Business Strategies and Ethical Issues in IT

ITM 100 Class 12 - Ethical and Social Issues in Information Systems

• Big data presents both opportunities and ethical concerns.

• Predictive policing can perpetuate existing biases in data, leading to unfair targeting of certain communities.

• Insurance rate calculations using big data can lead to discriminatory pricing, disadvantaging lower socioeconomic individuals.

• Transparency in big data algorithms is crucial for fair practices.

• Ethical and social issues are arising from new technologies.

• Undeveloped legal environment surrounding emerging technologies creates challenges.

• Companies have faced ethical and social issues in the past.

• General Motors (2015) covered up faulty ignition switches, leading to significant casualties.

• Takata Corporation (2015) concealed faulty airbags, causing millions of vehicles to require replacement.

• Four major banks (Citigroup, JPMorgan Chase, Barclays, UBS) (2012) were found guilty of manipulating the LIBOR interest rate.

• SAC Capital (2013), a hedge fund, was found guilty of insider trading.

• GlaxoSmithKline (2012) was fined for illegal promotion, safety data falsification, and price reporting violations.

• McKinsey & Company (2012) and CEO Rajat Gupta faced allegations of insider trading.

• Bank of America (2012) was accused of improper mortgage practices.

• Volkswagen (more recently) had software installed to cheat emissions tests, at a potential cost of $87 billion.

Ethics and Information Systems

• Ethics govern individual and collective behavior—defining right and wrong when using information systems.
• Privacy is a key concern in handling personal data (collection, storage, and usage)
• Transparency is essential in algorithmic decision-making.
• Digital divide: unequal access to technology creates significant social impact.
• Social media plays a vital role in shaping public opinion.
• Intellectual property rights and cybersecurity are critical political issues in the technological realm.

Key Topics

• Information rights and obligations: Defining who has the right to access, own, and control information.
• Property rights and obligations: Exploring how intellectual property is protected in the digital age. (Software piracy, copyright enforcement, etc)
• Accountability and control: Determining responsibility for using IT systems. (Example: liability if data breaches occur or AI systems malfunction).
• System quality: Criteria for evaluating the accuracy, reliability, and security of IT systems.
• Quality of life: Investigating how IT systems and advancements affect individuals' well-being. (Examples: excessive screen time or job displacement due to automation).

General Technology Trends

• Computing power doubles every 18 months, leading to faster systems and new capabilities.
• Data storage costs continuously decline, making large datasets increasingly accessible.
• Data analysis advances facilitate detailed profiles of individual behavior.
• Networking advancements readily allow remote data access.
• Mobile device adoption and widespread use has profound implications.

Internet Challenges to Privacy

• Cookies: Identify users, track visits to websites.
• Super cookies (Flash cookies): Enhanced user tracking ability.
• Web beacons (web bugs): Monitor e-mails/webpage visitors.
• Spyware: Software capable of secretly collecting data and transmitting it.
• Google services: Collect user data for targeting via DoubleClick.
• Opt-out vs. opt-in model: Choices available to users for agreeing to data collection and use.

Technical Solutions

• E-mail encryption methods.
• Anonymity tools.
• Anti-spyware tools.
• Browser features (e.g., "Private" browsing, "Do Not Track").

Other Real-World Ethical Dilemmas

• Technology use to reduce the workforce (e.g., automation).
• Selling subscriber information to advertisers.
• Corporate employees using business IT resources for personal use.
• Using IT to monitor employees

Advances in Data Analysis Techniques

• Profiling: Combining diverse data sources to create detailed dossiers on individuals.
• Nonobvious relationship awareness (NORA): Combining data from multiple sources to expose concealed connections (e.g., identifying criminals or terrorists).

Ethics in an Information Society: Basic Concepts

• Responsibility: Acknowledgement of potential costs, duties, and obligations associated with decisions.
• Accountability: Establishing clear mechanisms for identifying responsible parties.
• Liability: Defining the processes allowing individuals to recover damages from firms.
• Due process: Established laws to provide recourse and redress for individuals.

Ethical Analysis

• A five-step process for ethical analysis:

1. Identify the facts about the situation.
2. Define the problem and associated ethical considerations.
3. Identify the key stakeholders involved.
4. Consider all possible actions and options.
5. Evaluate the possible outcomes resulting from the various decisions.

Candidate Ethical Principles

• Golden Rule: Treat others how you want to be treated.
• Immanuel Kant's Categorical Imperative: Act only in a manner consistent with principles that you wish to apply to everyone.
• Descartes' Rule of Change: Don't engage in repeated actions that could harm the environment or leave lasting negative impacts.
• Utilitarian Principle: Choose the action that maximizes overall benefit.
• The Risk Aversion Principle: Choose the less risky, less costly option for minimizing potential damage.
• The "No Free Lunch" principle: recognize that someone owns the intangible or tangible objects, unless declared otherwise.

Information Rights: Privacy and Freedom

• Privacy: Individuals have a right to privacy and freedom from unwarranted surveillance.
• Fair Information Practices (FIPs): Set of principles (notice/awareness, choice/consent, access/participation) related to information collection/usage.
• COPPA (Children's Online Privacy Protection Act): Legislation to protect children's information online.
• Do Not Track Online Act: Addresses the issue of online tracking by requiring opt-in for data collection.
• European Directive on Data Protection: Regulations enforcing informed consent from users regarding the handling of data.
• Safe Harbor framework: Private, self-regulatory mechanism for data protection.

Property Rights: Intellectual Property

• Intellectual property: Intangible or tangible property rights or creations.
• Trade secret protection.
• Copyright protection: Legal rights to prevent others from using a work.
• Patents: Exclusive rights granted to an inventor for a 20-year period.
• Digital Millennium Copyright Act (DMCA): Prohibits circumvention of protection technologies on copyrighted material.

Computer-Related Liability Problems

• Software/hardware failure: Exploring responsibility for damages caused by software malfunction or hardware breakdowns. — determining the liable party.
• In cases of harm, should the responsibility lie with the producer, operator, or someone else?
• Is it prudent to treat software similar to a service, rather than a physical product?

System Quality: Data Quality and System Errors

• Acceptable system quality: Levels of accuracy, dependability, and security.
• Software errors, hardware failures, poor input data quality.

Quality of Life: Equity, Access, Boundaries

• Negative social consequences of systems: Societal impacts of emerging technology, including dependence, inequities, and reduced privacy.
• Balance of power in societal structures affected by technological change.
• Rapid pace of technological advancement, impacting competition and personal/work/leisure boundaries.

E-commerce, Digital Markets, and Digital Goods

• Ubiquity: Internet access availability everywhere.
• Global reach: Cross-cultural and national boundaries in transactions.
• Universal standards: Based on Internet standards.
• Richness: Support for multimedia elements.
• Interactivity: User engagement with the system.
• Information density: Vast increases in information amount and quality.
• Personalization/customization: Tailoring experiences to unique user needs.
• Social technology: Use of platforms for social sharing, networking, and content creation.
• Types of e-commerce: B2B, B2C, and C2C transactions.
• E-commerce revenue models: advertising, subscription, sales, free/freemium, transaction fees, affiliate programs.
• Internet marketing: Long tail marketing, programmatic advertising, behavioral targeting, and native ads.
• Disintermediation: Reducing intermediaries in business transactions.
• Digital goods: Goods easily delivered over a network, low production/delivery costs, but highly variable pricing.

Other Topics

• The impact of emerging technologies, such as AI, on various industries.
• Mobile commerce (m-commerce): Growth and various applications.
• Internet challenges to privacy: Policies surrounding data collection and user rights.
• Cybersecurity and data security.

This quiz covers key concepts related to business strategies, ethical concerns in IT, and the impact of technology on competitive forces. Questions focus on product differentiation, accountability in IT systems, and the implications of data analysis trends. Test your understanding of these critical issues in the modern business landscape.