This is an essay I wrote for one of my classes, responding to an online article.
Policing internet piracy Accessories after the fact Tougher laws against online pirates are needed, but a proposal in Congress could hit law-abiding businesses
Internet has become an essence in every aspect of our lives. Of significance is that the growth of Internet opens a new era of human unlimited access to a cornucopia of information that would take human beings centuries to write it down into books and would take a space of billions of books to store. However, everything has downsides. Cyber attacks and Internet piracies recently have raised numerous problems for economists and policy makers. Intellectual property piracy simply destroys the incentives for scientific innovations and discoveries. The problem is that the government’s influence and control over the Internet are miniscule. If there are an infinite number of potential competitions in a free market system, there is an unlimited number of hackers or file-sharing services in the Internet system. The attempt to shut down these websites is an impossible task. Not too long after lawsuits shutting down popular file-sharers such as Napster and Grokster, Pirate bay and Cyberblockers have emerged as the top leading websites with better upgrades and services. In response to this confounding quagmire, congress is planning to pass a new anti-internet piracy law called “the Stop Online Piracy Act (SOPA)”, which will allow the intellectual property owners file lawsuits against intermediaries “such as payment services, search engines, and internet service providers (ISPs)—that supply money and traffic to pirate sites”. This seems to be effective in solving the problem because these sites need financial supports for maintenance and can provide services indirectly through the intermediaries. Nonetheless, the passage of the bill is believed to bring about another issue for policymakers to think about. Of the top concern is the broad interpretation of the SOPA infringement, which inadvertently gives entrepreneurs disincentives to create online ads or blogs as means to advertisements of their products because the possibility of becoming suspects of file-sharing sites are high. Moreover, this may risk ruining the DNSSEC, the key protocol of the American Internet security, giving rise to more cyber attacks and hackings.
After all, the roles of Internet in the market are quite paradoxical. In one way, it allows firms to reduce significant amount of research time and costs, increasing their productivity. Online advertisements have been effectively utilized to maximize information allocation ‘s efficiency and to bring customers closer to the producers. Online purchases save times and eliminate wasteful resources and lower transaction costs. At the same time, however, it discourages technological innovations, owning to the common fear that patent laws are being useless with the growing complexity of Internet networks and the users’ hacking prowess. But I believe that this is just another kind of negative externalities or positive externalities, depending on context in which we place it. To this circumstance, this is emphatically a market failure that needs lots of works to be done in order to solve it. Most of the efforts should come from the governments that serve to assure that the market will be able to get back on track when it looses its self-correct mechanism and that the entrepreneurs’ interests will be protected. The most important question is how to succeed in eliminating the deadly cost without harming the market. Although the new legal remedy is not up to answer this question, it gives us more hopes that this will become successful in the future.