Fast, Cheap and Out of Control - Internet/Web/Online Service Information

Industry Standard, The, August 14, 2000 by Stewart Taggart

A second alternative is to assign or create a treaty-based global organization to carry the cudgel of harmonization. But it could take years to agree upon the size and composition of such a body. Its deliberations would be achingly slow by Internet-time standards. The United Nations Convention on the Law of the Sea, for example, which governs a host of political, economic, technological and scientific issues on the open oceans, took 150 nations more than 14 years to negotiate before being signed in 1982. The agreement took another 14 years to go into effect.

A more nuanced approach is that of the International Organization of Securities Commissions, an informal grouping of securities and futures market regulators, including everyone from the U.S. Securities and Exchange Commission to the Ugandan Capital Markets Authority. They've banded together to align international rules among member states, sidestepping the usual sluggish diplomatic process by utilizing their own bureaucratic power.

In the area of securities law, for instance, they've agreed that enforcement measures over securities dealing should be determined in part by the level of "targeting" a given Web securities business engages in toward a particular jurisdiction.

If an Australian, say, goes out of his way to find a French Web site to buy financial securities that aren't or can't legally be sold in Australia, they've agreed to largely let that pass. But if a French Web site specifically targets large numbers of Australian investors in securities prohibited for distribution in Australia, say by advertising in an Australian newspaper or putting the site in the .au domain, it could be deemed to fall within Australian regulatory dictates. The French regulatory bureaucracy, however, would do the dirty work of sanctioning the site. Agree bilaterally, enforce locally.

Close cooperation among global securities regulators, however, is possible only because they share an interest in enhancing efficiently functioning markets and safeguarding against global financial meltdown. This kind of urgency might not carry over so easily into other areas. Taxation, for instance, pits the interests of one nation against those of another. Your gain is my loss.

Some argue that loss of national control is inevitable, and that the Internet should be left to its own devices. Individuals will pick and choose from a menu of regulatory environments much as pedestrians pick and choose the city streets they walk down based upon how safe or efficient they're considered. Believers in a "self-ordering" system say sites providing credible protection against fraud and abuse would naturally gain traffic due to their reputations.

In such a self-ordering world, branding would largely take the place of black-letter laws, indeed of sovereignty itself, and Internet traffic itself would become a real-time voting machine.

Under the power of a million mouses, might the nation-state eventually whither away -- stripped of power and its control of the barn door? That seems unlikely. For the foreseeable future, nations will continue doing their best to keep a hand in the game.