Is More Government Regulation Needed to Promote E-commerce?

Abstract

E-commerce has experienced tremendous growth over the past few years. Nonetheless, senators, privacy watchdog groups, and the Federal Trade Commission have argued that e-commerce is being held back by consumer worries about online privacy and security. Some privacy advocates are calling for additional regulations specifically new online privacy rules aimed at providing consumers with more information and customer choice. And Congress has tried to answer that call most recently with a bill introduced by Senator Ernest Hollings. This essay examines the case for more government regulation and argues that the advocates have overstated their case. While some consumers, particularly older Americans and those new to the Internet, are clearly concerned about online privacy and security, these issues do not appear any more urgent for online shopping than offline shopping. Nor do these issues emerge as significant deterrents to e-commerce. Indeed, it is not even clear that any e-commerce has been deterred. Absent evidence of a significant market failure, the case for further government intervention is weak at best.