Description
Laudon
Traver
E-commerce 2018
E-commerce 2018
business. technology. society.
business. technology. society.
Kenneth C. Laudon | Carol Guercio Traver
www.pearson.com
FOURTEENTH
EDITION
FOURTEENTH
EDITION
Complete Listing of Chapter Opening Cases, Insight Cases,
E-commerce in Action Cases, and Case Studies
CHAPTER 1 THE REVOLUTION IS JUST BEGINNING
Opening Case: Everything on Demand: The “Uberization” of E-commerce
Insight on Technology: Will Apps Make the Web Irrelevant?
Insight on Business: Startup Boot Camp
Insight on Society: Facebook and the Age of Privacy
Case Study: Pinterest: A Picture Is Worth a Thousand Words
CHAPTER 2 E-COMMERCE BUSINESS MODELS AND CONCEPTS
Opening Case: Tweet Tweet: Will Twitter Ever Find a Business Model that Works?
Insight on Society: Foursquare: Check Your Privacy at the Door
Insight on Business: Crowdfunding Takes Off
Insight on Technology: Will the Connected Car Become the Next Hot Entertainment Vehicle?
Case Study: Dollar Shave Club: From Viral Video to $1 Billion in Just Five Years
CHAPTER 3 E
-COMMERCE INFRASTRUCTURE: THE INTERNET, WEB, AND MOBILE
PLATFORM
Opening Case: Voice-Controlled Intelligent Digital Assistants: Will They Revolutionize E-commerce?
Insight on Society: Government Regulation and Surveillance of the Internet
Insight on Technology: The Rise of HTML5
Insight on Business: The Apple Watch: Bringing The Internet of Things to Your Wrist
Case Study: Akamai Technologies: Attempting to Keep Supply Ahead of Demand
CHAPTER 4 BUILDING AN E-COMMERCE PRESENCE: WEBSITES, MOBILE SITES, AND APPS
Opening Case: The Wall Street Journal: Redesigning for Today’s Platforms
Insight on Business: Weebly Makes Creating Websites Easy
Insight on Society: Designing for Accessibility
Insight on Technology: Carnival Cruise Ships Go Mobile
Case Study: Dick’s Sporting Goods: Taking Control of Its E-commerce Operations
CHAPTER 5 E-COMMERCE SECURITY AND PAYMENT SYSTEMS
Opening Case: Cyberwar: MAD 2.0
Insight on Society: Equifax: Really Big Data Hacked
Insight on Technology: Think Your Smartphone Is Secure?
Insight on Business: Bitcoin
Case Study: The Mobile Payment Marketplace: Goat Rodeo
CHAPTER 6 E-COMMERCE MARKETING AND ADVERTISING CONCEPTS
Opening Case: Video Ads: Shoot, Click, Buy
Insight on Business: Are the Very Rich Different From You and Me?
Insight on Technology: The Long Tail: Big Hits and Big Misses
Insight on Society: Every Move You Take, Every Click You Make, We’ll Be Tracking You
Case Study: Programmatic Advertising: Real-Time Marketing
CHAPTER 7 SOCIAL, MOBILE, AND LOCAL MARKETING
Opening Case: Facebook: Putting Social Marketing to Work
Insight on Technology: Optimizing Social Marketing with Simply Measured
Insight on Society: Marketing to Children of the Web in the Age of Social Networks
Insight on Business: Mobile Marketing Goes 3-D
Case Study: ExchangeHunterJumper.com: Building a Brand with Social Marketing
CHAPTER 8 ETHICAL, SOCIAL, AND POLITICAL ISSUES IN E-COMMERCE
Opening Case: The Right To Be Forgotten: Europe Leads on Internet Privacy
Insight on Technology: Apple: Defender of Privacy?
Insight on Business: Internet Sales Tax Battle
Insight on Society: The Internet Drug Bazaar
Case Study: The Pirate Bay: Searching for a Safe Haven
CHAPTER 9 ONLINE RETAILING AND SERVICES
Opening Case: Blue Nile Sparkles for Your Cleopatra
E-commerce in Action: Amazon
Insight on Technology: Big Data and Predictive Marketing
Insight on Society: Phony Reviews
Insight on Business: Food on Demand: Instacart and GrubHub
Case Study: OpenTable: Your Reservation Is Waiting
CHAPTER 10 ONLINE CONTENT AND MEDIA
Opening Case: Cord Cutters and Cord Shavers: The Emerging Internet Broadcasting System (IBS)
Insight on Society: Are Millennials Really All That Different?
Insight on Business: Vox: Native Digital News
Insight on Technology: Hollywood and the Internet: Let’s Cut a Deal
Case Study: Netflix: How Does This Movie End?
CHAPTER 11 SOCIAL NETWORKS, AUCTIONS, AND PORTALS
Opening Case: Social Network Fever Spreads to the Professions
Insight on Society: The Dark Side of Social Networks
Insight on Technology: Trapped Inside the Facebook Bubble?
Insight on Business: Verizon Doubles Down on Portals
Case Study: eBay Evolves
CHAPTER 12 B
2B E-COMMERCE: SUPPLY CHAIN MANAGEMENT AND COLLABORATIVE
COMMERCE
Opening Case: Amazon Takes on B2B with Amazon Business
Insight on Society: Where’s My IPad? Supply Chain Risk and Vulnerability
Insight on Technology: Your Shoes Are in the Cloud
Insight on Business: Walmart Develops a Private Industrial Network
Case Study: Elemica: Cooperation, Collaboration, and Community
OTHER MIS TITLES OF INTEREST
Introductory MIS
Decision Support Systems
Experiencing MIS, 8/e
Kroenke & Boyle ©2019
Business Intelligence, Analytics, and Data
Science, 4/e
Sharda, Delen & Turban ©2018
Using MIS, 10/e
Kroenke & Boyle ©2018
Management Information Systems, 15/e
Laudon & Laudon ©2018
Essentials of MIS, 13/e
Laudon & Laudon ©2019
Processes, Systems, and Information: An
Introduction to MIS, 3/e
McKinney & Kroenke ©2019
Business Intelligence and Analytics: Systems
for Decision Support, 10/e
Sharda, Delen & Turban ©2014
Data Communications & Networking
Applied Networking Labs, 2/e
Boyle ©2014
Digital Business Networks
Dooley ©2014
Information Systems Today, 8/e
Valacich & Schneider ©2018
Business Data Networks and Security, 11/e
Panko & Panko ©2019
Introduction to Information Systems, 3/e
Wallace ©2018
Electronic Commerce
Database
E-commerce 2018: Business. Technology.
Society, 14/e
Laudon & Traver ©2019
Hands-on Database, 2/e
Conger ©2014
Modern Database Management, 13/e
Hoffer, Ramesh & Topi ©2019
Database Concepts, 8/e
Kroenke, Auer, Vandenburg, Yoder ©2018
Database Processing, 15/e
Kroenke & Auer ©2019
Systems Analysis and Design
Modern Systems Analysis and Design, 8/e
Hoffer, George & Valacich ©2017
Systems Analysis and Design, 10/e
Kendall & Kendall ©2019
Enterprise Resource Planning
Enterprise Systems for Management, 2/e
Motiwalla & Thompson ©2012
Project Management
Project Management: Process, Technology
and Practice
Vaidyanathan ©2013
E – commerce
business. technology. society.
F O U R T E E N T H
EC14_FM.indd 1
E D I T I O N
Kenneth C. Laudon
Carol Guercio Traver
New York University
Azimuth Interactive, Inc.
11/22/2017 9:46:28 AM
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Microsoft and/or its respective suppliers make no representations about the suitability of the information contained in the documents
and related graphics published as part of the services for any purpose. All such documents and related graphics are provided “as is” without warranty of any kind. Microsoft and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all warranties and conditions of merchantability, whether express, implied or statutory, fitness for a particular
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Microsoft® Windows® and Microsoft Office® are registered trademarks of Microsoft Corporation in the U.S.A. and other countries. This
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Copyright © 2019, 2018, 2017 by Kenneth C. Laudon and Carol Guercio Traver.
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Library of Congress Cataloging-in-Publication Data
Names: Laudon, Kenneth C., 1944- author. | Traver, Carol Guercio, author.
Title: E-commerce 2018: business, technology, society / Kenneth C. Laudon,
New York University, Carol Guercio Traver, Azimuth Interactive, Inc.
Description: Fourteenth Edition. | Boston: Pearson, [2017] | Revised edition
of the authors’ E-commerce 2017, [2017]. | Includes index.
Identifiers: LCCN 2017041167| ISBN 9780134839516 | ISBN 013483951X
Subjects: LCSH: Electronic commerce. | Internet marketing. | Information
technology.
Classification: LCC HF5548.32 .L38 2017b | DDC 658.8/72–dc23
LC record available at https://lccn.loc.gov/2017041167
ISBN-13: 978-0-13-483951-6
ISBN-10: 0-13-483951-X
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P RE FA C E
E-commerce 2018: business.technology.society 14E provides you with an in-depth introduction to the field of e-commerce. We focus on key concepts, and the latest empirical and
financial data, that will help you understand and take advantage of the evolving world of
opportunity offered by e-commerce, which is dramatically altering the way business is
conducted and driving major shifts in the global economy.
Just as important, we have tried to create a book that is thought-provoking and current. We use the most recent data available, and focus on companies that you are likely
to encounter on a daily basis in your everyday life, such as Facebook, Google, Twitter,
Amazon, YouTube, Pinterest, eBay, Uber, WhatsApp, Snapchat, and many more that you
will recognize, as well as some exciting startups that may be new to you. We also have
up-to-date coverage of the key topics in e-commerce today, from privacy and piracy, to
government surveillance, cyberwar, social, local, and mobile marketing, Internet sales
taxes, intellectual property, and more. You will find here the most up-to-date and comprehensive overview of e-commerce today.
The e-commerce concepts you learn in this book will make you valuable to potential
employers. The e-commerce job market is expanding rapidly. Many employers expect
new employees to understand the basics of e-commerce, social and mobile marketing,
and how to develop an e-commerce presence. Every industry today is touched in at least
some way by e-commerce. The information and knowledge you find in this book will be
valuable throughout your career, and after reading this book, we expect that you will be
able to participate in, and even lead, management discussions of e-commerce for your
firm.
WHAT’S NEW IN THE 14TH EDITION
Careers in E-commerce
In this edition, we’ve added an exciting new feature at the end of every chapter: a section
on careers in e-commerce that examines a job posting by an online company for an
entry-level position. We provide students with a brief overview of the field and company,
some details about the position, a list of the qualifications and skills that are typically
required, and then some tips about how to prepare for an interview, as well as showing
students how the concepts they’ve learned in each chapter can help them answer some
possible interview questions.
Currency
The 14th edition features all new or updated opening, closing, and “Insight on” cases. The
text, as well as all of the data, figures, and tables in the book, have been updated through
October 2017 with the latest marketing and business intelligence available from eMarketer, Pew Research Center, Forrester Research, comScore, Gartner Research, and other
industry and government sources.
iii
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iv
Preface
In addition, we have added new, expanded, and/or updated material throughout the
text on a number of e-commerce topics that have appeared in the headlines during 2017,
including the following:
• The latest developments with respect to on-demand service companies such as Uber;
updates on the challenges that mobile apps pose to the Web’s dominance of the Internet ecosphere; Pinterest gets closer to an IPO (Chapter 1)
• Twitter’s continued difficulties in finding a workable business model; changes in
Foursquare’s business model; use of initial coin offerings (ICOs) by startups; new
issues surrounding crowdfunding; developing new business models based on the
Internet of Things; how Dollar Shave Club used a viral video and subscription-based
business model to go from small startup to being acquired for $1 billion in just five
years (Chapter 2)
• Voice-controlled digital assistants, including Alexa, Google Assistant, and Siri; 5G
wireless; Google’s Project Loon, Facebook’s Internet access drone Aquila, and Microsoft’s white space initiative; developments in wearable computing, IoT, HTML5, virtual and augmented reality, artificial intelligence, intelligent assistants, and chatbots
(Chapter 3)
• Update on the Wall Street Journal’s effort to compete by redesigning its digital offerings;
open source Web and app development tools; Weebly’s new initiatives; increasing use of
Node.js; mobile-first and responsive design; increasing focus on online accessibility;
update on Dick’s Sporting Goods’ effort to reclaim its e-commerce infrastructure (Chapter 4)
• Cyberwarfare during the 2016 U.S. presidential election; new security threats (such as the
growth of ransomware (including WannaCry), business e-mail compromise (BEC) and
W-2 phishing, the Equifax data breach, the Mirai botnet DDoS attack, and the Microsoft
DDE protocol and WPA2 software vulnerabilities, smartphone security issues, and emergence of new Reaper/IoTroop botnet); OpenPGP; Apple’s Face ID; FTC enforcement
actions with respect to data security; mobile wallets; Bitcoin and blockchain technology;
P2P (Venmo, Facebook Messenger, Zelle); and mobile payment systems (Chapter 5)
• Updates on online video advertising; Google search engine algorithm updates; ad
fraud and viewability issues; the continuing rise in usage of ad blocking software;
Canada’s anti-spam laws; industry and FTC guidelines on cross-device tracking;
Apple’s Intelligent Tracking Prevention (ITP); issues with programmatic advertising
(Chapter 6)
• Mobile marketing continues to exceed desktop advertising; new social marketing and
social e-commerce tools from Facebook, Twitter, Pinterest, Instagram, LinkedIn, and
Snapchat; new FTC COPPA guidelines; use of 3-D mobile marketing; proximity marketing; BLE (Chapter 7)
• Update on the right to be forgotten, the impact of the Supreme Court’s Spokeo decision;
privacy issues associated with digital assistant devices, facial recognition and IoT technology; implications of new Google privacy policy; issues with persistent location tracking; new FTC report on cross-device tracking; FTC privacy enforcement actions; FCC
privacy regulations on ISPs repealed by Congress; new E.U. General Data Protection
Regulation and Privacy Shield; Apple/U.S. government iPhone privacy fight; updates on
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v
DMCA litigation; online sales tax developments in the United States and Europe; net
neutrality developments; online fantasy sports gambling issues (Chapter 8)
• Updates on Blue Nile, Amazon, Stitch Fix, Instacart, GrubHub, and OpenTable; digital
native verticals (manufacturer-direct); negative reviews and the Consumer Review
Fairness Act; updates on on-demand service companies (Chapter 9)
• Cord cutters, cord shavers, and cord nevers; industry structure convergence (Charter
Spectrum; Verizon/Yahoo mergers); updates on newspaper Digital First business
models; proposed newspaper industry legislation; native digital news sites; New
Yorker magazine digital strategy; update on e-books; streaming of pirated content;
streaming music services such as Spotify; streaming TV devices; the impact of Pokemon GO and new e-sports tournaments (Chapter 10)
• Update on LinkedIn; use of algorithms by social networks, such as Facebook; the dark
side of social networks; Facebook fake news controversy; Verizon acquires AOL and
Yahoo as the portal business faces challenges (Chapter 11)
• Amazon Business; the rise of B2B sell-side marketplaces; supply chain visibility; cloudbased B2B; mobile B2B; B2B marketing; update on Walmart supply chain issues (Chapter 12)
Themes
E-commerce has significantly evolved over the last decade. The iPhone was introduced
in 2007. The iPad tablet was first introduced in 2010 and has already gone through several
generations! Cloud services for storing and streaming content, and hosting thousands of
apps, were not widely available until 2011. Smartphone and tablet devices have changed
e-commerce into a social, local, and mobile experience. The 14th edition spotlights the
following themes and content:
Headlines
• Social, Mobile, Local: We include an entire chapter describing social, mobile, and
local marketing. Content about social networks, the mobile platform, and local
e-commerce appears throughout the book.
»» The mobile platform composed of smartphones and tablet computers takes off and
becomes a major factor in search, marketing, payment, retailing and services, and
online content, as well as on-demand service companies. Mobile device use poses
new security and privacy issues as well.
»» Social networks such as Facebook, Twitter, Pinterest, Instagram, LinkedIn, and
Snapchat continue their rapid growth, laying the groundwork for a social network
marketing platform.
»» Location-based services lead to explosive growth in local advertising and marketing.
• Online privacy continues to deteriorate, driven by a culture of self-revelation and
powerful technologies for collecting personal information online without the
knowledge or consent of users. A growing number of consumers adopt ad blockers.
• Internet security risks increase; cyberwarfare becomes a new way of conducting
warfare among nation-states and a national security issue. A growing perception of
online risk supports a growing lack of trust in e-commerce firms and transactions.
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Preface
Business
• E-commerce revenues continue to surge, at a rate higher than overall economic growth.
• Online advertising growth continues to outpace traditional advertising, including
television.
• Mobile marketing spending exceeds that spent on marketing on the desktop.
• E-books sales plateau but continue as a major channel for books. Consumers increasingly use smartphones and tablets as reader devices.
• Newspapers continue to struggle to define a digital first news service.
• Streaming of popular TV shows and movies (Netflix, Amazon, YouTube, and Hulu.
com) becomes a reality, as Internet distributors and Hollywood and TV producers
strike deals for Web distribution that also protects intellectual property.
• New mobile payment platforms continue to emerge to challenge PayPal, including
Apple Pay, Android Pay, Samsung Pay, Venmo, and Zelle.
• B2B e-commerce exceeds pre-recession levels as firms become more comfortable with
digital supply chains.
Technology
• Smartphones, tablets, and e-book readers, along with associated cloud-based software
applications, and coupled with 4G cellular network expansion, fuel rapid growth of
the mobile platform.
• Investment in cloud computing increases, providing the computing infrastructure for
a massive increase in online digital information content, and e-commerce.
• Cloud-based streaming services for music and video challenge sales of downloads and
physical product.
• Software apps fuel growth in app sales, marketing, and advertising; transforming software production and distribution.
• The cost of developing sophisticated websites continues to drop due to declining software and hardware prices and open source software tools.
• Internet and cellular network capacity is challenged by the rapid expansion in digital
traffic generated by mobile devices; the use of bandwidth caps tier-pricing expands.
Society
• The mobile, “always on” culture in business and family life continues to grow.
• Congress considers legislation to regulate the use of personal information for behavioral tracking and targeting consumers online.
• European countries develop much stronger privacy policies, including Right to be
Forgotten laws, add a new General Data Protection Regulation, and continue to
expand the rights of citizens vis-à-vis Internet data giants.
• States heat up the pursuit of taxes on Internet sales by e-commerce firms.
• Intellectual property issues remain a source of conflict with significant movement
toward resolution in some areas, such as Google’s deals with Hollywood and the
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publishing industry, and Apple’s and Amazon’s deals with e-book and magazine
publishers.
• Net neutrality regulations that forbid Internet providers from discriminating against
types of content, or providing differential service to large players are under siege.
• P2P piracy traffic declines as paid streaming music and video gains ground, although
digital piracy of online content remains a significant threat to Hollywood and the
music industry.
• Governments around the world increase surveillance of Internet users and web sites
in response to national security threats; Google continues to tussle with China and
other countries over censorship and security issues. Europe ends safe harbor protections for U.S. Internet firms.
• Venture capital investing in e-commerce explodes for social, mobile, and local software
applications. Crowdfunding becomes a new source of funding for e-commerce startups.
WELCOME TO E-COMMERCE 2018
Since it began in 1995, electronic commerce has grown in the United States from a standing start to a $695 billion retail, travel, and media business and a $6.3 trillion business-tobusiness juggernaut, bringing about enormous change in business firms, markets, and
consumer behavior. Economies and business firms around the globe are being similarly
affected. During this relatively short time, e-commerce has itself been transformed from
its origin as a mechanism for online retail sales into something much broader. Today,
e-commerce has become the platform for media and new, unique services and capabilities that aren’t found in the physical world. There is no physical world counterpart to
Facebook, Twittter, Google search, or a host of other recent online innovations from Pinterest and iTunes to Tumblr. The Internet is about to replace television as the largest
entertainment platform. Welcome to the new e-commerce!
E-commerce is projected to continue growing at double-digit rates over the next five
years, remaining the fastest growing form of commerce. Just as automobiles, airplanes,
and electronics defined the twentieth century, so will e-commerce of all kinds define
business and society in the twenty-first century. The rapid movement toward an e-commerce economy and society is being led by both established business firms such as
Walmart, Ford, IBM, Macy’s, and General Electric, and online firms such as Google, Amazon, Apple, Facebook, Yahoo, Twitter, and YouTube. Students of business and information technology need a thorough grounding in e-commerce in order to be effective and
successful managers in the next decade.
While firms such as Facebook, YouTube, Twitter, Pinterest, and Uber have grown
explosively in the last two years and grab our attention, the traditional forms of retail
e-commerce and services also remain vital and have proven to be more resilient than
traditional retail channels in facing the economic recession. The experience of these
firms from 1995 to the present is also a focus of this book. The defining characteristic of
these firms is that they are profitable, sustainable, efficient, and innovative, with powerful brand names. Many of these now-experienced retail and service firms, such as eBay,
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Amazon, E*Trade, Priceline, and Expedia, are survivors of the first era of e-commerce.
These surviving firms have evolved their business models, integrated their online and
offline operations, and changed their revenue models to become profitable. Understanding how these online businesses succeeded will help students to manage their own firms
in the current omni-channel business environment.
It would be foolish to ignore the lessons learned in the early period of e-commerce.
Like so many technology revolutions in the past—automobiles, electricity, telephones,
television, and biotechnology—there was an explosion of entrepreneurial efforts, followed
by consolidation. By 2005, the survivors of the early period were moving to establish profitable businesses while maintaining rapid growth in revenues. In 2017, e-commerce is in the
midst of a period of explosive entrepreneurial activity focusing on on-demand services,
social networks, and the mobile platform created by smartphones and tablet computers.
These technologies and social behaviors are bringing about extraordinary changes to our
personal lives, markets, industries, individual businesses, and society as a whole. E-commerce is generating thousands of new jobs in all fields from marketing to management,
entrepreneurial studies, and information systems. Today, e-commerce has moved into the
mainstream life of established businesses that have the market brands and financial muscle required for the long-term deployment of e-commerce technologies and methods. If
you are working in an established business, chances are the firm’s e-commerce capabilities
are important factors for its success. If you want to start a new business, chances are very
good that the knowledge you learn in this book will be very helpful.
BUSINESS. TECHNOLOGY. SOCIETY.
We believe that in order for business and technology students to really understand
e-commerce, they must understand the relationships among e-commerce business concerns, Internet technology, and the social and legal context of e-commerce. These three
themes permeate all aspects of e-commerce, and therefore, in each chapter, we present
material that explores the business, technological, and social aspects of that chapter’s
main topic.
Given the continued growth and diffusion of e-commerce, all students—regardless
of their major discipline—must also understand the basic economic and business forces
driving e-commerce. E-commerce has created new digital markets where prices are
more transparent, markets are global, and trading is highly efficient, though not perfect.
E-commerce has a direct impact on a firm’s relationship with suppliers, customers, competitors, and partners, as well as how firms market products, advertise, and use brands.
Whether you are interested in marketing and sales, design, production, finance, information systems, or logistics, you will need to know how e-commerce technologies can be
used to reduce supply chain costs, increase production efficiency, and tighten the relationship with customers. This text is written to help you understand the fundamental
business issues in e-commerce.
We spend a considerable amount of effort analyzing the business models and strategies of both online companies and established businesses now employing “bricks-andclicks” business models. We explore why e-commerce firms fail and the strategic,
financial, marketing, and organizational challenges they face. We also discuss how
e-commerce firms learned from the mistakes of early firms, and how established firms
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ix
are using e-commerce to succeed. Above all, we attempt to bring a strong sense of business realism and sensitivity to the often exaggerated descriptions of e-commerce.
The Web and mobile platform have caused a major revolution in marketing and
advertising in the United States. We spend two chapters discussing online marketing and
advertising. Chapter 6 discusses “traditional” online marketing formats like search
engine marketing, display advertising, and e-mail, as well as various Internet marketing
technologies underlying those efforts, and metrics for measuring marketing success.
Chapter 7 provides an in-depth examination of social, mobile, and local marketing,
which relies on mobile devices and social networks.
E-commerce is driven by Internet technology. Internet technology, and information
technology in general, is perhaps the star of the show. Without the Internet, e-commerce
would be virtually nonexistent. Accordingly, we provide three chapters specifically on
the Internet and e-commerce technology, and in every chapter we provide continuing
coverage by illustrating how the topic of the chapter is being shaped by new information
technologies. For instance, Internet technology drives developments in security and payment systems, marketing strategies and advertising, financial applications, media distribution, business-to-business trade, and retail e-commerce. We discuss the rapid growth
of the mobile platform, the emergence of cloud computing, new open source software
tools and applications, and new types of Internet-based information systems that support digital business-to-business markets.
E-commerce is not only about business and technology, however. The third part of
the equation for understanding e-commerce is society. E-commerce and Internet technologies have important social consequences that business leaders can ignore only at
their peril. E-commerce has challenged our concepts of privacy, intellectual property,
and even our ideas about national sovereignty and governance. Google, Facebook, Amazon, and assorted advertising networks maintain profiles on millions of shoppers and
consumers worldwide. The proliferation of illegally copied music, videos, and books on
the Internet, and the growth of social network sites often based on displaying copyrighted materials without permission, are challenging the intellectual property rights of
record labels, Hollywood studios, artists, and writers. And many countries—including
the United States—are demanding to control the content of websites displayed within
their borders for political and social reasons. Tax authorities in the United States and
Europe are demanding that e-commerce sites pay sales taxes just like ordinary brick and
mortar stores on Main Street. As a result of these challenges to existing institutions,
e-commerce and the Internet are the subject of increasing investigation, litigation, and
legislation. Business leaders need to understand these societal developments, and they
cannot afford to assume any longer that the Internet is borderless, be
