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					                 Katie Barry



   The Struggle for Control of the Internet

              International Law

City University of New York Graduate Center

                May 7, 2008
Introduction

        The Internet is strange. Although billion of people use it daily to connect with one

another, engage in commerce, and even find love, most have little idea how it functions.

Although national governments now use it for everything from accessing taxes to

distributing divorce documents and even spying on each other, most have little say in

how it is run. The Internet has little formal governance. Instead, it consists of thousands

of privately owned computers that voluntarily agree to connect and exchange

information. They find one another using a networking system developed by computer

scientists in American and European labs in the 1970s and 80s. The minimal central

coordination required to make it work is essentially overseen by a nonprofit corporation

whose 15 member board of directors is accountable to the attorney general of the state of

California and operates under the authority of the U.S. government.

Roots

        The online world evolved in a bottom-up and almost haphazard manner; it was

initially the province of a few American scientists and engineers, and was funded by the

United States Department of Defense Advanced Research Projects Agency, an institution

founded after the launch of Sputnik in an effort to gain a technological edge on the Soviet

Union. Although the U.S. government undoubtedly benefited from the technology that

developed, it did little of the actual work. In true capitalist fashion, it contracted out.

Most of the technology that grew into the Internet we know today came as a result of

research funded by the government but done at American universities, especially MIT,

Stanford, and UCLA, and private companies like IBM. In its earliest incarnations, the

network that would grow into the modern Internet came from simple attempts to share
information among labs. The network spent most of its existence administered by

Woodstock-era American academics and engineers, who deliberately designed it to be

non-bureaucratic and easy to access, a reflection of the political and economic liberalism

of their time. They created an open infrastructure with as few restrictions as possible,

designed to permit any network to connect with any other without going through any sort

of central hub (Cukier 2005). One network of computers simply connects to another. (the

root of the term “inter-net”). When a person visits the New York Times site, his computer

connects to the New York Times’ computer and exchanges information with it. If he

visits Google next, his computer closes the connection with the New York Times’

computer and begins exchanging information with Google’s computer. There is no

central Internet “out there”, only a series of computers interacting.

        The openness has allowed cheap expression, low cost access, and innovation.

Most innovation on the Internet has come from the private sector; any government

involvement has come fairly recently. The fact that the network carries streams of data, as

opposed to voices, has large kept it out of the way of laws designed to regulate the

telephone industry.

        For a long time, the Internet was mostly the province of academics and engineers;

most were American but the technology soon spread to Britain, Australia, Western

Europe, and Japan. In the early 1990s, the British scientist Tim Berners-Lee developed

Hypertext Markup Language coding (HTML), as well as a Web browser. The idea behind

hypertext is this: most text is static, like the text on this page. In an English paper

newspaper, for example, articles are meant to be read from left to right and from

beginning to end. Readers may read different articles, but they generally do not find, for
example, a note in the middle of an article on oranges inviting them to turn to page A11

for more information on other fruit. Hypertext represents a new way of looking at this

concept. Readers still generally read left to right and up and down, but hypertext creates

new ways of moving within the text. With a hypertext newspaper, an article about

oranges may well have a link in the middle inviting readers to click here for more

information on other fruit. HTML is simply the code that creates the possibility of linking

among Web pages. Berners-Lee’s HTML is what allows a person to click on an

underlined link on a Web page. It is relatively simple and minimalist, with code to allow

for links and also for text formatting (for example, italicizing or bolding text). A Web

browser, such as Internet Explorer or Apple Safari, is simply a computer program that is

able to interpret the HTML code calling for links, bold text, etc, and display it.

       In keeping with the prevailing liberal idea of laissez-faire and free exchange of

ideas, Berners-Lee made the technology available for free, with no patents or royalties

due. He called the network of interconnected pages viewed through browsers the World

Wide Web. Later, he created the World Wide Web Consortium, centered at MIT, to

improve and develop coding for the Internet. The group uses royalty-free technology, so

that it may be adopted by others for free. Their influence is visible in the names of most

Web sites today. The http://www. that precedes most web sites actually stands for

HyperText Transfer Protocol (the technical means of sending html)://World Wide Web

(Internet Society 2008).

       The accessibility that came with HTML led to the Internet explosion of the late

1990s. Non-scientists began to go online. Many of the companies that later became

Internet giants got their start performing basic functions for people when the Internet first
began. For example, Yahoo! was started by two Stanford University students who created

an index to better keep track of their favorite sites. It was originally titled “Jerry’s Guide

to the Web”, and later renamed Yahoo!, which stands for “Yet Another Hierarchical

Officious Oracle”. When the Web exploded in the late 1990s, Yahoo! was already there.

       Many of the Internet’s early devotees viewed it as a libertarian place in which all

were equal and national governments’ laws did not apply. In 1996, American activist

John Barlow wrote a declaration of independence for cyberspace, declaring that “legal

concepts of property, expression, identity, movement, and context do not apply…They

are all based on matter, and there is no matter here.” (Barlow 1996)

       Corporations and people who could afford to do so rushed to get online, and

investors who believed the Internet had no limits poured money into Internet ventures,

many of which were ill-advised. The view of the online world as something free and

above the rules of physical world was tempered by the Dot com bust of 2000-2001, but

has never entirely gone away. For example, computer scientists at Western universities,

outraged at the Chinese government’s censorship of the Internet, volunteer their time to

create methods for users in China to get around their government’s filters. Yet there was

little international outcry when the Chinese government installed video cameras in its

Internet cafes to monitor them, because no one disputes that the Chinese government has

sovereignty over Chinese citizens in physical space (Wu “Privacy” 2005).

       The open network creates many of the same problems as an open society. It is

difficult to track spammers, for example, and cyberspace is plagued with copyright

infringement and viruses. In short, problems thrive, but so does creativity. Governments

are constantly struggling to catch up. For example, the famous video-sharing site
YouTube was created in 2005 by three computer scientists who complained that there

was no good way to share videos online. Within two years, it had been banned (and

sometimes later un-banned) by the national governments of Brazil, Turkey, and Thailand,

for hosting a steamy video of a Brazilian model, a clip critical of Turkish leader Mustafa

Kemal Ataturk, and a video insulting the king of Thailand, respectively. Dot coms are

similarly at odds with how to deal with governments. Yahoo! Founder Jerry Yang was

called to testify before the U.S. Congress to explain why his company’s Hong Kong

affiliate gave the Chinese government dissident Chinese journalist Shi Tao’s emails,

actions that netted the journalist a ten-year prison sentence.

       Anglo-American influence can be seen not only in the liberal, almost libertarian

philosophy reflected in the way in which the Web is set up, but also in the language that

makes it work. For example, when Tim Berners-Lee began inventing HTML code, he

didn’t start by creating a new spoken language and a new alphabet. He used what he

already knew and had available, in this case, the English language and alphabet. HTML

code, as well as nearly every other computer language used online, is based on English

words typed on a Roman keyboard. HTML is mostly English words, or parts of English

words, typed inside brackets. For example, the code for blinking text is the word <blink>.

The code for bold text is the word <bold>, often shortened to <b>. When programmers

from non Western countries want to create Web pages, they must write code written in

Roman text based on the English language. This is not as difficult as it sounds; because

so much computing technology originated in the West, many computer keyboards in non-

Western countries consist of roman letters with local characters added.
       In addition, a great deal of the content of the Internet is in English. A report by the

British Council estimated that in 2005 31% of content available online was in English,

the largest of any language. The fact that many major Internet companies are located in

the United States has lead to charges that they favor literary and political ideas written in

English (Graddol 2005). For example, when Google initially embarked on its books

project, it announced its intention to create digital copies of all the books from several

American and British libraries and make them available online. (In deference to U.S.

copyright law, only a small portion of copyrighted books are readable on Google). The

President of France immediately protested that this was too Anglo-centric a cannon, and

soon the EU agreed to fund a similar project for libraries in other European languages

(Chrisafis 2006). However, despite the liabilities that come from the American origins of

many Internet mainstays, the saving grace of the Internet may be that it is so easy to

generate new content. China recently surpassed the United States as the nation with the

most Internet users, and the proportion of Web content in Chinese has skyrocketed.

Because so much of the content on the Internet is generated by the users themselves, it

naturally grows more and more reflective of the variety of people online.

Governance

       Despite its decentralized and somewhat haphazard organization, there are four

critical areas that need to match up in order for the Internet to work. For example, if a

person sitting in New York searches for something on Google, her computer connects

directly with Google’s computer network and interacts with it. The catch is that in order

for this connection to happen, the person’s computer must first be able to find Google.

Doing so means using one of the few universal controls present on the Internet. First,
every computer on a network needs a unique Internet Protocol (IP) address, which allows

other computers to find it and interact with it. In practice, it functions like a phone

number. Others need to know a phone number in order to reach someone; phone numbers

must be unique because giving the same phone numbers to multiple people would mean

the phone company would have no idea where to send calls. However, IP addresses are

usually so long that it is impractical for people to interact with them. For example, the IP

address for the CUNY network is 128.228.178.20. Opening a browser and telling it to go

to 128.228.178.20 will indeed deliver the CUNY Web site, but it is unlikely that people

would make much use of the Internet if they had to remember a long series of numbers.

To make up for this, early Web scientists began issuing sites domain names, such as

google.com and cuny.edu. When a user types www.cuny.edu into a web browser, their

computer sends a request to a root server, which functions as a Rolodex. It takes the

domain name, cuny.edu, and sends appropriate IP address, in this case, 128.228.178.20.

Because the system of root servers evolved so informally, their operators now include

NASA, a Dutch nonprofit, universities, and private companies. Finally, the Internet

requires uniform standards in order to operate, so that one computer can communicate

with another. These include everything from the addressing system to standards for how

routers communicate. They must be set, and they must be set by one party on behalf of

everyone.

       Like all forms of technology, the central coordination required for the Internet is

fraught with complications. For example, because of a technical decision made by

programmers when the Internet was developing, the system can only accommodate 4

billion IP addresses. Until the Internet is upgraded, then, IP addresses must be given out
sparingly and carefully. Because of another technical hiccup, there can be no more than

13 root servers, and at present, 10 of them are operated from within the United States,

with 1 each in Amsterdam, Stockholm, and Tokyo. The Internet evolved so gradually that

most governments and bureaucrats did not understand its implications until the late 1990s

(Cukier 2005). Like all issues involving shared resources, the struggle for control of the

Internet has been fraught with controversy.

       Until 1998, technical decisions about domain names, IP addresses, and technical

standards were made almost entirely by Jon Postel, a computer science professor at the

University of Southern California. Postel had been one of the original architects of the

Internet since its inception in the 1960s, and he administered it for the next 30 years on

behalf of the Department of Defense’s Advanced Research Agency. He made seemingly

political decisions, such as which entity would get to operate country domain names (the

.uk in, for example, www.bbc.co.uk). In the beginning, these names were often given to

private individuals instead of government bodies; in its early days, the Internet was so

new and strange that there was no appropriate entity to hand the domain names to.

Besides, national governments, and in particular their telecom monopolies, often hinder

communications growth more than they help it. By the mid 1990s, however, it was clear

that one person could no longer administer such a huge system (Cukier 2005).

       After a series of bitter negotiations involving the business community,

governments, and nongovernmental organizations, the Clinton administration brokered a

compromise and established an NGO called the Internet Corporation for Assigned Names

and Numbers (ICANN) in 1998, to take over for Postel. They felt that basing the

organization in the private sector would make it more responsive to change and less
prone to bureaucratic and political fighting. Its private sector status has helped to keep

ICANN out of politics – for example, when American Communications officials were

asked by their Chinese counterparts why Taiwan had been given its own two-letter

domain (.tw), they could safely blame ICANN and move on (Cukier 2005).

       Yet from the start, ICANN has been plagued by controversy. Although it goes out

of its way to be international, holding meetings all around the world, taking advice from

many countries and seating citizens on its board from many countries, it legally operates

under a memorandum of understanding with the U.S. Department of Commerce.

Although it tries, and often succeeds, to limit itself to addressing technical matters,

ICANN often faces ire from governments, businesses, and activists. It was criticized for

lack of transparency, accountability, and legitimacy. The U.S. Congress held hearings in

2002 about the ICANN’s lack of financial transparency – at one time, it refused to let one

of its own board members to examine its finances. Civil society groups felt it was too

controlled by the businesses it was designed to regulate. Early Internet pioneers began to

criticize ICANN for becoming too close to Network Solutions, the company that

administers many domain names. Businesses felt it was overly governmental. And

foreign governments felt threatened and perplexed by it. Brazilian officials complained

that although they rely heavily on the Internet to access taxes and deliver government

services, they as a government have little control over its maintenance and continued

existence. Governments frequently receive advice from NGOs and civil society groups.

They are completely unfamiliar with the idea of being asked to give nonbonding advice

to a private entity they cannot really control. Many developing countries, especially,
found it ridiculous that all the coordination for the Internet was done by a nonprofit

subject to the laws of California (Wu, Dyson 2006).

       Resentment about the situation finally boiled over at the UN’s first World Summit

on the Information Society, held in 2003 in Geneva. Many states wanted ICANN’s duties

to be administered by a new international treaty organization, perhaps under the United

Nations. There is precedent for this. International telephone service, for example, is

coordinated by the world’s oldest treaty organization, the International

Telecommunications Union. Pressure for this move grew as the United States invaded

Iraq, and states became increasingly suspicious of American hegemony. They viewed

ICANN, which exists under the oversight of the American government, as another

instrument of American dominance. Without international control, they protested, what

was to prevent the United States from one day kicking Iran off the Internet simply by

deleting the domain name suffix “.ir” (Cukier 2005)?

       Governments sought to dilute American control by calling for a new arrangement,

and in 2004 Kofi Annan appointed a 40-person working group to address questions of

Internet governance. As pressure mounted to hand over control of the Internet to an

international body, Washington reacted. It had viewed the creation of ICANN as a

concession, and it was not prepared to give up any more control over the organization.

Just before Annan’s group was to release its report in 2005 (which recommended turning

control of the Internet over to the United Nations), the U.S. Department of Commerce

issued a 331-word statement that announced that while it remained committed to further

discussions of Internet governance, it firmly intends to maintain its oversight over

ICANN’s activities (Cukier 2005).
       The decision was revisited at the 2005 UN Information Society Summit in Tunis.

There, delegates agreed to create an Internet Governance Forum, to begin in 2006. Some

nations plan to use it to push for more multinational governance. Although civil society

groups will be involved, most governments assume that they will be in charge.

       The American delegation viewed this as a victory. They did not actually cede

control of the Internet, ICANN’s duties remain unchanged, the Governance Forum has no

real powers, and its topics of discussion will include issues like spam and cyber-crime

(Economist 2005). Its membership was set up by Kofi Annan to be “multistakeholder”,

and includes 46 entities, not only governments but also groups from the commercial

private sector, civil society, and academia (UN 2006). In short, Forum’s creation lead to

no changes in the technical aspects of the Internet.

       Many of the architects of the Internet do not believe this is a bad thing. Leonard

Kleinrock, one of the pioneers of sending data online, said he didn’t believe the domain

name system was the “heartbeat” of the Internet, and questioned the idea that that the

Internet can lend itself to centralized or governmental control. “Who controls the flow of

the ocean?” he commented. “Nobody controls it, and it works just fine. There are some

things that can't be controlled and should be left distributed.” (Markoff 2005). Some

analysts commented that the United States is only able to maintain authority over the

ICANN because it does very little with this authority. Others point out that government

oversight inevitably slows down innovation, favors certain political players, inevitably

increases cost, and burdens engineers with political squabbles, and fear that putting the

Internet on an intergovernmental footing will jeopardize its free expression and cheap
access. As it stands now, ICANN still coordinates the Internet, and meetings on Internet

governance increasingly pit the United States against the rest of the world.



Treaties

         Officially, there are very few treaties that regulate the Internet. The most

prominent is the 2005 United Nations Convention on the Use of Electronic

Communications in International Contacts, one of the first U.N conventions to

specifically address the Internet. Its scope is relatively narrow, however – it attempts to

provide legal certainty in determining an Internet user’s location for legal purposes. It

tries to codify when and where electronic messages are sent and received, as well as the

proper use of automated message systems for contact formation. It set out standards to be

used in determining functional equivalence between electronic and paper documents. It

also creates measures to allow electronic signatures to be treated the same way as

traditional signatures on paper. Such predictability is intended to allow legal certainty

that transactions negotiated online will be honored – for example, a trader from one

signatory state who negotiates a contract via email with a party in another signatory state

can be assured that the contract will have the same weight as one signed in person. (Bick

2006).

         The Council of Europe’s Cyber Crime Convention has been acceded to by over

30 states, including most of Europe, the United States, Japan, and Canada. It outlaws a

number of online crimes, including unauthorized access of an Internet computer system,

unauthorized interception of Internet data, damage or other interference with Internet-

related computers or equipment, online fraud and forgery, the production or distribution
of child pornography, and copyright infringement using the Internet. The Convention

provides cooperation mechanisms for fighting Internet crime; however, those

mechanisms are difficult to implement without support from both the information-

seeking country and the information-providing country. (Bick 2006)

         The World Intellectual Property Organization’s copyright and patent treaties also

have impact for Internet law. Its Intellectual Property Organization Copyright Treaty,

which has been ratified by 60 countries, requires its signatories to enact laws to protect

copyrights in computer programs and some databases, both of which are required for

Internet content and communications processes. The Copyright Treaty also requires

enactment of laws to provide authors with the ability to control rental and distribution

rights. In addition, its Patent Cooperation Treaty, ratified by 14 counties, provides a

method for inventors to simultaneously file for patents in many countries (Bick 2006).

Much to the chagrin of corporations such as Microsoft, a WIPO official was quoted in

2003 as saying his organization was “intrigued” by the growth of open-source software, a

means of development that relies on collaboration and the sharing of computer code, as

opposed to the traditional method of developing software privately and copyrighting it.

He suggested the WIPO would welcome a meeting on the landscape of open source

technology, an idea that many in the field welcomed. The U.S. Patent and Trademark

Office was not in favor of the measure, however, and no meeting took place. (Krim

2003).

         Interestingly, the WIPO also comes into play when disputes arise over domain

names. Although ICANN holds power over domain names, it observes WIPO decisions

in cases when trademark disputes arise over domain names – for example, Time Warner,
which owns the rights to Harry Potter, successfully sued in the WIPO for the rights to

108 domain names containing the words “Harry Potter” (Gleick 2004).

       Another piece of international law that could theoretically be applied to the

Internet is the International Covenant on Civil and Political Rights. Article 17 of the

Convention forbids “arbitrary or unlawful interference” with “privacy, home, or

correspondence”. However, the Covenant has not had tremendous influence on the

behavior of states, largely because they are free to decide for themselves what constitutes

“unlawful interference”. (Wu “Privacy” 2006)

       At this point, however, multilateral treaties regulating the Internet are few and far

between. This does not mean, however, that the Internet is not influenced by national

governments. Some of the farthest-reaching efforts to influence the online world have

come from unlikely sources.



Privacy, Crime and the Internet

       The Internet is nothing if not a great compendium of information. In many cases,

this includes information that private individuals would prefer remain private, such as the

names and credit card numbers of Amazon.com customers, the banking records of

HSBC.com’s online customers, and the contents of Chinese dissident Shi Tao’s email

account. A great deal of information regulation, like copyright law, is spelled out in

international agreements such as the World Trade Organization’s Trade Related

Intellectual Property Agreement (TRIPPS), and there is rough consensus among

economically powerful nations about which regulations should be in place. Individual

privacy questions, on the other hand, seem to be a matter of greater debate, even among
cultural similar nations. Americans, traditionally, see privacy protection as a negative

freedom, usually freedom from government interference. They are often wary of

government restraints placed on business in the name of privacy protection. The U.S.

Congress has traditionally been reluctant to pass legislation that would limit, for example,

the right of Google to target ads to its users. Europeans, on the other hand, have a

reputation for caring the most about preserving private information, and want greater

policing of the private sector. At the opposite extreme, scholars of Chinese culture have

gone so far as to say that the Western concept of privacy has no meaning in the Chinese

context (Wu “Privacy” 2006).

       Because so many Internet companies must operate across national boundaries,

companies must prepare their products to comply with multiple privacy protection laws.

In the private sector, this usually involves the security of information transferred to others

in consensual transactions. For example, a bank might sell a customer’s phone number to

telemarketers who then call day and night. Regulations on this kind of transaction try to

create a correspondence between what customers expect businesses to do with their

information and what businesses actually do.

       Perhaps the most famous example of a transactional privacy dispute involves the

Seattle-based Microsoft Corporation and the European Union. In 2002, European Union

investigators summoned Microsoft officials to Brussels because of concerns about

Microsoft’s .NET Passport program. Anyone who uses the Web knows that remembering

usernames and passwords for different sites can be annoying. .NET Passport was

intended to provide users with a virtual “digital identification”, which would allow them

to navigate among sites that required passwords almost automatically. This necessarily
required Microsoft to transfer large amounts of personal information, usernames and

passwords that would allow access to everything from users’ email accounts to their bank

records. European officials were concerned about how Microsoft was collecting users’

information, and what it was doing with it.

       The European Union has the world’s broadest and strictest privacy laws. A

general European Directive on data protection went into force in 1998 and placed strict

restrictions on any “data controller”, defined as any person or entity who collects data

and “processes” it. This law is so broad that it was once used to prosecute a Swedish

woman who publicized information on a fellow church member’s foot problem. It

requires all “data controllers” to tell consumers why they are collecting data, and receive

clear consent to do so. They must then use the data only for the purposes started, and

cannot collect data unrelated to their intended use for the data (For example, a dentist

cannot ask for elementary school records).

       What makes the law particularly strong is its broad geographic scope. It applies

not only to European companies, but also to any company that makes use of data

processing “equipment” or “means” in Europe, and any company that may be reached by

means of public international law. It has been interpreted by European officials to mean

nearly any company that collects information from European citizens.

       The EU was concerned that Microsoft was violating its laws, and the two sides

entered into negotiations to solve the problem. In the end, Microsoft was faced with

complying with European laws or the economically unthinkable prospect of simply not

competing in Europe. It made “radical” revisions to how Passport manages user data.

Because it was too impractical to create separate versions of Passport for different
locations, Microsoft’s EU-friendly version of the program became its worldwide

standard. In effect, the world’s strictest privacy laws became the law of the network. (Wu

“Privacy” 2006)

       Further effects of the same European Union directive came from the famous

Article 25 of the document, which technically bans data transfers between the European

Union and countries that it sees has having “inadequate” data protection for individuals.

Because a ban on all data transfers between the EU and the United States would be

economically disastrous, the two sides immediately went into high stakes negotiations to

prevent that from happening. What resulted was a compromise, in which the United

States did not actually pass any new laws, but the US Dept of Commerce set up a

voluntary program wherein companies agreed to certify that their compliance was

roughly in keeping with Europe’s requirements, and that they would be subject to

American enforcement if they failed to live up to the requirements. While hardly a

complete victory, the EU had succeeded in influencing Americans’ online privacy. (Wu

“Privacy” 2006)

       Perhaps a more unique question is the issue of identity theft by people who intend

to use the information for criminal activities. This category can include people who steal

credit card and social security numbers, but can also extent to those who steal email

addresses for spam. These individuals often prefer to operate in countries with the least

restrictive Internet privacy laws – after all, many states make no attempt at all to track

spammers. At this stage, there has been little action on the part of governments to control

information theft and spam. However, some have proposed treating information thieves

in a manner similar to high seas pirates, on the grounds that they prey on the weak and
disrupt otherwise predictable transit systems. As hostis humanis generis, enemies of all

mankind, these offenders would be subject to universal jurisdiction, punished based only

on their activity and regardless of their nationality and the location of the computer on

which their crime was committed. (Wu “Privacy” 2006)



Online activity as trade?

       The organization with the most interesting potential role to play in the future of

Internet trade is the WTO, in particular through its General Agreement on Trade in

Services (GATS) and General Agreement on Tariffs and Trade (GATT). When the

organization was created in 1994, its members agreed to liberalize trade in services, as

well as in goods. At the time, few diplomats realized the full impact the coming

technological revolution would have. Indeed, the agreement is so dated that it makes use

of a products classification scheme that contains detailed provisions for “pre-recorded

video cassettes for use in home entertainment” - items that hardly exist anymore. To

further complicate matters, GATS defines “service” only as “any service in any sector

except services supplied in the exercise of government authority”. Most Internet content

can be reached by anyone, from anywhere, making anyone on the Internet a potential

importer or exporter of services. Almost by accident, the WTO may have put itself in the

position to regulate the national Internet practices of its members. (Wu “WTO” 2006)

       It is difficult to determine when Internet filtering violates world trade laws. The

present free trade regime is rarely interpreted to allow international society to restrict a

country’s ability to engage in political censorship. Sometimes, however, censorship is

based on domestic economic factors rather than ideological ones. For example, when the
Mexico blocked its citizens’ access to the low-cost online telephone service Skype, it did

so under pressure from its domestic Telecom monopoly. On the other hand, when a

French court ordered the American site Yahoo! to stop auctioning Nazi paraphernalia, it

did so mostly on ideological grounds. And when the United States tried to stop its

citizens from accessing Caribbean gambling sites, the case ended up in WTO court with

judgments going back and forth on appeal. (Wu “WTO” 2006). The case is still being

contested, but Antigua recently won some compensation in December 2007 when a WTO

arbitrator ruled that it was entitled to retaliate by violating copyright protections on goods

like U.S. films and music, worth up to $21 million.

       There are two broad areas of agreement. First, physical goods that happen to be

ordered using the Internet (such as a book ordered on Amazon.com) still involve the

movement of a good, and therefore implicate GATT. Online services that don’t implicate

downloaded or stored goods, such as search engines, are services. There is severe

disagreement on how to treat items in the middle – goods that remain in digital form, like

online newspapers, software, audio, and electronic books. For example, in 2000 a French

Court ordered the American auction site Yahoo! to removed Nazi-themed items from its

auction site. However, since Yahoo! had no assets in France, the court was unable to

enforce its ruling in France. The French International League against Racism and Anti-

Semitism sued Yahoo! again in the United States. Subsequent American rulings forced

Yahoo! to prevent the sale of Nazi items to users France only, but Yahoo! eventually

voluntarily removed all Nazi themed items from its auction site. The case generated a

great deal of controversy, with some accusing the U.S. of trying to extend the first
amendment beyond its borders, and others accusing Yahoo! of bowing to censorship

from a foreign power. (Wu “WTO” 2006)

       At this time, there have been relatively few decisions by the WTO, but the

implications of its exercising its power could be huge.

       The most important parts of GATS, in terms of trade law, are its anti

discrimination and market access rules. It bans discrimination between exporting

countries, and discrimination between local and imported products. One issue that stems

from this is the use of Internet phone services (called Voice-over-IP, or VOIP), which

allow people to make long distance and even international phone calls over the Internet

for free or for very low rates. By their very nature, such services are difficult to regulate

because national telecom laws usually presume a dedicated phone network. Long

distance or international phone calls are a lucrative revenue source for national telecoms

in many countries; these companies are likely to oppose services such as Skype, as has

already happened in the Skype case in Mexico cited earlier. (Wu “WTO” 2006)

       In one well-publicized case, the Estonian VOIP service Skype allegedly had its

services blocked by Mexico’s monopoly telephone carrier, Telemex. Because so many

Mexican citizens work in the United States, the temptation to maintain revenue from

telephone calls coming from the United States was very strong. Telemex denied the

charges, but there were substantial reports from Skype executives and Mexican Skype

users that Telemex maintained several measures that hindered Mexicans from using

Skype. The most basic way of doing this was to simply block users from reaching

Skype’s domain name (www.skype.com), and thus prevent people from accessing the

service. Other Mexican users reported much slower Internet service for people identified
as Skype users. Because Internet connection in Mexico often required use of Telemex’s

telephone lines, Telemex had the capacity to block Skype’s services. Would such an

actions count as an anti-competitive practice under the WTO agreement? The question

has never been answered, but it seems inevitable that such an issue will eventually come

up. What about countries like the United Arab Emirates, which say they ban Skype out of

concern for the “morals” of their citizens? (Wu “WTO” 2006)

       National attempts to filter the Internet on “moral” grounds have the potential to

present other difficulties. Because so many online companies are based in California, the

United States’ First Amendment allows them to host content that would be illegal even in

other Western nations. The most obvious example is Nazi-related paraphernalia, freely

bought and sold on eBay but illegal in France and Germany, but it could extend to state

attempts to control politically sensitive or pornographic sites.

       In at least one other case, however, the United States was in the position of trying

to protect its citizens from moral corruption. In early 2000, the island nation of Antigua

operated a large Internet gambling industry, which employed 5,000 people, or 7.5% of

the total population. In 2002, the United States began to crack down on Internet

gambling, usually by targeting intermediaries with offices in the United States, such as

PayPal and Citibank. The U.S. based its crackdowns on several federal laws, including

the Wire Act and the Travel Act, which make it illegal to operate a “wire” based

gambling service. As a result, Antigua’s online gambling industry was decimated. In June

2003, Antigua filed a WTO complaint against the United States, arguing that the United

States had violated its “market access” commitments, specifically the commitment it

made in 1993 to liberalize sector 10.D of GATS, “Other Recreational Services (except
sporting)”. Both the WTO panel and Appellate Body found in favor of Antigua, agreeing

that the American commitment to liberalize in “recreational services” included a

commitment to gambling. Of course, Internet gambling did not exist as such in 1993, and

there is no way the American negotiators could have known that is what they were

agreeing to. On the other hand, online gambling is nothing if not a “recreational service”.

(Wu “WTO” 2006)

       In the dispute, the United States argued that its gambling bans were necessary to

“protect public morals or maintain public order”, allowable exceptions under WTO rules.

It then argued that Web gambling was different from in-person gambling because of the

anonymity allowed in such transactions, as well as the low barriers to participation and

potential volume of such transactions. The original panel decision rejected these

arguments, but the Appellate Body reversed the decision and agreed with the U.S. that

American anti-online gambling laws were “necessary” to deal with the unique problem of

Internet gambling. The only thing left to decide was whether the laws were established in

a discriminatory way. In the initial decision, the panel accepted Antigua’s argument that

the U.S. ban on gambling was a farce, that the U.S. government allowed American

casinos to carry on their businesses without harassment. However, the Appellate Body

reversed the decision here as well, saying that although there were a few cases of the

United States’ not enforcing gambling laws, the evidence was not compelling enough to

find a treaty violation. It instead focused on the fact that most American anti-gambling

laws were worded neutrally, and therefore upheld most of them as a means of protecting

American morality and public order.
        What many analysts found significant about the ruling was not its result, but its

method, which suggests that when a country opens a sector of its economy under GATS,

foreign Internet-based services may demand access to its markets. Bans on Internet

business would have to be justified by compelling national interests, which are allowable

exceptions under the treaty. If countries distinguish between Internet and non-Internet

services, they must have a compelling reason for doing so. (Wu “WTO” 2006)

Conclusion

        The rise of the Internet brings with it a host of questions about its long term

prospects. It is not at all certain, for instance, that it will continue to be able to provide

relatively free and open communication. The United States may be unable to maintain

control over ICANN in the long run, or it may bow to pressure from its own domestic

telecoms to allow them to treat sites unequally. (The famous “Net Neutrality” dispute).

On the other side, it is possible that the ability to freely browse the Internet will not be

threatened, but that increasing regulation from Bretton Woods institutions it may extend

American-style free speech much further than its national boundaries. In short, the

Internet’s future may well be as strange as its beginning.
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