Can international law keep up with the Internet?

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This panel was convened at 2:30 pm, Friday, April 11, by its moderator, Gary N. Horlick of the Law Offices of Gary N. Horlick, Georgetown University Law Center, and the University of Barcelona, who introduced the panelists: Usman Ahmed, of eBay, Inc.; Henry Gao of Singapore Management University; Hamid Mamdouh of the World Trade Organization; and Sonia Rolland of Georgetown University Law Center. *

INTRODUCTORY REMARKS BY GARY N. HORLICK

The pervasiveness of the Internet in all aspects of our lives is a cliche, but it is just in its early phases. Approximately two billion of the world's seven billion people have broadband access now, a number very likely to double in the next 4-5 years through the growth of smart phone ownership. The "Internet of things," in which ordinary devices are hooked up to the Internet, for example, to monitor your heart rate, is just in its infancy. But the legal regime for the Internet is even more of an infant, particularly internationally.

This may be a good thing. The Internet so far has grown up with a very, very light touch of regulation (even though, of course, the physical backbone of the Internet is and was provided by the U.S. government at no charge). As we will see, much of the Internet's growth, especially in the United States, has been due to a favorable regulatory environment--none of it planned, of course. The doctrine of "fair use" in U.S. copyright law predates the Internet by more than a century. Although its boundaries are still being litigated, commonly accepted Internet uses such as search engines existed--and thrived--first in the United States in part because of the legal cover of fair use for temporary copies. The limitations on secondary liability legislated by the U.S. Congress in 1998 occurred at least in part because Internet access at the time was dial-up to phone lines. Phone companies, unlike Internet startups in 1998 (the founders of Google were then in the process of dropping out of Stanford), had well-established Washington presences and a lot of lobbying power, and could thus ensure that anything carried over their lines was not their problem as long as they reacted appropriately to it later. Without that, user-content Internet operations such as YouTube, Twitter, Pinterest, and so on would not be possible. It is worth emphasizing the importance of that framework to the Internet economy as well. When you go on Walmart.com now, it has links to other vendors' websites, which Wal-Mart and other e-commerce sites can do because of those protections. The United States and, increasingly, other countries' companies are to a very surprising extent "Internet companies."

That means that a company such as Proctor & Gamble, viewed as a leading U.S. manufacturer, has fully incorporated the Internet into all of its operations, including product development (e.g., using social media); customer service (through a website); purchasing and manufacturing process controls; and crucially, deciding where to advertise, and then advertising through the Web. As such, it can have many of the same concerns as Google, since a company that invites customer postings needs to worry about fair use and secondary liability, for example.

All of this works reasonably well in the United States and in countries with a legal framework for the Internet that is similar to that of the U.S. But very few countries have such frameworks. Singapore has copied U.S.-style "fair use," as Singapore is seeking, apparently quite successfully, to be the most digital country on earth, and Malaysia has copied Singapore to avoid losing entrepreneurs across the causeway. Israel has legislated fair use, and courts in Canada are getting there. But most of the world is a patchwork of laws that date to well before the Internet. And of course the Internet itself is quite global, so putting up your website effectively means the possibility of some degree of connection with more or less everywhere except North Korea.

Certainly "the Internet economy" is not genetically tied to the United States. One of the two founders of Google is Russian; the founder of eBay is French; the founder of Skype is Swedish; and so on. But the United States provides a framework in which people from other countries can come to make their Internet economy ventures work. The Internet economy is now flourishing in numerous other places.

There are no overarching international agreements on the subject. Our panel today will touch on the absence of such international frameworks and some of the many areas where that raises questions. This does not necessarily imply that binding international agreements are the solution. The near life-and-death experience with the Internet Telecom Union (ITU) last year certainly convinced a lot of people that such negotiations are dangerous--and we are not yet out of the ITU woods yet!

* Mr. Mamdouh did not submit remarks for the Proceedings.

REMARKS BY USMAN AHMED *

Technology, particularly in the form of the Internet, is revolutionizing how businesses of all sizes engage in global trade. This trend is exciting from an economic and social perspective, but it also introduces new challenges for international law. Our eBay Marketplaces, PayPal, and eBay Enterprise platforms give us a window into how businesses are evolving as a result of technological innovation. Moreover, we have a strong insight into how small businesses in particular are harnessing the power of technology to reach out to global customers. A significant portion of the users of our platforms are small businesses (5-10 employees) and they are retailers, app developers, and service providers. These are traditional businesses that are using the Internet to enhance their offerings. The Internet enables more efficient data processing, enhanced customer service, and the ability to connect instantly to a transacting party on the other side of the world.

The enhancement is tangible and is the result of the global nature of the Internet. The eBay Inc. Public Policy Lab has done some economic analysis on businesses around the world using our Marketplaces platform. The findings of our research were astounding. Take Peru, for example, where about 14% of traditional businesses in Peru export. Over 95% of the small businesses using our platform engage in exporting. Traditional Peruvian exporters reach on average three different markets; our exporters reach 25 markets. Only 45% of traditional Peruvian businesses survive their first year; nearly 75% of our exporters survive their first year. Finally, when analyzing traditional exports, the top 5% of Peruvian exporters account for 90% of the exports, whereas on our platform we found that the top 5% of exporters only accounted for 15% of sales. Technology-enabled businesses export at a higher rate to more countries, with higher survival rates, and with less concentration than their offline competitors.

So what is happening? The Internet is providing an instant global consumer base to merchants of any size anywhere in the world. It is helpful to come down from the high-level statistics to a specific case study. Thanks to the Internet and new technology, at just 30 years old, Parul Arora has become a successful global entrepreneur. Together with her mother, Usha, she runs an online jewelry boutique out of New Delhi, India called Indiatrend. The business secures jewelry from local artisans and also offers its own line of handicraft jewels. Indiatrend has sold its products to over 40 countries, including China, Finland, Israel, Japan, Kuwait, Macedonia, Poland, Russia, and Turkey, enabling Parul and her mom to employ nine people.

This is the reality that the global Internet is creating. This is the Global Empowerment Network where an entrepreneur can build a global brand instantly, so long as she has access to the Internet, the services that sit on top of the Internet, and, depending on business model, the logistics networks that help to deliver physical products.

The Global Empowerment Network is bringing a whole new class of businesses and consumers into the global trading system. This new class of stakeholders is certainly a new challenge for international law. It means that there will be new and unique issues that have never before been answered. Here are just a few open international trade questions that need to be considered as the Global Empowerment Network continues to build out:

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