After years of waiting for industry self-regulation of online behavioral marketing, the Federal Trade Commission has asked for a voluntary do-not-track system. But don't be fooled. Although the language is polite, the intent is clear. The FTC wants privacy controls beyond anything that either the advertising or high tech industries have considered. Moreover, it's not clear that even a politically divided Congress would oppose the concept.
The FTC wants a way for consumers to opt out of being followed on the Web for marketing purposes. The agency is also in discussions with Adobe (ADBE) about the role persistent Flash cookies play in data collection.
FTC wish listThe FTC's report includes a framework that's likely to be painful for the tech and advertising industries:
- "The framework applies to all commercial entities that collect or use consumer data that can be reasonably linked to a specific consumer, computer, or other device."
- "Companies should promote consumer privacy throughout their organizations and at every stage of the development of their products and services."
- "Companies should simplify consumer choice." Companies would not need to offer choices when doing routine things like collecting information to fulfill an order.
- "Companies should increase the transparency of their data practices," including short, clear, and more standardized privacy notices; reasonable consumer access to data about themselves; and clear disclosures and opt-in when a company will use personal data in a "materially different manner than claimed when the data was collected."
Political realityInfluential Democrats would have a difficult time backing away from the privacy issue, even though they take large amounts of money from media and Internet companies. And those who think that Republicans would scuttle any attempt should also reconsider. Just last month, Republican Representative Joe Barton talked of calling technology executives before Congress to testify on privacy issues:
On privacy, Barton said that he was somewhat surprised that there hasn't been an Internet privacy bill introduced in this Congress, and that he would be very willing to "legislate" on this issue in the next Congress, saying that privacy is "something that is gaining in importance".The very media and technology groups that favor Democrats are unlikely to find an understanding opposition party.
Advertisers want to opt outA coalition of advertising groups has worked on its own opt-out systems. Consumers would in theory be able to prohibit marketers from delivering ads keyed to people's activities on the Web. Ironically, to do so they would have to enable cookies so any given site would know not do deliver ads.
However, with cookies on, browsers would still maintain the data that advertising networks use to follow consumers' activities because, even if they don't deliver ads, the networks, as well as individual sites, could in theory make the data available to others for other marketing purposes.
The downside from industry is that ad revenues would drop, making many business models more precarious.
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