MoneyWatch Tech

Has High Tech Become Too Complicated To Regulate?

By Erik Sherman

Updated on: November 22, 2010 / 4:03 PM EST / MoneyWatch

Just a few weeks ago, it looks as though Europe would increase privacy regulation on Internet companies, with the Obama administration following suit in the U.S. Now movement even in the EU is already in doubt. Why? Because no one is quite sure how to set guidelines to achieve the desired ends and the result is fighting that could effectively kill the effort.

Corporations regularly rail against government regulation as being too cumbersome and expensive to allow companies to do business. Frankly, the moaning and groaning is largely an attempt by giant companies to complain their way out of effort they'd simply rather avoid. However, in high tech, the opposite condition seems to have come into real existence. Regulators have begun to find that the industry's products and services are so complicated that they can make regulation next to impossible.

As the Wall Street Journal suggests, the intricacies of controlling what happens on the Web, for example, become arcane battlegrounds for argument:

Now, Internet companies, advertisers, lawmakers, privacy advocates and EU member nations can't agree on the law's meaning. Is it sufficient if users agree to cookies when setting up Web browsers? Is an industry-backed plan acceptable that would let users see -- and opt out of -- data collected about them? Must placing cookies on a machine depend on the user checking a box each time?

And think of all that the report of the discussion doesn't begin to touch:

the time a cookie may stay in effect
HTML cookies versus the extended types enabled by Adobe (ADBE) Flash or HTML 5
any difference in handling third-party cookies
cookies that track users wherever they go on the Web
how an opt-in or opt-out would work
how often a user might have to opt-in, if that was the approach taken
whether the law distinguish between tracking cookies and those that store preferences

And that just touches on cookies, without discussing such issues as web bugs or Java programming that might also collect data. The EU is supposed to have guidelines available by next year, with member nations implementing them by May. However, nations can implement guidelines as they wish, which could mean that a practice recognized as allowable in one country might cross a legal line in another.

Clearly some part of the back and forth is from advertising-related companies, including Google (GOOG), Facebook, and Amazon (AMZN). But there is also the technology and its uses that are subtle and require detailed prescriptions that organizations such as Google, Mozilla, Microsoft (MSFT), and Apple (AAPL) can implement in their browsers.

Unfortunately, such rules-based regulation stands in contrast to the European general approach of setting principles and then letting companies and countries decide on how to best implement the principles.

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