How ACTA Could Squash Financial Innovation

By Rachel Schramm - 31/01/2012 07:00:00

Despite a huge outcry against SOPA and PIPA, there has been relatively little noise made about ACTA, the Anti-Counterfeiting Trade Agreement. While it didn't provoke venture capitalists to hold off on online start up funding, ACTA's draconian measures could still stifle online financial innovation.^[1] Potentially more alarming? ACTA was written up behind closed doors and signed without congressional approval.^[2]

 

What does ACTA Do?

 

Like SOPA and PIPA, ACTA was created to safeguard intellectual property rights and give the government the right to take action if they believe a website violates copyright laws.^[3] Unlike SOPA and PIPA, it extends beyond United States borders. While protecting the rights of businesses and artists remains important, many online entrepreneurs criticize that the ACTA:

 

• Contains a poor definition of intellectual property. Although the language is meant to apply to trademarks, ACTA could extend to just about any ideas or information currently available online.^[2]

  
  

• Enforces excessively stringent surveillance. ACTA requires ISPs to closely inspect both their own servers and all data sent or received for copyrighted information – websites cannot display and users cannot send copyrighted music, videos, information, or links to copyrighted material.^[2] 

 

These principal flaws have driven activist groups and online entrepreneurs to speak out against ACTA.

 

What This Means for Financial Innovators

 

Because of the measures it takes against counterfeiting, ACTA could endanger businesses in the financial services industry, particularly companies with websites containing any amount of user generated content. If a user even links to copyrighted material, the government could shut down the entire website. 

 

For innovators in social finance, this could seriously disrupt their ability to do business.^[2] Not only could they lose customers who have been booted off Facebook or Twitter for sharing copyrighted content, but they could be shut down if any one of their users share copyrighted content with them. As a part of SOPA, measures like these could lead venture capitalists to stop funding digital media startups.^[1] ACTA could provoke a similar response on an international scale, severely limiting funding for online businesses in every country that signs ACTA. This could discourage new financial websites from incorporating social media and user generated content, thereby preventing innovation in a potentially key area of the financial industry.

 

Online payment service providers could also suffer from the implementation of SOPA, ACTA and PIPA. If the government forces them to take anti-piracy measures, they could lose business if any of their users are trading in any copyrighted material. This role as an enforcer puts online payment service providers in the difficult position of trying to please both the Internet community and the government. However, choosing to obey new anti-piracy rules may not be enough to keep a service provider out of trouble; even if a payment company were to cut off their services from a website when they identify copyright infringement, there is no guarantee that the online payment company won’t be shut down.^[4] 

 

Furthermore, online payment providers could be shut down even if the website they service was unaware it was violating copyright laws. If the material wasn’t trademarked when the website and payment provider were using it, new online anti-piracy restrictions could still land them in hot water if those ideas become copyrighted.^[4] Such regulations could pose serious problems for online payment startups without the funds to stand up against intellectual property lawsuits. These harsh repercussions, often for crimes that businesses may not even have known they were committing, could scare many online pioneers away from getting involved with financial innovation.

 

Considering the amount of research and discussion that goes into building an innovative financial business—online or otherwise—there's a strong chance that copyrighted material will be shared at the project's inception.^[5] In the event that an aspiring online financial entrepreneur buys an eBook, or quotes a copyrighted article in an email, the government could block their internet access for sharing the information with  their coworkers or business partners. Moreover, they could be fined and potentially sent to prison under ACTA.^[2] Additionally, this interaction could mean that the entire business would have to shut down, damaging not just their innovative ability, but their client's pocketbooks.

 

Do We Really Need Online Anti-Piracy Legislation?

 

Draconian measures like SOPA, PIPA and ACTA may serve the entertainment giants that funded them, but they could put a damper on online innovation across the financial services and creative industries.^[6] During this time of low employment and high creative potential, a bill that holds back small businesses and limits financial innovators may not be the best course of action. 

 

 

 

References

 

[1] Bayrasli, Elmira "How SOPA Threatens American Innovation." Forbes. 16 01 2012: n. page. Web. 27 Jan. 2012. <http://www.forbes.com/sites/elmirabayrasli/2012/01/16/sopa-threatens-american-innovation/>. 

 

[2] Kain, E.D. “If You Thought SOPA Was Bad, Just Wait Until You Meet ACTA.” Forbes. 23 01 2012: n. page. Web. 27 Jan 2012.<http://www.forbes.com/sites/erikkain/2012/01/23/if-you-though-sopa-was-bad-just-wait-until-you-meet-acta/>. 

 

[3] "How SOPA/PIPA Can Affect You." Webdesigner. 12 2011: n. page. Web. 27 Jan. 2012. <http://www.1stwebdesigner.com/design/how-sopa-pipa-can-affect-you/>.

 

[4] Wolfe, Daniel “Backlash Against Piracy Bill Could Help Financial Companies.” Bank Technology News. 17 01 2012: n. page Web. 29 Jan 2012 <http://www.americanbanker.com/issues/177_11/sopa-pipa-anti-piracy-banks-payments-blocking-1045767.html?pg=1>

 

[5] "The World Faces Major Challanges." Action FFII. n.d. n. page. Web. 27 Jan. 2012. <http://action.ffii.org/acta/Analysis>.

 

[6] "Meet ACTA: PIPA and SOPA’s Big Brother." Access Blog. 25 01 2012: n. page. Web. 27 Jan. 2012. <https://www.accessnow.org/policy-activism/press-blog/meet-acta-pipa-and-sopas-big-brother>.