The government looks set to make a second U-turn on its ecommerce policy by not creating a licensing regime for providers of ecommerce services, writes Dan Sabbagh.
Industry will instead be encouraged to adopt a self-regulatory approach.
The move is a sign that the government will introduce a bare minimum of regulation in its ecommerce bill, to be published at the end of this month. The bill is now expected to focus on establishing the legal basis for digital signatures and any other form of electronic writing.
'This is exactly what the select committee was recommending,' said Peter Sommer, research fellow at the London School of Economics and the advisor to Parliament's trade and industry select committee inquiry into electronic commerce.
Self-regulation has the advantage of being more flexible than a statutory system - a big plus in an emerging high-tech market. However, the bill will include reserve powers allowing the government to introduce a scheme backed by law if self-regulation proves not to work. Self-regulation can still be enforced by competition regulator the Office of Fair Trading.
This second U-turn follows last month's decision to abandon controversial key escrow plans to tap encrypted communications, because of widespread industry opposition.
The government acknowledged that the scheme, which required encryption users to deposit copies of their private encryption keys with third parties, was too complex and was out of step with international developments.
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