e-business basics - International Regulations

When a business commences on-line trade, it potentially reaches a global audience - intentionally or not. In presenting itself on the Internet, the trader unwittingly crosses borders of different regulations, tastes and conventions. Whilst the latter two issues are important – so that a trader presents itself in a favourable light within local culture – regulations can give rise to particular problems.

Products and services are regulated differently in different countries. For example, in some countries, tobacco and alcohol are freely available to all, elsewhere advertisements are strictly controlled; in some countries these products are completely banned from sale. Financial Services are notoriously carefully regulated and few are offered on a cross-border basis. Attitudes to pornographic material vary immensely across the world.

It is important for a trader to understand and manage the regulations that affect its business, and so it is not feasible to generalise. However, whilst manufacturers, retailers and providers of many kinds of services have a fairly clear-cut area of influence, those who operate as providers of marketplaces, exchanges can find themselves falling foul of regulations.

One of the best-known cases is that of a case brought against Yahoo! in France in respect of a US seller offering Nazi memorabilia for sale (McDonald 2001).This material is specifically banned for sale in France. Yahoo! was not even offering such items specifically for sale in France through its auction, yet the reach of the Internet made Yahoo! liable under French law.

In another case, the former head of CompuServe, Felix Somm, was convicted in Germany of aiding the distribution of child pornography by providing unfiltered Internet access.

Author: Steve Whiteley, January 2007