Why Online Marketers Didn't Police Privacy While They Still Could
Technology companies have finally done it. For years, congressional committees have said, "Safeguard user data and privacy, or we'll do it for you," and online marketers have ignored ignoring the requests. Now Reps. Rick Boucher and Cliff Stearns have released a draft bill that would require opt-in consumer consent before companies could collect and disclose personal information. It's something the industry has dreaded, but you have to wonder why it didn't take self-policing action when it still could.
The degree to which technology companies are tone deaf to government demands is amazing. In virtually any other industry, companies understand that regulators are an unpleasant fact and know that to ignore them is to invite legal controls. However, in high tech companies, the approach is to ask for forgiveness instead of permission. That can work for a while, but eventually government officials get annoyed -- particularly when they're legislators in an election year.
Look at some of the big tech names that continue to appear before regulators of various sorts: Apple (AAPL), Google (GOOG), and Facebook. You can understand why they don't want restraints on new ways to make money. That's like saying you don't want restrictions on how fast you drive on the highway. Cook along in your daily commute if you wish, but one day the blue lights will start flashing in your rearview mirror. At that point, the police officer won't be interested in your views on the irrationality of traffic laws. You might get a warning, but dig out the checkbook should the same cop stop you again.
This is exactly what has happened on the privacy front. Everyone in the business knows that online marketers want every last bit of information on customers they can get. The more information you have, the better you can target marketing messages to people, the higher rates you get for advertising, and so on. Furthermore, when compared to the consumer detail routinely available in the "real" world, online information is tame.
Online marketers didn't want to hear that they couldn't do what they were already doing. So they followed the grand tech tradition and ignored the procession of congressional hearings on the issue. Just a few years ago government pressure on marketers increased. The FTC issued proposed guidelines for online advertising self-regulation -- a first, as the agency had always left such things to web site owners.
The industry has now gone from (a) taking care of its own business to (b) the FTC suggesting an approach to (c) Congress drafting legislation. Given that new privacy glitches keep appearing, like Facebook users having access to live chats of friends, don't expect the tide of formal regulation to pull back.
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