Thanks, Google and Facebook: Everyone Gets the Regulation You Asked For

Last Updated Nov 5, 2010 5:51 PM EDT

The European Union wants tighter privacy regulations on social networking sites. Stringent consumer protections is nothing new in the area, but now things will go further, as regulators look for new checks on such companies as Google (GOOG), Microsoft (MSFT), Facebook, Twitter, and Yahoo (YHOO).

There are two ironies in the situation. One: an industry that strongly protests its ability to self-regulate essentially asked by its actions for more regulations. Two: every other company in high tech and media will have to live with the outcome and implications, which will be unpleasant and widespread.

The EU's inclinations come from the extensive consumer tracking companies do to gain information that might better target advertising. Regulators and legislators both in Europe and in the U.S. have stated their concerns over a number of years. The entire online marketing industry responded by promising to "do" something and then by doing nothing, because they did not want to give up any of the insights available, because they translate into higher advertising rates or more effective campaigns.

The EU gets proactive on privacy
As an EU statement said, the region wants people to retain ownership of all their information and materials, including photographs, and wants a public "right to be forgotten" when they no longer want their data online. The EU plans to draft legislation next year.

Think about what it would require for someone to be forgotten on a social network, and you face an impressive task. That would mean every message and comment from the person, and, possibly to as well. It would mean photos, but what if someone has taken a personal copy of an image without asking? Achieving this ability would require a degree of information tracking that the services may never have achieved before.

But such a regulation won't stop with the top companies. Add in every social network, discussion board, customer feedback form, any other variations that could come under the rubric of social networking, and virtually every high tech company large and small that does business in Europe will be affected.

Why the U.S. might be next
Additionally, even back in 2006 under a Republican administration and Congress, the FTC first started to look at online behavioral marketing. Banking on a Republican majority in the House to stave off potential regulatory action, especially as high tech tends to favor Democrats in its giving, is a mistake. Some variation, though likely watered down, of what happens in Europe might find its way into the U.S.

It's clear why companies don't like regulation. It is often costly and, at the minimum, generally requires what seems like annoying make-do work. And so, companies often argue against it. However, smart risk management involves understanding just how far you can push a situation. Legislative hearings and public gaffes by one company after another are good signs that it's time to pull back and rethink a strategy, lest you seem to invite a heavier hand. And yet major high tech companies couldn't have gotten more attention from regulators had they jumped up and down. Now it's too late for promises of self control. So -- Google, Facebook, Yahoo, Microsoft, and all those ad networks, hope you enjoy the new dose of bureaucracy. Someone ought to.


Image: Flickr user By Dan4th, CC 2.0.
  • Erik Sherman On Twitter» On Facebook»

    Erik Sherman is a widely published writer and editor who also does select ghosting and corporate work. The views expressed in this column belong to Sherman and do not represent the views of CBS Interactive. Follow him on Twitter at @ErikSherman or on Facebook.