For many of us, the 1990s don’t seem like a very long time ago — but from a work mode perspective, they are almost the Dark Ages. At the beginning of the 1990s, firms with “knowledge workers” (not yet called that) maintained filing systems filled with oddly-shaped pieces of paper, photographs and cardboard folders, collected at trade shows, seminars and via the daily mail, which dumped a pile of oddly-shaped envelopes on a table in a windowless room. Finding information was problematic: it was estimated that 20% or more of all of those papers were misfiled, and workers would often hoard the bits that were especially important to them, removing them from the central filing cabinets altogether. Learning about new developments was even harder; the path between the envelopes piled on the table and one’s attention was circuitous (and uncertain) at best.
The advent of the Internet and email completely changed the way that information was distributed. The Internet didn’t just replace those filing cabinets, it obliterated the entire collect/store/retrieve process, enabling anyone with even rudimentary skills to poke into every corner of every drawer on earth to retrieve whatever brochure, article or picture they were looking for. And email reduced the pile of physical envelopes to two streams — the neatly-packaged cheques and invoices went off to finance, and the lumpy packages with pictures and brochures were routed to the recycle bin.
In time, information flow morphed further. Collaboration tools built on Internet technologies enabled context-rich, group-focused communications; this replaced, at least in some cases, the need for the table itself, and the chairs that surrounded it. Other social tools, such as Twitter, evolved to exploit new opportunities for continuous connectedness. And email divided into two broad categories: it was used for person-to-person (or person to small group) business communications, and it was used as a broadcast medium. The broadcast use in turn had multiple layers: email lists were used to keep groups of family and friends abreast of developments (at least, by the handful of people who weren’t already using Facebook instead); it was used to distribute product information to theoretically-interested parties; it was used for regular communications to defined groups, such as donors, volunteers, or fans of a particular team or ensemble; it was used by news sources to ‘push’ information to readers, alerting them to new developments without requiring them to ‘pull’ information off websites on a regular basis; and it was used by a host of spammers to tempt unwary users to download malware and/or part with credit card information.
The Canadian government has decided to take action against this last group — but in the process, has introduced legislation that will affect the entire email stack, and in turn, the ability of Canadians to stay current with new developments, and/or to promote new products or insights to their countrymen. Canada’s Anti-Spam Legislation (CASL) arrives July 1st with the intention of filtering out spam — a function that is currently addressed in greater or lesser degree by a host of low-cost or free technologies (including by Gmail, whose intelligent filtering does a good job of separating “Primary” and “Social” communications from “Promotions”). Once in place, CASL will have the effect of reducing spam traffic across public and private networks — but it will also have the effect of silencing many different information sources, to the detriment of Canadian businesses and consumers.
In our opinion, there are three key factors that shape the impact that the law will have on Canadian businesses: the disconnect between the intent and effect of CASL, the confusion surrounding its introduction, and the unanticipated but beneficial consequence that we expect it will have on Canadian business understanding and use of social media. An understanding of how and why CASL will have a negative effect on Canadian business requires that we ‘connect the dots’ between these issues to explain why legislation with a beneficial orientation is likely to have negative consequences.
The intent of the law is to reduce unsolicited messages — but the effect will be much broader and less salubrious. Like so many other government pronouncements, CASL was introduced in a flourish of grand language: “The general purpose of Canada’s Anti-spam Legislation (CASL) is to encourage the growth of electronic commerce by ensuring confidence and trust in the online marketplace.” But the legislation itself does not address issues of online confidence or trust — it is focused on the conditions under which email may be sent from a commercial enterprise to a person or business. There is an argument to be made that a reduction in spam will increase confidence in email, but there’s little real support for the notion that this will in turn drive ecommerce growth or even that it will have a positive effect on the confidence and trust that spurs increased online business activity. Research has shown that online trust results from a complex mix of trust-establishing services (including authentication and feedback) and trust ensuring services (such as secure technologies and buyer protection policies). These techniques aren’t directly connected to spam. However (and ironically), they will be absent once CASL has impeded the free flow of information, potentially to the detriment of online commerce in Canada. A leading expert in the online trust field has written that “academics have even attributed the trust-building norms of various cultures to their nations’ economic performance, offering a macroeconomic perspective that associates prosperity with a capacity to scale trust. We believe that an open, free flow of ideas, regardless of their source within and between organizations would stimulate significant gains in productivity.”
There is a great deal of confusion regarding the law, and this confusion will result in diminishing online commercial activity. One could reasonably fill many different posts of this length with evidence of CASL confusion — amongst businesses and businesspeople, and even within the government itself. In discussing CASL with businesspeople, for example, we have found a great deal of uncertainty regarding the extent to which existing relationships can be maintained via email after July 1: we have heard conflicting opinions on how quickly the law will be phased in, on how it defines existing commercial relationships (one of the exclusions in CASL), on what is meant by “implied consent,” and on how CASL affects third parties (such as hosting firms and software vendors) whose products or services may be involved in email transmission. In our research for this piece, for example, we read one website that stated “The good news is that if you are currently sending a blog or newsletter, you can continue to use your address list. However, after July 1st, you must get permission, in writing, before you add anyone to your address list.” Another that observed “you cannot ’grandfather-in’ your existing lists. It will be necessary to re-permission your current subscribers prior to the July 1, 2014 effective date. Communications sent requesting permission will also be governed by CASL, so you must get permission prior to July 1.” In attempting to clarify this discrepancy, we approached the media line at Industry Canada, only to be told that the government would offer no guidance beyond what it has published on the web until after CASL comes into effect; we were further advised to seek guidance from a lawyer if we wanted clarification. In the meantime, the material available online suggests that it is unwise to rely on existing compliance with PIPEDA, which has been the standard for Canadian businesses: page 11 of CASL states that “In the event of a conflict between a provision of this Act and a provision of Part 1 of the Personal Information Protection and Electronic Documents Act, the provision of this Act operates despite the provision of that Part, to the extent of the conflict.”
Amidst all of this confusion, the one certainty surrounding the law is that it will hamper email-dependent business processes, as a consequence of the extremely severe penalties associated with breach of the CASL. The law calls for fines of up to $1 million for individuals, and up to $10 million for companies, with directors and officers liable for corporate fines. This last part is at least a bit unusual: debts and liabilities typically accrue to the incorporated entity, and not to the individuals responsible for its operation. By extending liability to officers and directors, the Canadian government has ensured that businesses will err on the side of caution with respect to the law. A reduction in business activity — resulting on the ‘sell side’ from reduced promotional capacity, and on the ‘buy side’ from both reduced access to information and decreased productivity resulting from the need to ‘pull’ information that was previously ‘pushed’ — will end up as regrettable but inevitable consequences of executive and board member need to be protected from large fines arising from inappropriate messaging.
One accidental but beneficial outcome: Canadians will become more adept at social media management. The business response to restrictions on email is quite likely to include much more extensive use of social media. The Canadian government’s information site states that “the Regulations provide exclusions from all requirements of the Act for commercial electronic messages that are sent on platforms where the required identification and unsubscribe information is conspicuously published and readily available to the recipient on the user interface.” Social platforms (but not email, nor even the email functions embedded in social platforms) meet this definition — and since CASL does not extend to Twitter, LinkedIn and similar platforms, businesses will find ways to stream messages via these media to fill some part of the void created by the abolition of broadcast email.
The bottom line:
Spam is certainly an issue for network providers: it accounts for a very high percentage of overall mail volumes (estimates range from 70% to well over 90%), and is rarely actually delivered to users, meaning that the networks get the downside of traffic without the upside of customer connections and recognition of service value. It is also a nuisance to all email users, and a threat to many; research has shown that nearly 70% of Canadians have had viruses on their computers, and the growing sophistication of online criminal activities increases the chance that a spam message can trigger a chain of events that ends with credit or other sensitive data being stolen from a business or individual.
For these reasons, legislation that will “encourage the growth of electronic commerce by ensuring confidence and trust in the online marketplace” is important to growth in Canada’s corner of the global economy. However, this law does not only — or even primarily — create a basis of trust for e-commerce. Instead, it attempts to reverse the broad flow of information by setting draconian limits on business communications. In its attempt to staunch email at one broadcast layer, it has driven a stake through all adjacent layers.
Clearly, there’s a need for some action in this area. A supply-side approach corresponding to Google’s definitions — requiring messages to be labeled by the sender as promotional, social or primary, with clear guidelines for categorization, and penalties for violating those guidelines — would have protected those who wish to avoid CEMs altogether, while allowing the mass of business sellers and buyers who depend on email communications to act responsibly. That isn’t what CASL delivers, though.
Come July 1, those who long for a bucolic inbox where the ping of new mail announcements punctuate long periods of silence will be delighted. Businesses that have come to depend on email as a means of distributing information — not just product offers, but all forms of business information — and those that rely on email to stay abreast of developments in their industries (again, not merely announcements of ‘limited time only!’ purchase offers, but the flow of insights and announcements needed to stay current with new trends and business options) will be less pleased. They will in time find other ways of sending and receiving electronic notifications about new ideas. In the meantime, they can always return to the ink-and-paper interface of the 1990s.