E-Commerce E-Business and Privacy for All?

FRAMINGHAM (04/18/2000) - Elizabeth Echols, 39, stands astride a virtual divide. On one side, consumer and privacy advocates cry out for increased fraud and privacy protection through stricter internet regulations. On the other, corporations resist any internet regulation or taxation that could derail chances of fully exploiting e-commerce. Echols, dubbed the country's e-commerce czar, is charged with somehow making both sides happy.

It's not a small task. Since e-commerce exploded onto the business and political landscape just a few short years ago, the Clinton administration has seesawed in its approach to internet control. Early regulatory attempts were a tad heavy-handed, as characterized by the Clinton administration's 1993 failed Clipper Chip initiative, which would have allowed the government to obtain judicial consent to break almost any message by requiring that all encoding include a "back door," or skeleton key, allowing government access. This evolved into today's more laissez-faire stance, which allows private industry to lead both e-commerce development and consumer safeguards against internet fraud. For example, the administration's Electronic Bill of Rights for Privacy in the Information Age calls for websites to voluntarily give internet customers the right to choose whether personal data is shared and to dictate how and when it is disclosed. (The bill would also give consumers the right to view the data gathered and to correct wrong information.) Of course, by trying to please everybody, nobody ends up happy: The White House has been criticized both by privacy groups for taking a far too hands-off approach and by Silicon Valley potentates for meddling too much.

The Clinton administration first appointed an e-czar six years ago, when Ira Magaziner was named to the post. Magaziner's initial efforts to fight internet consumer fraud and the digital divide while simultaneously encouraging e-business expansion evolved into today's White House Electronic Commerce Working Group. Echols, a lawyer who specialized in international trade Issues and telecommunications as well as a former investment banker, became the group's first executive director in August.

We talked to Echols about the complexities she faces in her new role as well as her thoughts on some of the issues the group is currently grappling with.

CIO: Could you give us a thumbnail sketch of the main issues the Working Group is examining right now?

Echols: It's really a range of e-commerce issues, including infrastructure, [web] content and promoting a global approach to these issues. This year, we will also go beyond the commercial aspects of e-commerce and try to focus on ways that information technology can be used to really better the lives of all people. For example, in December, Vice President Gore announced two initiatives. One aims to improve the use of IT in government, and the other concentrates on the electronic society [using IT to improve access to education]. These projects, along with the initiative [to combat the digital divide] that the president announced in the middle of December, will be a big part of what the group does this year. Really, all of these initiatives are designed to bring the benefits of information technology to more people.

CIO: Can you explain how these initiatives will be implemented? What is the role of the Working Group?

Echols: In each initiative, the president charged various cabinet secretaries with responsibility for implementing the parts of the initiative within their jurisdiction. The Working Group will play a coordinating role and work closely with each federal agency on implementing these initiatives. For instance, the president asked the secretary of education to work with states on removing legal and regulatory barriers to distance learning. Similarly, the president directed the secretary of health and human services to examine ways that technology can be used to deliver health care to underserved areas.

In the e-gov initiative, one way to make government more accessible to people is through a government portal. We are looking at creating a one-stop point of entry for government information. For instance, if you needed a new passport, eventually you could just type passport and go directly to the right page on the state department website, cutting through a lot of red tape. Another piece of the e-gov initiative is that the president has asked the National Science Foundation to conduct a one-year study on electronic voting. There are a lot of issues that need to be addressed with regard to e-voting, such as privacy, authentication and access.

CIO: There are many privacy proponents who think the e-commerce community isn't doing enough to regulate itself. Do you think the government will step in and do more in the way of regulation?

Echols: I think there are two separate issues here. First of all, there are certain areas of privacy where the administration has supported expanded legal protection. For example, medical records and children's privacy issues are particularly sensitive, and we have consequently expanded legal protection. In terms of what the industry should be doing, there's clearly a lot of work still to be done. But we are encouraged by efforts to self-regulate, as evidenced by the increasing number of websites that are posting their privacy policies, and we do believe that is the most effective way. Obviously, government and private industry all have an interest in protecting the consumer. Consumers are becoming much more concerned about information that is being collected about them on the web. And if the industry doesn't take action to self-regulate, people will not use the web and e-commerce to the extent that we currently expect they will, and ultimately both consumers and e-tailers will lose out.

CIO: Europeans have much stricter privacy rules regarding the web than the United States. How is the Working Group addressing that?

Echols: [In February] negotiators from the European Commission and the United States reached a tentative agreement on the creation of a "safe harbor." The safe harbor agreement bridges the differences between the EU's and the United States' approaches to privacy protection and ensures adequate privacy protection for EU citizens' personal information. Working with the EU, the Department of Commerce developed the concept of the safe harbor, under which U.S. companies would have the choice to voluntarily participate in the safe harbor by self-certifying to the Department of Commerce. In self-certifying, companies agree to adhere to the seven privacy principles of the safe harbor, including elements such as choice, notice and enforcement. Through this process, U.S. companies can qualify for the safe harbor and thereby continue to receive transfers of personal data from citizens in the EU. [Ed. note: On March 15, European and U.S. negotiators finalized the agreement on the "safe harbor" principles described above.] CIO: What is the Working Group doing to address global e-commerce issues?

Echols: Obviously, given the global nature of the internet and e-commerce, it is critical that countries around the world adopt policies that will encourage rather than hinder the growth of the internet. At the heart of this issue for us is creating a universal approach to national and international internet policies that stresses private-sector leadership and a minimalist government role. Since President Clinton and Vice President Gore first announced this policy in July 1997, many countries around the world have adopted a similar approach. We have signed agreements with eight individual countries as well as with the EU.

More specifically, in May 1998, the Clinton administration won agreement from the World Trade Organization [WTO] member governments to refrain from imposing customs duties on electronic transmissions. At the last WTO meeting in Seattle, we made substantial progress in negotiations in this area on a common, multinational approach to customs duties. We are trying to extend the moratorium with the view of making it permanent.

CIO: How would you answer criticisms that Clinton's administration has been too cautious on regulating e-commerce issues?

Echols: Because this medium moves so quickly, there is no way that government can watch everything going on on the internet; the reach is just too great.

That is why self-regulation is so important--we need internet vendors to post meaningful privacy policies, that sort of thing. But that's not to say that we are just throwing up our hands either, because we will continue to aggressively enforce already existing consumer protection laws. I think the question is, How does the internet differ from the land-based world, and what additional work needs to be done to make sure consumers get the same protections online as they do offline?

Both the land-based world and the internet world have crimes, for example. But the real challenge is finding the resources to keep up with the reach and speed of the internet and adequately enforce existing laws.

CIO: What specific proposals has the administration made to bridge the digital divide?

Echols: Well, actually, the administration has done a number of things already.

This year, for example, we tripled government investment in community technology centers from $10 million in fiscal year '99 to $32.5 million in fiscal year 2000. President Clinton hopes to triple this amount again to $100 million in his fiscal year 2001 budget. The number of classrooms actually connected to the internet has increased from 3 percent in '94 to 51 percent in '98. We are also looking at other ways to promote internet access. [As part of his new budget proposals, the president called for $2 billion in tax incentives for private businesses to encourage technology training for workers and $380 million to serve as catalysts for public and private partnerships for IT training, $10 million of which is proposed to help prepare Native Americans for IT careers.] Finding specific, concrete ways to promote internet access to traditionally underserved areas will remain an important part of our agenda.

CIO: What is the final goal of the Working Group?

Echols: We want to continue to see e-commerce and the internet grow and flourish in ways that protect the public interest and provide benefits to all people. That's a huge mandate, and there are a lot of different ways to approach the goal. Clearly, we want to increase individual access to the internet, address some of the digital divide issues and make sure people have the web access necessary to participate in the new information economy. We also need to make sure that those consumers who are shopping online receive the same protection online as they do at the shopping mall.

But I don't see balancing consumer protection and privacy concerns and the growth of e-business as an either/or proposition. If people don't get what they pay for or have come to expect from the web--they order something online and then get a substitute item without being notified, that sort of thing--then they will become disenchanted, and there won't be the tremendous growth that we've seen so far. So it's to all our benefits to make the internet easily accessible and safe.

Senior Writer Mindy Blodgett often thinks about her online privacy, do you?

Write to her at mblodgett@ cio.com.

Elizabeth Echols, 39

Executive director of the White House Electronic Commerce Working Group Background and education Received JD degree from Stanford Law School, BA from Yale University Prior to joining the Clinton administration, Echols worked with the investment banking firm of Morgan Stanley & Co. and at the Washington law firm of Steptoe & Johnson; prior to her current appointment, she served as senior adviser to Commerce Secretary William Daley on such issues as telecommunications and information technology.

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