As the reliability of each communication connection increases, the efficient aggregate reliability of the whole network decreases. In other words, aggregate risk of coordination failure of an increasingly larger network of e-commerce increases. Many news on devastating impacts of Internet virus and paralysis of the whole network caused by paralysis of a link in the network provide evidences for this phenomenon. For instance, development of Internet makes more difficult for employers to monitor employees. Many employers complain that Internet generates a great deal of loss to them since employees now spend much of working time surfing on the Internet for business unrelated purposes.
Some employees take the matter to the court to claim that their privacy is infringed upon.
Some employees have won the litigation. Another heated debate is about the reforms of the patent system. In 1999, more than two thousand Internet related patents are registered. Electronic viruses and e-commerce fraud generate huge losses to the world economy. All of the new phenomena call for institutional innovation and new policies that cannot be sorted out in the absence of government actions.