Crypto's not the only e-commerce issue

Last week's coverage of the Emerging Digital Economy report rightly focused on Commerce Secretary William Daley's admission that the Clinton Administration's encryption policy isn't working.

But other substance in the report was overlooked.

First, let's belabor Daley's crypto lament: "Our policy goal is the right one--balance--but our implementation has been a failure." That statement represented a very high-level admission of policy gridlock in the Administration. Daley highlighted the standoff, between cops and spies on one side and commercial and high-tech interests on the other, over what strength of strong encryption U.S. firms can sell overseas.

Daley underscored industry's central point: Since other governments aren't backing the United States, U.S. firms are losing sales to overseas competitors. Meanwhile the bad guys are getting strong crypto anyway.

Daley's plaintive words amounted to a plea for help in a political fight the government's losing. Commerce is trying to enforce an unenforceable law that it doesn't like. It's an unusual story but hardly a political turning point.

The rest of the 300-page report included various e-commerce projections and success stories--Amazon, Cisco, Dell, Auto-by-Tel, and so on. Six NEWS.COM stories were cited as well. Although Commerce did virtually no original research, it collected the best work from Wall Street, industry, and academic researchers, and that's a contribution in itself.

But buried in the report were other items of note:

First (and you may call me a privacy nag), Daley dished strong words on Web sites for their so-far poor attempts to guard user privacy.

The Clintonites recognize that keeping personal data private is a make-or-break issue for consumers. Without confidence in what's being done with information about them, consumers will shy away from Internet commerce.

Clinton's crew doesn't want Internet privacy laws--they have consistently argued for industry self-regulation. Unfortunately, the Internet industry is barely responding, and the clock is ticking. The Department of Commerce must report to the White House on July 1 on progress toward privacy self-regulation. Daley practically begged industry to act: "I very much want this to be a positive report."