The Internet has brought a new dimension to the way we communicate and exchange information and collaborate in work processes. Although this medium has positive outcome in economic growth such as e-commerce, it may bring about undesirable negative consequences if it is not managed properly. There is a need for government and policy makers to address the impact of Internet on society and to take into account the externalities generated in the cyberspace. This chapter identifies the positive potential and impact of the Internet and some of the negative externalities created by Internet users as a result of their actions. In addition, present and future measures undertaken to combat negative externalities in the cyberspace are briefly discussed.