography to encrypt and send symmetric key

Figure 4.8 Public Key Cryptography: Creating a Digital Envelope

Digital Certificates and Public Key Infrastructure (PKI)
• Digital certificate includes:
• Name of subject/company
• Subject’s public key
• Digital certificate serial number
• Expiration date, issuance date
• Digital signature of CA
• Public Key Infrastructure (PKI):
• CAs and digital certificate procedures
• PGP

Figure 5.9 Digital Certificates and Certification Authorities

Limitations of PKI
• Doesn’t protect storage of private key
• PKI not effective against insiders, employees
• Protection of private keys by individuals may be haphazard
• No guarantee that verifying computer of merchant is secure
• CAs are unregulated, self-selecting organizations

Securing Channels of Communication

• Secure Sockets Layer (SSL)/Transport Layer Security (TLS)
• Establishes secure, negotiated client-server session
• Virtual Private Network (VPN)
• Allows remote users to securely access internal network via the Internet
• Wireless (Wi-Fi) networks
• WPA2
• WPA3

Figure 5.10 Secure Negotiated Sessions Using SSL/TLS

Protecting Networks
• Firewall
• Hardware or software that uses security policy to filter packets
• Packet filters
• Application gateways
• Next-generation firewalls
• Proxy servers (proxies)
• Software servers that handle all communications from or sent to the Internet
• Intrusion detection systems
• Intrusion prevention systems

Figure 5.11 Firewalls and Proxy Servers

Protecting Servers and Clients

• Operating system security enhancements
• Upgrades, patches
• Anti-virus software
• Easiest and least expensive way to prevent threats to system integrity
 • Requires daily updates

Management Policies, Business Procedures, and Public Laws

• Worldwide, companies spend more than $86 billion on security hardware, software, services
• Managing risk includes:
• Technology
• Effective management policies
• Public laws and active enforcement

A Security Plan: Management Policies

• Risk assessment
• Security policy
• Implementation plan
• Security organization
• Access controls
• Authentication procedures, including biometrics
• Authorization policies, authorization management systems
• Security audit

Figure 5.12 Developing an E-commerce Security Plan

The Role of Laws and Public Policy

• Laws that give authorities tools for identifying, tracing, prosecuting cybercriminals:
• USA Patriot Act
• Homeland Security Act
• Private and private-public cooperation
• US-CERT
• CERT Coordination Center
• Government policies and controls on encryption software
 • OECD, G7/G8, Council of Europe, Wassener Arrangement

E-commerce Payment Systems

• In U.S., credit and debit cards are primary online payment methods
• Other countries have different systems
• Online credit card purchasing cycle
• Credit card e-commerce enablers
• Limitations of online credit card payment
• Security, merchant risk
• Cost
• Social equity

Figure 5.14 How an Online Credit Card Transaction Works

Alternative Online Payment Systems

• Online stored value systems:
• Based on value stored in a consumer’s bank,
checking, or credit card account
• Example: PayPal
• Other alternatives:
• Amazon Pay
• Visa Checkout, Mastercard’s MasterPass
• Dwolla

Mobile Payment Systems

• Use of mobile phones as payment devices
• Established in Europe and Asia
• Expanding in United States
• Near field communication (NFC)
• Different types of mobile wallets
• Universal proximity mobile wallets, such as Apple Pay, Google Pay, Samsung Pay, PayPal
Mobile
 • Branded store proximity wallets, offered by Walmart, Target, Starbucks, others
• P2P mobile payment apps, such as Zelle, Venmo

Blockchain
• Blockchain
• Enables organizations to create and verify transactions nearly instantaneously using a
distributed P2P database (distributed ledger)
• Benefits:
• Reduces costs of verifying users, validating transactions, and risks of storing and processing
transaction information
• Transactions cannot be altered retroactively and therefore are more secure
• Foundation technology for cryptocurrencies and supply chain management, as well as potential
applications in financial services and healthcare industries

Figure 5.16 How Blockchain Works

Cryptocurrencies
• Use blockchain technology and cryptography to create a purely digital medium of exchange
• Bitcoin the most prominent example
• Value of Bitcoins have widely fluctuated
• Major issues with theft and fraud
• Some governments have banned Bitcoin, although it is gaining acceptance in the U.S.
• Other cryptocurrencies (altcoins) include Ethereum/Ether, Ripple, Litecoin and Monero
• Initial coin offerings (I C Os) being used by some startups to raise capital

Electronic Billing Presentment and Payment (EBPP)

• Online payment systems for monthly bills
• Four EBPP business models:
• Online banking model (most widely used)
• Biller-direct (monthly telephone bill)
 • Mobile
• Consolidator (third party)
• All models are supported by EBPP infrastructure providers

Careers in E-commerce
• Position: Cybersecurity Threat Management Team Trainee
• Qualification/Skills
• Preparing for the Interview
• Possible Interview Questions needs of other instructors who rely on these materials.
Chapter 6
E-commerce Marketing & Advertising
Learning Objectives
6.1 Understand the key features of the Internet audience, the basic concepts of consumer
behavior and purchasing, and how consumers behave online.
6.2 Identify and describe the basic digital commerce marketing and advertising strategies
and tools.
6.3 Identify and describe the main technologies that support online marketing.
6.4 Understand the costs and benefits of online marketing communications.

Consumers Online: The Internet Audience and Consumer Behavior (1 of 3)

• Around 280 million in the U.S. have Internet access in 2018
• Growth rate has slowed
• Intensity and scope of use both increasing
• Some demographic groups have much higher percentages of online usage
• Income, education, age, ethnic dimensions
• In Vietnam, there are 64 million Internet users in 2019 (66% of the population).

Consumers Online: The Internet Audience and Consumer Behavior (2 of 3)

• Broadband and mobile
• Significant inequalities in broadband access
• Older adults, lower income, lower educational levels
• Non-broadband household still accesses Internet via mobile or other locations
• In Vietnam, Internet broadband subscriptions are 13 millions, and mobile broadband
subscriptions are 52,8 millions.
• Community effects
• Role of social emulation in consumption decisions
• “Connectedness”
• Top 10-15% are more independent
• Middle 50% share more purchase patterns of friends
• Recommender systems - co-purchase networks

Consumers Online: The Internet Audience and Consumer Behavior (3 of 3)

• Consumer behavior models
• Study of consumer behavior; social science discipline
• Attempt to predict or explain wide range of consumer decisions
• Based on background demographic factors and other intervening, more immediate variables
• Profiles of online consumers
• Consumers shop online primarily for convenience

Figure 6.1 A General Model of Consumer Behavior

The Online Purchasing Decision (1 of 2)
• Five stages in consumer decision process
• Awareness of need
• Search for more information
• Evaluation of alternatives
• Actual purchase decision
• Post-purchase contact with firm

Figure 6.2 The Consumer Decision Process and Supporting Communications

The Online Purchasing Decision (2 of 2)

• Decision process similar for online and offline behavior
• General online behavior model
• User characteristics
 • Product characteristics
• Website features: latency, usability, security
• Attitudes toward online purchasing
• Perceptions about control over Web environment
• Clickstream behavior

Figure 6.3 A Model of Online Consumer Behavior

Shoppers: Browsers and Buyers

• Shoppers: Over 90% of Internet users
• Around 80% are buyers
• Around 13% are browsers (purchase offline)
• Online research influenced about $2.6 trillion of retail purchases in 2017
• Online traffic also influenced by offline brands and shopping
• E-commerce and traditional commerce are coupled: Part of a continuum of consuming behavior.

How Consumers Shop

• How shoppers find online vendors
• Highly intentional, goal-oriented
• Search engines
• Marketplaces (Amazon, eBay)
• Specific retail site
• About 8% of Internet users don’t shop online
• Trust factor
• Hassle factors (shipping costs, returns, etc.)

Trust, Utility, and Opportunism in Online Markets

• Two most important factors shaping decision to purchase online:
• Utility:
 • Better prices, convenience, speed
• Trust:
• Perception of credibility, ease of use, perceived risk
• Sellers develop trust by building strong reputations for honesty,
fairness, delivery

Digital Commerce Marketing and Advertising: Strategies and Tools

• Features of Internet marketing (v s traditional)
• More personalized
• More participatory
• More peer-to-peer
• More communal
• The most effective Internet marketing has all four features

Multi-Channel Marketing Plan

• Website
• Traditional online marketing
• Search engine, display, e-mail, affiliate
• Social marketing
• Social networks, blogs, video, game
• Mobile marketing
• Mobile/tablet sites, apps
• Offline marketing
• Television, radio, newspapers

Strategic Issues and Questions

• Which part of the marketing plan should you focus on first?
• How do you integrate the different platforms for a coherent message?
• How do you allocate resources?
• How do you measure and compare metrics from different platforms?
• How do you link each to sales revenues?

Establishing the Customer Relationship

• Website functions to:
• Establish brand identity and customer expectations
• Differentiating product
• Anchor the brand online
• Central point for all marketing messages
• Inform and educate customer
• Shape customer experience

Online Marketing and Advertising

• Online advertising
 • Display, search, mobile messaging, sponsorships, classifieds, lead generation, e-mail
• Advantages:
• 18-34 audience is online
• Ad targeting to individuals
• Price discrimination
• Personalization

Traditional Online Marketing and Advertising Tools

• Search engine marketing and advertising
• Display ad marketing
• E-mail marketing
• Affiliate marketing
• Viral marketing
• Lead generation marketing

Search Engine Marketing and Advertising (1 of 2)

• Search engine marketing (SEM)
• Use of search engines for
branding
• Search engine advertising
• Use of search engines to
support direct sales
• Types of search engine advertising
• Paid inclusion
• Pay-per-click (PPC) search ads
• Keyword advertising
• Network keyword advertising
(context advertising)

Search Engine Marketing and Advertising (2 of 2)

• Search engine optimization (SEO)
• Google search engine algorithms
• Social search
• Utilizes social contacts and social graph to provide fewer and more
relevant results
• Search engine issues
• Paid inclusion and placement practices
• Link farms, content farms
• Click fraud

Display Ad Marketing (1 of 2)
• Banner ads
• Rich media ads
• Interstitial ads
• Video ads
• Far more effective than
other display formats
• Sponsorships
• Native advertising
Display Ad Marketing (2 of 2)
• Content marketing
• Advertising networks
• Ad exchanges, programmatic advertising, and real-time bidding (RTB)
• Display advertising issues
• Ad fraud
• Viewability
• Ad blocking

Figure 6.6 How an Advertising Network Works

E-mail Marketing
• Direct e-mail marketing
• Messages sent directly to interested users
• Benefits include
• Inexpensive
• Average around 3% to 4% click-throughs
• Measuring and tracking responses
• Personalization and targeting
• Three main challenges
• Spam
• Anti-spam software
• Poorly targeted purchased e-mail lists

Spam
• Unsolicited commercial e-mail
• Around 55% of all e-mail in 2017
• Most originates from bot networks
• Efforts to control spam have largely failed:
• Government regulation (CAN - SPAM)
• State laws
• Voluntary self-regulation by industries (DMA)
• Canada’s stringent anti-spam laws

Other Types of Traditional Online Marketing

• Affiliate marketing
• Commission fee paid to other websites for sending customers to their website
• Viral marketing
• Marketing designed to inspire customers to pass message to others
• Lead generation marketing
• Services and tools for collecting, managing, and converting leads

Social, Mobile, and Local Marketing and Advertising

• Social marketing and advertising
• Use of online social networks and communities
• Mobile marketing and advertising
• Use of mobile platform
• Influence of mobile apps
• Local marketing
• Geotargeting
• Display ads in hyperlocal publications
• Coupons

Multi-Channel Marketing
• Integration of online and offline marketing
• Increasing percentage of American media consumers use several media at
once
• Reinforce branding messages across media
• Most effective multi-channel campaigns use consistent imagery across
media

Insight on Business: Are the Very Rich Different from You and Me?
• Class Discussion
• What distinguishes luxury marketing from ordinary retail marketing?
• What challenges do luxury retailers have in translating their brands and the look and feel of luxury
shops into Web sites?
• How has social media affected luxury marketing?
• Visit the Net-a-Porter website. What do you find there?

Other Online Marketing Strategies

• Customer retention strategies
• One-to-one marketing (personalization)
• Behavioral targeting (interest-based advertising)
• Retargeting
• Customization and customer co-production
• Customer service
• FAQs
• Real-time customer service chat systems
• Automated response systems

Pricing Strategies (1 of 2)
• Pricing: integral part of marketing strategy
• Traditional pricing based on fixed costs, variable costs, demand curve
• Marginal costs
• Marginal revenue
• Piggyback strategy
• Price discrimination

Pricing Strategies (2 of 2)
• Free and freemium
• Versioning
• Bundling
• Dynamic pricing
• Auctions
• Yield management
• Surge pricing
• Flash marketing

Long Tail Marketing

• Internet allows for sales of obscure products with little demand
• Substantial revenue because
• Near zero inventory costs
• Little marketing costs
• Search and recommendation engines

Insight on Technology: The Long Tail: Big Hits and Big Misses
• Class Discussion
• What are recommender systems? Give an example of one you have used.
• What is the Long Tail and how do recommender systems support sales of items in the Long Tail?
• How can human editors, including consumers, make recommender systems more helpful?

Internet Marketing Technologies

• Internet’s main impacts on marketing:
 • Scope of marketing communications broadened
• Richness of marketing communications increased
• Information intensity of marketplace expanded
• Always-on mobile environment expands marketing opportunities

Web Transaction Logs

• Built into web server software
• Record user activity at website
• Provides much marketing data, especially combined with:
• Registration forms
• Shopping cart database
• Answers questions such as:
• What are major patterns of interest and purchase?
• After home page, where do users go first? Second?

Cookies and Tracking Files

• Types of tracking files
• Cookies
• Flash cookies
• Web beacons (“bugs”)
• Tracking headers (supercookies)
• Other tracking methods
• Deterministic cross-device tracking
• Probabilistic cross-device tracking

Databases
• Enable profiling
• Store records and attributes
• Database management system (DBMS):
• SQL (Structured Query Language):
• Industry-standard database query and manipulation language used in a relational database
• Relational databases

Data Warehouses and Data Mining

• Data warehouse:
• Collects firm’s transactional and customer data in single location for offline analysis by
marketers and site managers
• Data mining:
• Analytical techniques to find patterns in data, model behavior of customers, develop customer
profiles
• Query-driven data mining
• Model-driven data mining
• Rule-based data mining
Hadoop and the Challenge of Big Data
• Big data
• Petabyte, exabyte range
• Web traffic, e-mail, social media, content
• Traditional DBMS unable to process the increasing volume of data
• Hadoop
• Open-source software framework
• Processes any type of data, even unstructured
• Distributed processing

Marketing Automation and Customer Relationship Management (CRM) Systems

• Marketing automation systems
• Track steps in lead generation
• CRM systems
• Manage relationship with customers once purchase is made
• Create customer profiles
• Customer data used to:
• Develop and sell additional products
• Identify profitable customers
• Optimize service delivery, and so on

Figure 6.9 A Customer Relationship Management System

Online Marketing Metrics: Lexicon

• Audience size/market share metrics
• Impressions, click-through rate (CTR), page views, viewability rate, stickiness, loyalty, reach,
recency
• Conversion to customer metrics
• Acquisition rate, conversion rate, browse-to-buy ratio, cart conversion rate, abandonment rate
• Video ad metrics
 • View time, completion rate
• E-mail campaign metrics
• Open rate, delivery rate, click-through rate, bounce-back rate

Figure 6.10 An Online Consumer Purchasing Model

How Well Does Online Advertising Work?

• Use ROI to measure ad campaign
 • Difficulty of cross-platform attribution
• Highest click-through rates: Search engine ads, permission e-mail campaigns
• Online channels compare favorably with traditional
• Most powerful marketing campaigns use multiple channels, including online, catalog, TV, radio,
newspapers, stores

The Costs of Online Advertising

• Pricing models
• Barter, cost per thousand (CPM), cost per click (CPC), cost per action (CPA), hybrid, sponsorship
• Measuring issues
• Correlating online marketing to online or offline sales
• In general, online marketing is more expensive on CPM basis, but more efficient in producing sales
• Effective cost-per-thousand (eCPM)

Marketing Analytics
• Software that analyzes data at each stage of the customer conversion process
• Awareness
• Engagement
• Interaction
• Purchase activity
• Loyalty and post-purchase
• Helps managers
• Optimize ROI on website and marketing efforts
• Build detailed customer profiles
• Measure impact of marketing campaigns

Figure 6.11 Web Analytics and the Online Purchasing Process

Careers in E-commerce
• Position: Digital Marketing Assistant
• Qualification/Skills
• Preparing for the Interview
• Possible Interview Questions
Chapter 7
Social, Mobile and Local Marketing
Learning Objectives
7.1 Understand the difference between traditional online marketing and the new social-mobile-local
marketing platforms and the relationships between social, mobile, and local marketing.
7.2 Understand the social marketing process from fan acquisition to sales and the marketing
capabilities of social marketing platforms such as Facebook, Instagram, TikTok, Twitter, and
Pinterest.
7.3 Identify the key elements of a mobile marketing campaign.
7.4 Understand the capabilities of location-based local marketing.

#Marketing: #BookTok, #WeddingTok, and #CrumblReviews

• Class Discussion
– Have you used TikTok? Do you follow any particular influencers or hashtags on TikTok?
– Have you ever purchased anything recommended by a social media influencer? Why or why not?
– What are some of the issues with respect to influencer marketing on TikTok or other social
networks?

Introduction to Social, Mobile, and Local Marketing

• New marketing concepts
– Conversations
– Engagement
• Impact of smartphones and tablets
• Social-mobile-local nexus
– Strong ties between consumer use of social networks, mobile devices, and local shopping

Figure 7.3 Online Marketing Platforms

Social Marketing
• Traditional online marketing goals
 – Deliver business message to the most consumers
• Social marketing goals
– Encourage consumers to become fans and engage and enter conversations
– Strengthen brand by increasing share of online conversation

Social Marketing Players

• The most popular sites account for over 90% of all social network visits
– Facebook, Instagram, TikTok, Twitter, Pinterest, Snapchat, LinkedIn
– Unique visitors v s engagement
▪ Engagement measures the amount and intensity of user involvement
▪ Facebook dominates in both measures
– Dark social: sharing outside of major social network (e-mail, IM, texts, etc.)

Figure 7.4 The Social Marketing Process

Measuring Social Marketing Results

• Basic metrics
– Fan acquisition (impressions)
– Engagement (conversation rate)
– Amplification (reach)
– Community
– Brand strength/sales
• Social media analytics tools
– Social media management systems (HootSuite)
– Analytics providers (Google Analytics, Webtrends, IBM Digital Analytics)

Insight on Technology: Optimizing Social Marketing With Sprout Social

• Class Discussion
– How do social media analytics help companies identify and attract customers?
– What are the challenges in measuring the effectiveness of social marketing campaigns?
– What advantages did the Atlanta Hawks and Allegiant Air find in using Sprout's analytics and
tools?
Facebook Marketing
• Basic Facebook features
– Profile and Timeline
– Feed
– Groups
– Tagging and Reactions buttons
– Stories and Reels
• Social density of audience is magnified
– Facebook is largest repository of deeply personal information
– Facebook geared to maximizing connections between users

Facebook Marketing Tools

• Reactions Buttons
• Brand Pages
• Facebook Ads (includes various formats including display ads and video)
– Can be placed in Feed, right-hand column or side bar; Stories, or Reels; on Messenger; within
apps; Facebook Watch (video-on-demand service)
– Most revenue comes from mobile ad platform
• Facebook Live: free video streaming service that can be saved to a brand’s page

Starting a Facebook Marketing Campaign

• Establish Facebook brand page
• Use comment and feedback tools to encourage fan comments
• Encourage brand involvement through video, rich media, contests
• Set up Facebook Ads account (Meta Business Suite); create a Facebook Ads campaign
• Use Facebook Groups; develop a community of fans

Instagram Marketing
• Visual social network focused on photos and videos
• Owned by Meta, Facebook’s parent
• Basic Instagram features
– Profile
– Feed
– Stories and Reels
– Instagram Live and Instagram Video
– Tagging and Hashtags
– Filters
– Instagram Direct

Instagram Marketing Tools

• Brand Profiles
• Instagram Ads (includes various formats including display ads and video ads)
– Various formats including display ads and video ads
– Carousel ads
– Stories
 – Can include Buy button

Starting an Instagram Marketing Campaign

• Set up free Instagram business profile
• Turn an Instagram post into an ad by using Instagram’s Boost Post function
• Connect Instagram account to Meta Business Suite; create an Instagram Ads campaign
• Partner with influencers to extend reach

TikTok Marketing
• One of newer social networks; short videos
• Owned by Chinese company Bytedance
• Basic TikTok features
– Profile
– For You Page based on algorithm
– Tagging and Hashtags
– Filters and effects
– Stitch and Duet

TikTok Marketing Tools

• In-feed ads
– Image ads
– Video ads
– Spark ads
– Carousel ads
– Pangle ads
– TopView ads
• Branded Hashtag Challenges
• Search ads also being tested as of 2022

Starting a TikTok Marketing Campaign

• Create a profile
• Start creating and posting video content
• Partner with creators and influencers
• Launch organic hashtag challenges
• Try some of TikTok’s ad formats

Twitter Marketing
• Social network originally based on 140-character text messages
• Now allows users to send and receive 280-character messages, news articles, photos, videos
• Basic features
– Tweets, retweets, mentions, replies
– Followers
– Direct messages (DMs)
– Hashtags
– Moments tab
– Timeline
 Twitter Marketing Tools
• Promoted Ads
– Variety of formats: Text Ads, Carousel Ads, Moment Ads, Video Ads
• Follower Ads
• Twitter Takeover
• Branded Notification
• Twitter Amplify
• Twitter Cards
• Twitter Live

Starting a Twitter Marketing Campaign

• Establish a Twitter account
• Follow others relevant to your content and conversation
• Try Promoted Ads
• Try Follower Ads
• For larger budgets, use Twitter Takeover
• For retail business local sales, try Twitter Cards

Pinterest Marketing
• Online board to which users can “pin” photos
• Enables users to talk about brands using pictures rather than words
• Features include:
– Pins and re-pins to Boards
– Home Feed
– Hashtags and keywords
– Share
– Search
– Pinterest Lens
– Widgets and buttons

Pinterest Marketing Tools

• Brand pages
• Paid formats
– Standard and Carousel
– Video
– Shopping
– Collection
– Search ads
• Visual search engine
• Idea Pins
• Rich Pins: Product, Article, and Recipe

Starting a Pinterest Marketing Campaign

• Create Pinterest brand page
• Pin photos of products
• Create multiple theme-based lifestyle boards
• Use Pinterest Rich Pins
• Add Pinterest widgets and buttons to website
• Promote Pinterest account on other social networks
• Follow and interact with other pinners and boards
• Try various Pinterest Promoted Pins and other ad options

Marketing on Other Social Networks (1 of 2)

• Snapchat: Mobile messaging app/social network
• Basic features
– Snapchat Stories
– Live Stories
– Discover
• Marketing tools
– Snap Ads
– Sponsored Geofilters
– Sponsored Lenses

Marketing on Other Social Networks (2 of 2)

• LinkedIn: Social network focused on professional networking
• Basic features: Profile pages and Feed
• Marketing tools
– Company profile page
– Showcase page to highlight product or service
– Career page targeted at recruiting
– Sponsored posts (ads) in feeds; display ads
– Sponsored inMail
– LinkedInPulse

The Downside of Social Marketing

• Loss of control
– Where ads appear in terms of other content
– What people say
▪ Posts
▪ Comments
▪ Inaccurate or embarrassing material
• In contrast, TV ads maintain near complete control

Insight on Society: Marketing to Children in the Age of Social, Mobile, Local

• Class Discussion
– Why is online marketing to children a controversial practice?
– What is the Children’s Online Privacy Protection Act (COPPA), and how does it protect the
privacy of children?
– What actions must YouTube take as a result of its settlement with the Federal Trade Commission?
– Should COPPA be revised? If so, how?

Mobile Marketing
• About 280 million Americans use a mobile device for Internet access
 – Devices used multiple times per day
• In 2022, m-commerce accounts for about 40% of all retail and travel e-commerce revenues.
• Challenges
– Motivating consumers to click on mobile ads
– Pricing for mobile ads

Figure 7.5 The Growth of M-commerce

How People Actually Use Mobile Devices

• Average of four and a half hours daily on mobile devices
– Almost 70% of time spent occurs in home
– Entertainment (music and podcasts, social networks,
video, mobile game apps) is the primary focus
• Mobile devices currently used more for communicating and entertainment than for shopping and
buying, but:
– Rapidly growing smartphone m-commerce sales

In-App Experiences and Ads

• Mobile use
– Users spend almost four times the amount time using apps compared to mobile browsers
– Users use about 45 apps per month
• App marketing
– Most effective are in-app ads
– Placed in most popular apps
– Targeted to immediate activities and interests

How the Multi-Screen Environment Changes the Marketing Funnel

• Consumers becoming multi-platform
– Desktops, smartphones, tablets, TV
– Multi-device users use multiple devices to complete a specific action
▪ View ad on TV, search on smartphone, purchase on tablet
• Marketing implications
– Consistent branding
– Responsive design
– Increased complexity, costs

Mobile Marketing Overview

• Mobile marketing more than 66% of all online marketing
• Dominated by Meta (Facebook and Instagram) and Google
– Others with significant presence: Amazon, Twitter, LinkedIn, and Snapchat
• Google is dominant in mobile search
• Meta dominates mobile display ads

Basic Mobile Device Features

• Personal communicator and organizer
• Screen size and resolution high enough to support graphics and video
• Self-locating GPS locating capability
• Web browser
• Apps
• Ultraportable and personal
• Multimedia capable
• Touch/haptic technology

Mobile Marketing Tools: Ad Formats

• Mobile marketing formats
– Search ads
– Display ads
– Video
– Text/video messaging
– Other: e-mail, classifieds, lead generation
• Social networks have brought their desktop advertising techniques to mobile platform

Insight on Business: Mobile Marketing Revs Up With 3D, AR, VR and the Metaverse
• Class Discussion
– Why do mobile devices represent such a promising opportunity for marketers?
– What are the benefits and the appeal of 3D, AR, and the metaverse for mobile advertising?
– Have you ever engaged with 3D, AR, or metaverse-based mobile ads?
– What types of products are best suited for 3D, AR, or metaverse-based ads?

Starting a Mobile Marketing Campaign

• Develop a mobile website; include links to social networks
• Mobile versions of display advertising campaigns
• Join an ad network such as Google AdMob
• Develop interactive content aimed at mobile users
• Measuring and manage campaign

Figure 7.10 Measuring the Effectiveness of a Mobile and Social Marketing Branding Campaign

Local and Location-Based Marketing

• Location-based marketing
– Targets messages to users based on location
– Marketing of location-based services
• Location-based services
– Provide services to users based on location
▪ Personal navigation
▪ Point-of-interest
▪ Reviews
▪ Friend-finders, family trackers
• Consumers have high likelihood of responding to local ads

The Growth of Local and Location-Based Mobile Marketing

• Prior to 2005, nearly all local advertising was non-digital
– Google Maps (2005)
▪ Enabled targeting ads to users based on IP address and general geographic location
– Smartphones, Google’s mobile maps app (2007)
▪ Enabled targeting ads based on GPS
• Location-based mobile marketing
– Expected to triple over next five years

Figure 7.11 Location-Based Mobile Marketing in Perspective

Location-Based Marketing Platforms
• Google
– Android operating system has built-in location functionality
– Google Maps, Waze app, Google MyBusiness, AdMob (mobile advertising business)
• Meta (Facebook and Instagram)
• Twitter
• YP (formerly Yellow Pages)

Location-Based Mobile Marketing

Technologies
• Two types of location-based marketing techniques
– Geo-aware techniques
▪ Identify location of user’s device and target ads, recommending actions within reach
– Proximity marketing
▪ Identify a perimeter around a location and target ads and recommendations within that perimeter
• Identifying locations
– G P S signals
– Cell-tower locations
– Wi-Fi locations

Why Is Location-Based Mobile Marketing Attractive to Marketers?

• Mobile users more active, ready to purchase than desktop users
• More than 80% of U.S. consumers use mobile devices to search for local products, services
– 50% of smartphone users visit a store within 1 day of local search
– 18% of smartphone users make a purchase

Location-Based Marketing Tools

• Geo-social-based services marketing
• Location-based services marketing
• Mobile-local social network marketing
• Proximity marketing
• In-store messaging
• Location-based app messaging
Location-Based Marketing Tools

Starting a Location-Based Marketing Campaign

• Location-based considerations
– Action-based, time-restrained offers and opportunities
– Target location-aware mobile user demographic
– Strategic analysis of marketspaces
• Measuring marketing results
– Same basic measures as mobile and web marketing
– Metrics for unique characteristics. In click-to-call campaign, would also measure:
▪ Number of calls
▪ Duration of calls
▪ New versus existing customers
▪ Number of accidental or hostile calls

Careers in E-commerce
• Position: Social Media Marketing Associate
• Qualification/Skills
• Preparing for the Interview
• Possible Interview Questions
Chapter 8
Ethical, Social, and Political Issues in E-commerce
Learning Objectives
8.1 Understand why e-commerce raises ethical, social, and political
issues.
8.2 Understand basic concepts related to privacy and information rights,
the practices of e-commerce companies that threaten privacy, and the
different methods that can be used to protect online privacy.
8.3 Understand the various forms of intellectual property and the
challenges involved in protecting it.
8.4 Understand how the Internet is governed and why taxation of e-
commerce raises governance and jurisdiction issues.
8.5 Identify major public safety and welfare issues raised by e-
commerce.

The Right to Be Forgotten: Europe Leads on Internet Privacy

• Class Discussion
• Is Google responsible for the accuracy of links to other information? Why or why not?
• Why do European and American views on privacy protection differ so dramatically?
• How can the different perspectives on privacy be managed in a global environment like the
Internet?

Understanding Ethical, Social, and Political Issues in E-commerce

• Internet, like other technologies, can:
• Enable new crimes
• Affect environment
• Threaten social values
• Costs and benefits must be carefully considered, especially when there are no clear-cut legal or
cultural guidelines

A Model for Organizing the Issues

• Issues raised by Internet and e-commerce can be viewed at individual, social, and political levels
• Four major categories of issues:
• Information rights
• Property rights
• Governance
• Public safety and welfare

Figure 8.1 The Moral Dimensions of an Internet Society

Basic Ethical Concepts
• Ethics
• Study of principles used to determine right and wrong courses of action
• Responsibility
• Accountability
• Liability
• Laws permitting individuals to recover damages
• Due process
• Laws are known, understood
• Ability to appeal to higher authorities to ensure laws applied correctly

Analyzing Ethical Dilemmas

• Process for analyzing ethical dilemmas:
1. Identify and clearly describe the facts
2. Define the conflict or dilemma and identify the higher-order values involved
3. Identify the stakeholders
4. Identify the options that you can reasonably take
5. Identify the potential consequences of your options

Candidate Ethical Principles

• Golden Rule
• Universalism
• Slippery Slope
• Collective Utilitarian Principle
• Risk Aversion
• No Free Lunch
• The New York Times Test
• The Social Contract Rule
Privacy and Information Rights
• Privacy
• Moral right of individuals to be left alone, free from surveillance or interference from other
individuals, organizations, or state
• Information privacy: 4 premises
• Right to control information collected about them
• “Right to be forgotten”
• Right to know when information is collected and give consent
• “Informed consent”
• Right to personal information due process
• Right to have personal information stored in a secure manner

Table 8.2 The FTC’s Fair Information Practice Principles

Principle Description

Notice/Awareness (core Sites must disclose their information practices before collecting
principle) data. Includes identification of collector, uses of data, other
recipients of data, nature of collection (active/inactive), voluntary
or required, consequences of refusal, and steps taken to protect
confidentiality, integrity, and quality of the data.

Choice/Consent (core There must be a choice regime in place allowing consumers to

principle) choose how their information will be used for secondary
purposes other than supporting the transaction, including internal
use and transfer to third parties. Opt-in/opt-out must be available.

Access/Participation Consumers should be able to review and contest the accuracy and
completeness of data collected about them in a timely,
inexpensive process.

Security Data collectors must take reasonable steps to assure that

consumer information is accurate and secure from unauthorized
use.

Enforcement There must be a mechanism to enforce F I P principles in place.

This can involve self-regulation, legislation giving consumers
legal remedies for violations, or federal statutes and regulation.

Privacy in The Public Sector: Privacy Rights of Citizens

• Public sector privacy rights have long history
• First Amendment
• Fourth Amendment
• Fourteenth Amendment
• Constitutional, implied privacy rights did not cover collection and use of personal information
• 1974 Privacy Act
• Federal and state law to protect individuals against unreasonable government intrusion

Privacy in The Private Sector: Privacy Rights of Consumers

• Privacy issues rose with first large-scale, nationwide computerized systems
– Credit card systems, credit rating agencies
• Piecemeal federal and state privacy legislation, applying to specific industries
– Spoke v Robins: what harm must be shown in order to sue?
• Historically, few claims to privacy in public, open markets such as in e-commerce
• Emergence of Internet has created enormous collections of personal data
– Ideal environment for business and government to invade personal privacy of consumers
– Google, Amazon, Netflix, etc.

Information Collected by Websites

• Data collected includes
• Personally identifiable information (PII)
• Anonymous information
• Types of data collected
• Name, address, phone, e-mail, social security
• Bank and credit accounts, gender, age, occupation, education
• Preference data, transaction data, clickstream data, browser type

Key Issues in Online Privacy of Consumers

• Top concerns
• Profiling and ad targeting
• Social network privacy
• Sharing of information by marketers
• Mobile phone privacy
• Digital assistant privacy

Marketing: Profiling, Behavioral Targeting, and Retargeting (1 of 2)

• Profiling
• Creation of data images that characterize online individual and group behavior
• Anonymous profiles
• Personal profiles
• Facial recognition a new dimension
• Advertising networks
• Track consumer and browsing behavior on Web
• Dynamically adjust what user sees on screen
• Build and refresh profiles of consumers
• Google’s new privacy policy

Marketing: Profiling, Behavioral Targeting, and Retargeting (2 of 2)

• Business perspective:
• Increases effectiveness of advertising, subsidizes content
• Enables sensing of demand for new products
• Critics’ perspective:
 • Undermines expectation of anonymity and privacy
• Enables price discrimination

Social Networks: Privacy and Self-Revelation

• Social networks
• Encourage sharing personal details
• Pose unique challenge to maintaining privacy
• Facebook
• Massive database
• Serving ads to users not on Facebook
• Sharing information with third parties
• Personal control over personal information v s Organization’s desire to monetize social network

Mobile Devices: Privacy Issues

• Mobile apps
• Funnel personal information to mobile advertisers for targeting ads
• Track and store user locations
• Track users’ use of other apps
• Persistent location tracking
• U.S. Supreme Court rules that police need warrant prior to searching a cell phone for information

Consumer Privacy Regulation: the FTC (1 of 2)

• Fair Information Practice (FIP) principles
• Informed consent: Opt-in and opt-out
• Harm-based approach
• “Do Not Track” mechanism
• Recent emphasis is to give consumer rights regarding collected personal
information

Consumer Privacy Regulation: the FTC (2 of 2)

• FTC’s current privacy framework
• Scope:
• Applies to all commercial entities
• Privacy by Design:
• Companies should promote consumer privacy throughout the organization and at all stages in
the development of products
• Simplified Choice
• Companies should simplify consumer choice
• Greater Transparency

Consumer Privacy Regulation: the Federal Communications Commission (FCC)

• 2015 classification of broadband ISPs as similar to public utility services and subject to FCC
regulation
• 2016 FCC approved new privacy rules for broadband ISPs
 • Must notify users of privacy options or obtain user consent to collect information
• Service cannot be contingent on users surrendering privacy
• 2017 Congress voted to repeal privacy rules for broadband ISPs

Privacy Policies
• Website Terms of Use Notices
• Recent study showed these polices would take average reader 8 hours to read policies
• Have conflicting statements
• Little oversight and comparison between policies of different companies

Privacy Protection in Europe

• European privacy protection much stronger than in U.S
• 2016 General Data Protection Regulation (GDPR)
• Replaces Data Protection Directive of 1998
• Applies to all organizations that operate in EU
• Protects wide variety of PII
• Strengthens citizens’ rights to their own personal data
• Strengthens oversight of firms to ensure compliance
• Environment has turned against U.S. firms like Facebook and unfettered collection and use of
personal data.

Cyber Security in Vietnam

• The Law on Cyber ​Information Security 2015 protects the information security on 03 aspects:
• Information integrity
• Information confidentiality
• Availability of information
• The Law on Cyber ​Security 2018 focuses on combating malicious information, infringing upon
national security, social order and safety, and the legitimate rights and interests of the individuals,
organizations and agencies in the network environment.

Industry Self-Regulation
• Privacy seal programs
• Network Advertising Initiative (NAI)
• Ad Choices Program
• In general, self-regulation has not succeeded in reducing American fears of privacy invasion or
reducing the level of privacy invasion

Technology Solutions
• Solutions include
• Intelligent Tracking Protection (ITP)
• Differential privacy software
• Privacy default browsers
• Message encryption
• Spyware blockers
 • Pop-up blockers and ad blockers
• Secure e-mail, anonymous remailers
• Cookie managers
• Public key encryption

Privacy Protection
• Privacy protection as a business
• Personal Data Economy (PDE)
• Internet of Me
• Life Management tools
• Privacy advocacy groups

Limitations on The Right to Privacy (1 of 2)

• Law enforcement and surveillance
• Edward Snowden and NSA Prism program
• Legislation that strengthens ability of law enforcement to monitor Internet users without their
knowledge
• CALEA, USA Patriot Act, Cyber Security Enhancement Act, Homeland Security Act, USA
Freedom

Limitations on The Right to Privacy (2 of 2)

• Apple’s iPhone 6 and encryption controversy
• Supreme Court cases limiting law enforcement’s ability to obtain data from mobile phones without a
warrant
• Riley v California
• United States v Jones
• Use of personal data by government agencies is widespread

Intellectual Property Rights

• Intellectual property:
• All tangible and intangible products of human mind
• Major ethical issue:
• How should we treat property that belongs to others?
• Major social issue:
• Is there continued value in protecting intellectual property in the Internet age?
• Major political issue:
• How can Internet and e-commerce be regulated or governed to protect intellectual property?

Intellectual Property Protection

• Main types of protection:
• Copyright
• Patent
• Trademark law
• Trade secrets law
• Goal of intellectual property law:
 • Balance two competing interests-public and private
• Maintaining this balance of interests is always challenged by the invention of new technologies

Copyright
●​ Protects original forms of expression (not ideas) from being copied by others for a period of
time Fair use doctrine
●​ Digital Millennium Copyright Act of 1998
●​ First major effort to adjust copyright laws to Internet age
+​ Implements W I P O treaty that makes it illegal to make, distribute, or use devices
that circumvent technology-based protections of copyrighted materials
+​ Safe-harbor provisions

Patents
●​ Grant owner 20-year monopoly on ideas behind an invention
●​ Invention must be new, non-obvious, novel
●​ Encourages inventors
●​ Promotes dissemination of new techniques through licensing
●​ Stifles competition by raising barriers to entry

E-commerce Patents
• 1998 State Street Bank & Trust v. Signature Financial Group
• Business method patents
• 2014 Alice Corporation lawsuit
• Supreme Court rules that software does not make a basic business method or abstract idea
patentable
• E-commerce patents
• Amazon: One-click purchasing
• Akamai: Internet content delivery global hosting system

Trademarks
• Identify, distinguish goods, and indicate their source
• Purpose
• Ensure consumer gets what is paid for/expected to receive
• Protect owner against piracy and misappropriation
• Infringement
• Dilution
• Federal Trademark Dilution Act and Trademark Dilution Revision Act
• Uniform Rapid Suspension System (URS)

Trademarks and the Internet

• Cybersquatting and brand-jacking
• Anticybersquatting Consumer Protection Act (ACPA)
• Cyberpiracy
• Typosquatting
• Metatagging
• Keywording
• Linking and deep linking
• Framing
Trade Secrets
• Business procedures, formulas, methods of manufacture and service delivery
• May not be unique or novel
• Trade secrets are
• (a) secret
• (b) have commercial value to owner
• (c) owner has taken steps to protect
• 2016 Defend Trade Secrets Act

Who Governs the Internet and E-commerce?

• Mixed mode environment
• Self-regulation, through variety of Internet policy and technical bodies, co-exists with limited
government regulation
• ICANN : Domain Name System
• Internet can be easily controlled, monitored, and regulated from a central location

Taxation
• Non-local nature of Internet commerce complicates governance and jurisdiction issues
• Sales taxes
• Governments in Europe and U.S. rely on sales taxes
• As e-commerce grew, states began to argue their inability to tax remote e-commerce sales was
siphoning away billions of tax dollars
• Supreme Court ruled in South Dakota v Wayfair that states could tax online sales even when seller
did not have physical location in the state
• Internet Tax Freedom Act

Net Neutrality
• All Internet activities charged the same rate, regardless of bandwidth used
• Netflix and YouTube together consume about 50% of bandwidth in
United States
• Prior to 2015, ISPs could throttle high-volume users
• February 2015, FCC ruled that broadband ISPs should be viewed and regulated as public utilities
• Under Trump administration, net neutrality regulations have been repealed, but many states are
attempting to reinstate them via state laws and regulations

Public Safety and Welfare

• Protection of children against pornography and privacy infringement
– Passing legislation that will survive court challenges has proved difficult
• Efforts to control gambling and restrict sales of drugs and cigarettes
• Prevent All Cigarette Trafficking Act
• Unlawful Internet Gambling Enforcement Act
• Increase in number of states allowing online gambling