Protectionism in cyberspace. (Competing Interests).

For most companies, the Internet offers a huge opportunity to reach new customers. But for others, it's a threatening place filled with invisible competitors intent on stealing their customers and shrinking their margins.

Robert D. Atkinson of the Progressive Policy Institute think tank in Washington calls this latter group "the disintermediated." As consumers use travelocity.com rather than travel agents or shop at Amazon.com instead of the corner bookstore, the owners of bricks-and-mortar operations understandably worry. Moreover, Atkinson says, these businesses "are using all the judicial, regulatory and legislative means at their disposal to thwart competitors who would like to use the Net to sell a product or service."

In a paper titled The Revenge of the Disintermediated, Atkinson illustrates how these companies have used government as a means of domestic protectionism at an estimated annual cost of $15 billion to consumers.

* eBay's success as an online auctioneer has prompted traditional auction houses to push for state laws to keep it at bay. New Hampshire's auction board now requires auctioneers to take an exam, pay $85 for an annual license and post a $10,000 bond. Illinois has adopted similar laws.

* Drivers in Great Britain can purchase new cars online directly from manufacturers, but Americans are not so lucky. Auto dealers successfully have lobbied all 50 state legislatures to ban auto purchases unless they involve local franchise owners. Researchers at the Yale School of Management estimate customers could save 2 percent by buying cars online. Nonetheless, car dealers paternalistically claim they are protecting consumers from making bad choices about complex products. Occasionally, candor overcomes them. Gene Fondren, president of the Texas Auto Dealers Association, defended the anti-Internet law by saying his group is concerned with "the property rights of its members. Don't expect us to change that."

* The Wine Wholesalers Association fruitfully lobbied Congress for a law that allows states to sue out-of-state wineries if they sell directly to consumers in the 26 states that ban Internet wine sales. Wine wholesalers claim this shields teenagers from the dangers of zinfandel or pinot noir. Of course, most underage drinkers crave Budweiser or Corona and lack both the credit cards and the patience to purchase alcohol online.

The Federal Trade Commission, or FTC, is trying to combat Internet protectionism. "State and federal regulatory policy should encourage, and not restrict, the growth of ecommerce," explains Ted Cruz, director of the FTC's Office of Policy Planning. "The widest possible competition from the Internet ultimately should benefit all consumers."

Cruz and his colleagues have filed legal briefs to persuade state authorities to overturn protectionist laws. Last March, for example, the FTC wrote to Connecticut officials to protest attempts by the state opticians board to curb Internet sales of replacement contact lenses by requiring sellers to secure optician's licenses. Such restrictions "would likely increase consumer costs while producing no offsetting health benefits," argued the FTC, which discussed the case in a June 12 hearing.

The North Carolina Bar and Rhode Island's legislature have tried to stymie Internet mortgage lenders through actual and proposed requirements that consumers hire in-state attorneys to conduct real-estate closings at a cost of $150-$500 each. The FTC and the Justice Department recently urged both states to keep lawyers optional. They are studying this request.

Atkinson urges policy makers to support innovation and allow the free market to pick winners and losers in the battle between ecommerce and bricks-and-mortar companies. He recalls that early in the 20th century, the Horse and Mule Association of America and the National Hay Association "vigorously campaigned to limit the use of trucks on public roads, and conducted successfully in many places a nationwide campaign to prohibit automobile parking on principal streets." America thrived as horses yielded to cars. The nation likewise will prosper as consumers carry their shopping lists from Main Street to the Information Superhighway.

New York commentator Deroy Murdock is a Senior Fellow with the Atlas Economic Research Foundation in Fairfax, Va., and a Media Fellow with the Hoover Institution at Stanford university.