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As seen in...
The Politics Of Surfing
E-politics, Webware for rent
By Shannon Kinnard
Business Start-Ups magazine - December 1999
It was bound to happen: The Internet has become so profitable that the government wants to step in. To protect? To serve? To get a piece of the pie? Whatever the motivation, its attempts to regulate the wild, wild Web could hurt your business. Here's a look at the top five threats the government poses to e-commerce:

1. Intervention without understanding. "Politicians are quick to impose regulations to appease constituents," says George Matyjewicz, moderator of the online discussion list E-Tailer's Digest (http://www.retailtoday.com/etailer/index.htm), which covers e-commerce issues for retailers. "But they don't always understand the ramifications."

Censorship, for example, could put a damper on business. Matyjewicz cites a 1995 instance when CompuServe pulled the plug on some 200 newsgroups containing "offensive" words. Unfortunately, banning the word "breast" restricted forums such as breast-cancer support groups.

2. Restrictions on data collection and usage. The government is trying to protect consumers' privacy by limiting the information that cookies and subscriber forms can automatically gather when visitors drop by a Web site. While there's a fine line between prying into consumers' lives and collecting marketing information, it's easy for government intervention to go too far. "[The Consumer Internet Privacy Protection Act of 1999] restricts a company's ability to market its services," says Ben Isaacson, acting executive director of the Association for Interactive Media (AIM), a Washington, DC, group that represents companies doing business online. (For more information, visit the Electronic Privacy Information Center at http://www.epic.org)

3. Limitations on bulk e-mail. While well-intentioned, legislation to stop the flow of unsolicited, commercial, bulk e-mail could limit e-mail's value as a direct-marketing tool. "I believe spam should be banned and spammers [should be] hung by their toes," says Matyjewicz. "However, don't I believe the government understands the true picutre [of e-mail marketing], and it may try to impose regulations that will make any bulk e-mail illegal."

4. Limits on alcohol sales. Existing legislation in many states bans sales of alcohol across state lines. In response to the new sales channel presented by the Internet, bills before Congress, such as S.577, sponsored by Sen. Orrin Hatch (R-UT), would ensure alcohol can't be sold online to any restricted states. The proposed laws pose threats to Internet retailers, vineyards and microbreweries nationwide that wish to expand sales using the Internet.

5. Taxes. Last year, Congress passed the Internet Tax Freedom Act, which gave businesses a three-year moratorium on new and discriminatory or multiple state and local taxes on Internet activity. (This doesn't mean the Internet is a tax-free zone; it means certain sales are exempt from certain types of taxes.) But with the money to be gained from Internet taxes so substantial, will the government be able to keep its paws off it for long? New tax regulations, collection, paperwork and enforcement would mire e-commerce in bureaucracy. Here's the bottom line, according to Matyjewitcz: "If it ain't broke, why fix it?"

To voice your opinions on any of these issues, e-mail your congressperson using http://www.visi.com/juan/congress.

Shannon Kinnard (shannon@ideastation.com), president of Idea Station, an e-mail marketing agency in Atlanta, is the author of Marketing With E-Mail (Maximum Press, $24.95, 800-989-6733).

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