E-Commerce Law Week, Issue 396

"Click Fraud" -- The Bane of Internet Advertising
It’s no secret that search engines and web portals derive a tremendous amount of income from text-based advertising links that trigger commissions each time an Internet user clicks through them.  This business model is based on the assumption that genuine potential customers are the ones clicking on the advertisements.  But a practice called "click fraud" threatens to unravel this premise.  Whether a result of unintentional double clicking, or fraudsters' repeatedly clicking on specific advertising links to drive up costs for their competitors, the ultimate effect of click fraud is that advertisers end up paying for useless traffic.  And they are not happy about it.  Google recently settled a class action lawsuit in Arkansas that sought to blame the search engine for the practice.  But the settlement leaves unresolved significant questions about what liability Internet companies should have for invalid clicks they do not encourage, and may not even know are invalid.  The suit will continue against Yahoo! and other Internet companies, and the final ruling could end up determining the viability of the main business model for many Internet companies.

"Made in China" Wireless Standard Rejected
Over the past decade or so, China has climbed the economic value chain and changed the meaning of "Made in China" with startling speed.  Production of lower-quality merchandise has increasingly been supplanted by high-quality, high-technology production, and more recently has been augmented by rapidly increasing research and development capabilities.  Many Chinese believe that their economy will conquer the world, and they may eventually be right.  But not yet.  Last week, the International Organization for Standardization (ISO) rejected the Chinese Wired Authentication and Privacy Infrastructure (WAPI) wireless standard in favor of the US-led 802.11i standard.  Both WAPI and 802.11i have been promoted as more secure alternatives to the popular WiFi (802.11a/b/g) and WiMax (802.16) standards.  But the WAPI standard has a bit of a checkered history.  In late 2003 and early 2004, the Chinese government tried to mandate the standard for all wireless LAN products operating in the 2.4GHz frequency band in China, but ultimately relented in trade talks with the United States.  Since then, China has taken the high road by pursuing approval for WAPI through the international standards process.  However, press reports after the ISO decision indicated that the Chinese government intends to continue to promote the WAPI standard domestically.  Hopefully, this does not mean a return to the mandatory approach of 2003 and 2004.  Such an approach would seem counterproductive for Chinese companies who want to be players on the world stage, and who increasingly understand that they benefit most by playing by the rules of the global economic game. 

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