From the December 1999 issue of Startups

It was bound to happen: The Internet has become so profitable that the government wants to step in. To protect? To serve? To get a piece of the pie? Whatever the motivation, its attempts to regulate the wild, wild Web could hurt your business. Here's a look at the top five threats the government poses to e-commerce:

1. Intervention without understanding. "Politicians are quick to impose regulations to appease constituents," says George Matyjewicz, moderator of the online discussion list E-Tailer's Digest (http://www.retailtoday.com/etailer/index.htm), which covers e-commerce issues for retailers. "But they don't always understand the ramifications."

Censorship, for example, could put a damper on business. Matyjewicz cites a 1995 instance when CompuServe pulled the plug on some 200 newsgroups containing "offensive" words. Unfortunately, banning the word "breast" restricted forums such as breast-cancer support groups.

2. Restrictions on data collection and usage. The government is trying to protect consumers' privacy by limiting the information that cookies and subscriber forms can automatically gather when visitors drop by a Web site. While there's a fine line between prying into consumers' lives and collecting marketing information, it's easy for government intervention to go too far. "[The Consumer Internet Privacy Protection Act of 1999] restricts a company's ability to market its services," says Ben Isaacson, acting executive director of the Association for Interactive Media (AIM), a Washington, DC, group that represents companies doing business online. (For more information, visit the Electronic Privacy Information Center at http://www.epic.org)

3. Limitations on bulk e-mail. While well-intentioned, legislation to stop the flow of unsolicited, commercial, bulk e-mail could limit e-mail's value as a direct-marketing tool. "I believe spam should be banned and spammers [should be] hung by their toes," says Matyjewicz. "However, don't I believe the government understands the true picutre [of e-mail marketing], and it may try to impose regulations that will make any bulk e-mail illegal."

4. Limits on alcohol sales. Existing legislation in many states bans sales of alcohol across state lines. In response to the new sales channel presented by the Internet, bills before Congress, such as S.577, sponsored by Sen. Orrin Hatch (R-UT), would ensure alcohol can't be sold online to any restricted states. The proposed laws pose threats to Internet retailers, vineyards and microbreweries nationwide that wish to expand sales using the Internet.

5. Taxes. Last year, Congress passed the Internet Tax Freedom Act, which gave businesses a three-year moratorium on new and discriminatory or multiple state and local taxes on Internet activity. (This doesn't mean the Internet is a tax-free zone; it means certain sales are exempt from certain types of taxes.) But with the money to be gained from Internet taxes so substantial, will the government be able to keep its paws off it for long? New tax regulations, collection, paperwork and enforcement would mire e-commerce in bureaucracy. Here's the bottom line, according to Matyjewitcz: "If it ain't broke, why fix it?"

To voice your opinions on any of these issues, e-mail your congressperson using http://www.visi.com/juan/congress.


Shannon Kinnard (shannon@ideastation.com), president of Idea Station, an e-mail marketing agency in Atlanta, is the author of Marketing With E-Mail (Maximum Press, $24.95, 800-989-6733).

Short-Term Software

Need new business software, but don't want to spend a bundle? You might save money--and time--by using an application service provider (ASP).

Just as an ISP rents access to the Internet through its servers, an ASP rents use of its software applications. Instead of paying for the software upfront and installing it, you pay on a per-month basis and access the software via the Internet. Prices start at about $15 per month; products include accounting, legal and marketing programs.

Rentable applications offer other benefits as well. You get a chance to test the software before making a major commitment to it. Upgrades and maintenance are the duty of the ASP vendor. And if you or your employees travel frequently or often work on projects outside the office, you'll appreciate being able to access the programs remotely 24 hours a day, seven days a week.

Two ASPs to check out are http://www.appsonline.com and http://www.officetool.com . To find others, search online for "Application Service Provider" or read the ASP News Review (http://www.aspnews.com).