Internet Privacy: The Raptors of Regulation

"Companies that track consumer behavior on the Web for targeted advertising without proper consent are near their 'last chance' to self-regulate." ~ FTC Chairman Jon Leibowitz, Monday 26 April 2009 at the Reuters Global Financial Regulation Summit.

Privacy Advocates

Privacy advocates have long knocked, unheard or largely ignored, on the doors of internet giants like Google and AT&T. These same advocates have a strong presence in Washington, lobbying Congress for change. Their basic argument is that privacy regulations are too lax, allowing internet companies to collect and use what advocates characterize as "private data" without notification, permission, or an opt-out.

The attention -- huge and growing larger in Washington -- is largely focused on "behavioral advertising." The push is to increase both privacy protections (permissions and opt-out) as well as transparency (clear, visible privacy policies). In a congressional hearing last week, Rep. Rick Boucher (D-VA) promised, by the end of the year, some form of legislation from congress to address the issue.

The Debate

This debate is taking place despite the fact that no one on either side can point to any specific harm done to consumers or internet users. Both sides admit the benefits (targeted and free content). The issue seems largely focused on a lack of understanding or confusion on the part of internet users... Users are unaware of when and how, or sometimes if their personal behavioral data is collected or used.

There are also clear signs in the way the debate is being framed in Washington that the government would rather not step in with regulations, preferring the industry to do so on its own. There is time, but very little left, for the industry to do so.

"If companies fail to do a better job of making their privacy policies understandable to the average person, momentum will keep building for greater regulation," Leibowitz said. “It’s really up to industry.”

Wrap It Up

A fork in the road is clearly here for internet companies and internet technology providers. The industry has only a few months wiggle room before choices vanish and the raptors of regulation descend. Google in particular has a chance to lead the pack and set the pace for the rest of the industry or defer and face the whims of the raptors.

Choose wisely: The time is now.

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