Round Up of Recent Legal Points in Online Business
I’ve posted before about how legal related issues and cases are beginning to catch up and carve out the landscape for online business. The public explosion of the SOPA debate served notice that the online community can galvanize, apparently at a moment’s notice. To help keep track of recent developments, I’ve put together a quick summary of what happened in the first half of February.
Google’s New Privacy Policy
As written about by Danny Goodwin, Google explained their privacy policy before Congress. As noted by others including Danny, the change is pretty straight forward. Google has accumulated and grown a number of services over the years, but these products were patched together with different privacy policies. Essentially, this revision allows Google to treat all of their programs as one, so a Google search can take into account recent YouTube activity to tailor results, for example. Simple.
However, Congress has batted this around, concerned by things such as violating HIPPA policy, which is a good question, but ultimately not a legitimate concern. The Electronic Privacy Information Center, while normally a group I advocate listening to, is suing Google saying this violates an aggreement which Google made with the FTC while developing Google Buzz. This case does fall into EPIC’s main focus, however the opt out portion is pretty clearly stated by Google, and in the case of advertising, is pretty safe compared to less scrupulous means of tracking.
European Developments
Europe’s stance on internet related actions always serves as an interesting contrast to the American approach. One such topic should be monitored as European Union is enforcing a new law in May 2012, which will require all users of a website to consent to have their information tracked, and a cookie to be placed on their computer. So, imagine clicking on a foreign comparison engine, being directed to a retail site, and then having to opt-in to allow your activity to be tracked. It’s safe to say many consumers will decline, which raises all sorts of tracking and attribution related issues for businesses. To think, May is right around the corner.
Occasionally France is good for a laugh, and that’s true with their recent decision to penalize Google for offering Google Maps for free. France is famous (or notorious depending on your perspective), for protecting their national interests, including those of competing French mapping companies. To be fair, this same treatment helped create the French fashion industry, by helping to maintain the prestige of key brands. So, this seems to be a case where Google must simply pay up to do business in France ($660K in this case).
On the other side of the coin, my distant kin in the Czech Republic have allowed Google Street View to continue their work. Some key points have been worked out including allowing citizens to petition for the removal of personal information. So, at least Google has some good news across the pond.
Taxes, Taxes, and Taxes
Did someone say online sales taxes were coming closer? Virginia recent voted to close a loop hole which allowed Amazon to avoid collecting sales tax in the state, so momentum builds for some type of solution. In New Jersey, Amazon is working with legislators for a 22 month amnesty before collecting sales taxes at the Garden State, allowing for warehouses and jobs to be created in the state. This holds with Amazon’s strategy of conceding the payment of sales tax around 2014. Whether this is because Amazon expects to have physical stores by then, or just expects the sales tax issue to be handled federally, or both, is still unclear.
RIP: SOPA and PIPA
I wouldn’t be doing my part without lending some additional thought to SOPA and PIPA. Recently the Recording Industry Association of America (RRIA) President Cary Sherman, criticized Google and Wikipedia for becoming politically active instead of taking a neutral stance in the matter, comparing Google to a television station’s position of giving neutral coverage. Of course this is a pretty narrow point of view of the issue in criticizing Google for defending a key principle of the internet, but to be fair, SOPA and PIPA were founded on fundamentally good intentions of helping to curb online piracy of content. Noting that the music industry’s company VEVO showed pirated content at their own event, it’s pretty obvious that there is a fine line in sharing content, and intentionally stealing content for personal gain. While I would love to embrace Chris Anderson’s view that we are moving toward free information, there simply must be mechanisms in place to make sure content is controlled how it’s creator intends. It’s more and more obvious that copyright law is outdated overall, including how to enforce key provisions of unique content. In the new world of digital communication, a new way of operating is needed. The most important question, is how that should happen.
Monetizing Google Product Search
So, it looks like Google has finally found a way to monetize Google Product Search.
It’s been discussed for years, ever since Froogle was in beta, how Google would eventually get money out of their free product listings. Retailers have been seeing shifts in traffic for several months now, where clicks are moving away from Google Product Search and over to Google Product Listing Ads.
The exact amount of the shift will depend on the product segment and retailers in question, but the trend is undeniable and feeds into Google’s strategy to more aggressively pull in revenue from their programs. There are still likely to be many changes upcoming for for Google, including potentially new programs which are based on the product data which is sent to Google Product Search. However for now, retailers should aggressively work to expand their Product Listing Ad programs through:
- Aggressive bidding
- Campaign and ad group structure
- Negative keyword lists
- Promotion text
- More advanced techniques such as day parting which is now available
After all, if Google is aggressively pushing the program, that can be a powerful current to ride.
Why SOPA Isn’t A Clean Solution
SOPA, or the Stop Online Privacy Act, is another internet focused measure being circulated as federal legislation around internet use continues to heat up. My estimate is that it takes federal government about 10-15 years to catch up with current innovations overall so we are just now seeing a coming wave of laws which will take aim at policing technology and internet use. That kind of latency is not unheard of, and really whenever there is a technological revolution, there will eventually be laws enacted to follow up on those changes. So whether we are talking about driving laws to catch up with the advent of the automobile and changeover from pedestrian/animal based transportation, or labor laws rising up after factories and industrial lines became wide spread, now we are entering a period where new measures are being penned to catch up with the rise of online business.
SOPA is now being oppossed by industry leaders Google, Facebook, Amazon, and Twitter. Essentially SOPA would allow the federal government to block sites from a U.S. audience which have been shown to be pirating content (estimated to cost $775B in lost revenue annually). There are many problems with this measure as Inc. points out, including a heavy burden on small business, questions for companies with user supplied content, and problems with existing security protocol. Additionally, having such sweeping powers to block sites creates all of kinds of questions about who is doing the blocking and how sites are properly judged.
The good news is that is looks like the issue has gotten enough attention, this measure will not pass in it’s current form. However, it brings to light an important point about why companies like Yahoo, Google, Amazon, and others have found common ground in groups like NetCoalition. The internet is new enough, that the public and government do not have a firm grasp on technical and structural issues to form rules which will bring more positive benefit than negative. It is the responsibility of those engaged in online business to be aware and take part in the formation of rules and regulations which help the public, but do not infringe on the openness which has allowed online business to expand at an exponential rate.
Amazon Taxes and the Rumor Mill
At the end of 2011, Amazon made a hard push to ensure all of their third-party merchants had provided IRS Form 1099 information. The push was hard enough that Amazon would be deprecate anyone who didn’t complete this (no word if that actually happened). Why now, and what makes it so essential to have this information provided by the end of 2011, or at least before 2012 rolled around?
All of Amazon’s work with individual states suggest that by 2014, Amazon expects to have the internet sales tax issue worked out. As Internet Retailer reported, Amazon has cut a deal with another state, this time being Indiana to solve the tax issue. Their provision pledges that Amazon will voluntarily collect sales by January 1, 2014 for all Indiana consumers on Amazon. Some people believe Amazon is anti-tax, but that’s not the case. As Jeff Bezos has stated, Amazon is just pressing for a sensible tax system, and it’s looking more and more likely a system will be in place within 1-2 years, with a bill being passed either this year or next.
What makes the 2012 push for 1099 forms interesting is a rumor written about by Jason Calacanis that Amazon may open retail stores. That would be a huge change, and if it were to happen, it would make Amazon instantly tax liable in any state which a store is opened in. Adding more credibility to the rumor, the physical store roll out would also make sense because it’s inline with Amazon’s always aggressive strategy, fits with their push to grab offline sales such as Amazon’s Q4 offer to credit consumers to buy on Amazon, would stick it to Walmart (I wouldn’t underestimate this one), and fits with their same day delivery experiments where a consumer could have an item delivered to them same day and thus create a store with very little overhead expenses due to the light inventory.
I don’t usually devote space to speculation, but this rumor has a certain ring to it which may be worth listening to.
Reverting Back from Holiday Rate Cards
That was a busy holiday season. I imagine everyone will agree we saw about a 15-20% lift year over year for the quarter industry wide, but sometimes the work involved feels like it’s gone up exponentially to achieve those goals. Regardless, when thinking ahead to life outside of Q4, it’s good to keep in mind the end date for holiday rate cards.
Shopzilla has already gone back to standard rates, so this should be a prime location for pushing budget to. On the other side of the coin, some engines are not rolling back rates until January 15th, so throttles should be available if needed.
End of Holiday CPC Rate Card
- Shopzilla December 25
- Gifts.com December 31
- NexTag December 31
- Shopping.com December 31
- PriceGrabber January 15
- Pronto.com January 15
