Clinton, Gore to Call for Boost in Commerce on the Internet
Washington, Nov. 25 (Bloomberg) -- U.S. President Bill
Clinton and Vice President Al Gore will ask executives from
companies like Cisco Systems Inc., legislators, and government
officials Monday to help boost the Internet as a global
marketplace.
Yet while the Clinton administration will use the White
House event to promote efforts to make it easier for companies to
expand their electronic commerce, critics say the industry isn't
doing enough to protect consumers' privacy online.
''All of the market research shows that the biggest
obstacles to consumer adoption of online commerce are concerns
about privacy and security,'' said Bill Whyman, an Internet
analyst with Legg Mason Inc.'s Precursor Group. The
administration gets ''poor grades'' in those areas.
Almost 9 million households will have shopped on line by
year-end, up from 4.5 million last year, according to Cambridge,
Massachusetts-based Forrester Research Inc.
Market researcher Boston Consulting Group projects that
online retailing is growing more than 200 percent annually and
merchants will sell $13 billion worth of goods this year through
the Internet.
''The progress has been substantial, but not as much as
American businesses and consumers expect or need,'' Whyman said.
''They realize there's a lot of work that needs to be done.''
Toward that end, Clinton's top Internet adviser, Ira
Magaziner will release a report on White House Internet
initiatives and recommend further steps in several areas,
including beefing up privacy protections.
''E-commerce is doubling in size every year,'' said
Magaziner, who plans to step down before year end. ''Getting the
right policy architecture in place to develop that growth is an
essential economic issue.''
Privacy Concerns
The Clinton administration generally has advocated a hands-
off approach to Internet regulation. It favors self-regulation
efforts such as the Online Privacy Alliance, a group representing
America Online Inc., International Business Machines Corp., Walt
Disney Co., Yahoo! Inc. and other companies.
The administration puts too much faith in the ability of
industry to regulate itself and needs to be more aggressive, the
critics say. They want the administration to push Congress to
adopt new laws protecting the collection and distribution of
personal information online.
''The laws we have now are just not strong enough,'' said
Mary Griffin, a financial privacy specialist at Consumers Union,
publisher of Consumer Reports magazine.
The Clinton administration has invited executives such as
Cisco's John Chambers and Margaret Whitman, CEO of eBay Inc. to
Monday's White House meeting, and will call for more industry
action on the privacy front.
A subsidiary of the Better Business Bureau, for example,
will put forth a new program designed to verify the privacy
policies of Web sites. ''The administration recognizes the
importance of online commerce to American competitiveness,'' said
Russell Bodoff, chief operating officer of BBBOnLine.
'Safe Harbor'
The latest focus of concern for privacy advocates is a plan
by the Commerce Department to issue ''safe harbor'' regulations
that would exempt U.S. companies operating in Europe from meeting
tough privacy standards adopted last month by the European Union.
Industry officials complain the administration also needs to
do more in the area of advanced data-scrambling, or encryption,
technology. In September, the U.S. said it would loosen export
controls on encryption technology for the insurance, health care
and online industries.
Intel Corp. officials and others said the move was a step in
the right direction but that additional measures are needed so
U.S. companies don't face a competitive disadvantage. Customers
outside the U.S. can buy software with stronger security
protections from non-U.S. companies.
The Clinton administration should work more with the World
Trade Organization, World Intellectual Property Organization and
other international organizations to foster Internet growth,
Whyman said. ''They have to be more aggressive in dealing with
the international implications'' of the Internet.
Copyright Protection and Taxes
Magaziner's report is a followup to Clinton's July 1997
directive that first outlined the administration stand on
Internet issues such as encryption, taxes and copyright
protection.
This year, Congress and Clinton agreed to extend copyright
protections to the Internet and adopted a three-year ban on new
taxes on Internet business. On the international front, the
administration convinced the WTO to adopt a one-year ban on
tariffs.
''We've put e-commerce on the front burner of policy agendas
everywhere and we've been able to help set the terms of the
debate,'' Magaziner said.
Magaziner shepherded rules for a new system of handing out
Internet addresses, or so-called domain names, and asked the
Internet community to work out its own proposal for the
transition.
He's working closely with a new non-profit organization, the
Internet Corporation for Assigned Names and Numbers, that will
oversee the system for the .com, .net and other tags at the end
of World Wide Web addresses.
''Ira is to be commended for getting the administration to
adopt a decentralized vision of the Internet,'' said Jerry
Berman, president of the Center for Democracy and Technology, a
group that advocates civil liberties on the Internet.
Elliott Maxwell, recently named special adviser to Secretary
of Commerce William Daley on the digital economy, is likely to
lead the administration's inter-agency Internet agenda next year.
''When the work began with respect to electronic commerce,
few people were worrying about the policy questions,'' Maxwell
said. ''All that's different now.''
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