Battle on digital privacy policy heats up

17 Oct, 2012

The battle over digital privacy is reaching a boiling point.

At the centre of the debate is the implementation of a so-called "Do Not Track" preference in web browsers that would allow consumers to signal their desire not to be tracked or targeted with personalised ads as they surf the internet. Industry groups are fighting over voluntary standards for its adoption, threatening to grind its implementation to a halt.

Lawmakers and regulators, meanwhile, are questioning whether self-regulation provides strong enough privacy protection and are stepping up their scrutiny over the fast-growing business of profiling consumers and selling data about their lives.

"I worry that if you don't have a process and an agreement, at the end of the day, you are going to have an arms race with privacy. That will not be helpful to the internet ecosystem," Jon Leibowitz, chairman of the US Federal Trade Commission told the Financial Times. "[Advertisers] might be killing the goose that lays the golden egg."

One indication of regulators' increasing concern over online privacy came on Tuesday when EU privacy commissioners called for Google to substantially change a controversial privacy policy, which allows it to deploy users' information across a wider range of services, or risk substantial fines.

Yet even as the regulatory battles brew, data brokers are continuing to create ever more robust profiles about individuals based on information collected both online and in the brick-and-mortar world.

Those dossiers include information ranging from online searches and website visits to the products people buy at drug stores, their voting records and income and ability to pay financial obligations. In the latest development, MasterCard is selling advertisers the ability to use information based on credit card transactions to target ads and measure their performance.

"The industry can no longer claim it is innocuous, business as usual," said Jeffrey Chester, executive director of the Center for Digital Democracy, a Washington-based privacy advocacy group. "The reams of online and offline data being compiled today is an aspect that the industry would prefer not to talk about, but it is going to come out sooner or later."

That day should come soon. The US Senate Commerce Committee last week set in motion an investigation into the practices of nine major consumer data brokers. By November 2, the companies are expected to respond to a detailed query into what consumer data the companies collect, the specificity of the data, how the information is collected, who buys it and how it is used.

"Because consumers are now able to conduct nearly all of their daily business online, an unprecedented amount of personal, medical and financial information about them can be mined, collected and sold," John Rockefeller, chairman of the senate commerce committee, wrote in a letter to Acxiom, one large data broker.

Scott Howe, the chief executive of Acxiom, said the company "looks forward to continuing to work with the Congress to help the members gain a deeper understanding of Acxiom's business and how people and the economy benefit from the appropriate use of data".

Sen Rockefeller last year introduced the Do-Not-Track Online Act, which would create a legal obligation for companies to comply with do-not-track requests, meaning advertisers would not collect information about users or target them with personalised ads, often called behavioural advertising.

Lawmakers and the FTC have also encouraged industry groups to develop voluntary standards in addition to other self-regulatory privacy principles already in place. Industry groups pledged implementation by the end of the year.

But the adoption has stalled. At a meeting of the World Wide Web Consortium over the global adoption of such standards, the head of a marketing trade group sparked controversy by requesting that marketing be included as an exception for why companies could ignore the do-not-track preference.

Microsoft, meanwhile, is drawing harsh criticism from the advertising business because of its plans to automatically install a do-not-track feature in the latest version of its web browser. Last week, the Digital Advertising Alliance, a consortium of advertising and media industry trade groups that together include more than 5,000 companies, said its members should ignore the Microsoft do-not-track browser setting because it is set by the manufacturer rather than the consumer.

The news drew scrutiny from lawmakers, who threatened that stronger laws are needed to protect consumer privacy. Joe Barton and Edward Markey, US representatives, said in a statement: "The Digital Advertising Alliance's announcement made clear that it puts profits over privacy."

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