Evan Schuman's StorefrontBacktalk

Two recent developments—one involving a New York federal judge and the other involving a group of U.S. senators—are signaling serious difficulties for E-Commerce efforts over the next two years.

The federal judge case involved U.S. District Court Judge Louis L. Stanton of the Southern District of New York and his decision to order Google to surrender YouTube customer records to Viacom. The U.S. senator matter involved a hearing on Wednesday (July 9) where senators questioned Microsoft, Google and others about data privacy and what kind of laws the government should have.

In both cases, those federal employees are wading into areas with extraordinary implications.

Consider one of the judge’s arguments in ordering YouTube to surrender the data. "Defendants argue that the data should not be disclosed because of the users’ privacy concerns, saying that
‘Plaintiffs would likely be able to determine the viewing and video uploading habits of YouTube’s users based on the user’s login ID and the user’s IP address.’" But the judge rules against YouTube because he wasn’t clear how that data alone could reveal much.

The assumption of some anonymity on E-Commerce sites can be critical. Let’s look at a scenario for Amazon.com. One of its most critical value-adds is customer comments—both good and bad—about its products.

What if a consumer—employed in the consumer appliance world—purchased a toaster that was absolutely horrible? That consumer then wanted to warn other Amazon users of the terrible toaster. He does so, using a pseudonym. A week later, an attorney for the Terrible Toaster Company sues Amazon, demanding the name of all anonymous posters, along with their IP addresses and any other information.

Their purpose? To sue those consumers and to make an example of them so that people are scared to criticize their products.

StorefrontBacktalk.com itself has people commenting on our stories anonymously. At least one of those anonymous users is a well-known IT exec with a very large retailer. The identification of that person could hurt their career. What if some vendor wanted them identified to evaluate whether a lawsuit was warranted?

As social networking sites and E-tailers try and leverage Web capabilities and build more interactive relationships with customers, those customers need to trust that their information will be protected. These kinds of court decisions threaten far more than the judge likely realizes.

But for true nightmarish sweats, no group delivers like the U.S. Senate. The Washington Post story had an exchange that would be quite funny if the potential for damage wasn’t so sobering: "Sen. Bill Nelson (D-Fla.) asked a question about Internet connections so muddled that apparently no one understood. ‘I think I’m not entirely sure of what you are suggesting, senator,’ the witness answered. ‘Nor am I,’ Nelson said."

One of the bigger legitimate fears about retail (including E-tail) data collection is not what the merchants plan on doing as much as what cyber thieves, rivals, evil ex-spouses and other villains might do. Not to worry, of course. Retailers are experts at protecting data. *gulp*