The history of government regulation in the United States can be divided into four phases. The first phase was the antimonopoly period of the late 19th and early 20th centuries. During this era, major laws such as the Sherman Antitrust Act, Clayton Act, and Federal Trade Commission Act were passed.to maintain a competitive environment by reducing the trend toward increasing concentration of industry power in the hands of a small number of competitors. Laws enacted more than 100 years ago still impact business in the 21st century.
The recent Microsoft case is a good example of antitrust legislation at work. The U.S. Justice Department accused the software powerhouse of predatory practices designed to crush competition. By bundling its own Internet Explorer Browser with its Windows operating system (that
runs 90 percent of the world’s personal computers), Microsoft grabbed significant market share from rival Netscape. It also bullied firms as large as America Online to drop Netscape Navigator in favor of the Microsoft browser. Microsoft countered that its bundling decisions were simply efforts to offer customer satisfaction through added value. But as a recent joke reported, “In the U.S. government’s fight with Bill Gates, I’m for the federal government. I always like to root for the little guy.”1’
The second phase, aimed at protecting competitors, emerged during the Depression Era of the 1930s, when independent merchants felt the need for legal protection against competition from larger chain stores. Among the federal legislation enacted during this period was the Robinson-Patman Act. The third regulatory phase focused on consumer protection. Although the objective of consumer protection underlies most laws—with good examples including the Sherman Act, FTC Act, and Federal Food and Drug Act—many of the major consumer-oriented laws have been enacted during the past 40 years. The fourth phase, industry deregulation, began in the late I970s and has continued to the present. During this phase, government has sought to increase competition in such industries as telecommunications, utilities, transportation, and financial services by discontinuing many regulations and permitting firms to expand their service offerings to new markets.
The newest regulatory frontier is cyberspace. The Federal Trade Commission (FEC) is investigating ways to police the Internet and online services. The immediate goal is to protect consumers who buy goods and services online from fraud and deceptive advertising. Although the federal government has been slow to regulate am—junk e-mail—many states have enacted legislation and many more have introduced bills to protect consumers. Lawmakers in California, Washington, and Virginia have made it a criminal offense to send spam with false or misleading headlines, enforcing penalties ranging from fines to incarceration. But as one anti-spam activist has pointed out, “The Internet is global and laws in any one jurisdiction are not going to stop it.
The FEC and state regulators search out fraudulent schemes, like own-your-own business scams and sales promotions that, at first glance, appear to be casual chat rooms. Meta-tags are the newest shell game in town. When creating a site, a firm inserts the name of bigger competitors in a code called “meta-tags” that is read by search engines but remains invisible to casual viewers. When consumers look for a big company, they are taken to a roadside stop owned by the little company, as well. In 1999, California courts banned the use of meta-tags to lure traffic to a site because the practice breeds confusion among consumers)3 Now that the Internet is an established medium, laws to control fraud and misrepresentation in cyberspace are inevitable. Privacy and child protection issues may present the most difficult enforcement challenge of the Internet. With the passage of the Children’s Online Privacy Protection Act, Congress took the first step in regulating what children are exposed to on the Internet. The primary focus is a set of rules regarding how and when marketers need to get parental permission before obtaining marketing research information from children over the XMeb)4 Many Internet marketing decision makers are taking proactive steps to protect the consumer. For example, IBM’s Web sites post a clear privacy policy; America Online promises never to disclose information about members to outside companies; and Microsoft is developing technology that lets people automatically skip sites that do not meet their privacy standards) lists and briefly describes the major federal laws affecting marketing. Legislation affecting specific marketing practices, such as product development, packaging, labeling, product warranties, and franchise agreements. Marketers must also monitor state and local laws that affect their industries. Many states, for instance, allow hard liquor to be sold only in liquor stores; such laws limit the distribution of low alcohol cocktails made with rum, vodka, whiskey, and bourbon. California’s stringent regulations for automobile emissions require special pollution control equipment on cars sold in the state.