Privacy Groups, Business Firms Firing Warning Shots on New Online Ad Privacy Bill

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Privacy advocates and business groups drew
early battle lines on Tuesday in the debate over a new bill to rein in
Web advertisements that are based on consumers’ online shopping habits
and Internet browsing histories.

It took only hours for those industry leaders to question the size
and scope of that new effort, spearheaded by Reps. Rick Boucher (D-Va.)
and Cliff Stearns (R-Fla.). In fact, one of the only strong points of
consensus to emerge late Tuesday among stakeholders was a recognition
that they would have to work closely with lawmakers over the coming
months to shape legislation they say could have serious effects on both
the Internet economy and consumer privacy.

Stearns and Boucher’s bill bill, which is still in draft form, would
require companies to disclose whenever they collected information from
consumers and ported that data into Web ads. Businesses that failed to
publish their methods appropriately would face punishment from the
Federal Trade Commission, which the bill would grant statutory authority
to enforce behavior-based advertisement rules. Consumers who feel 
their privacy remains at risk could ultimately opt out of a site’s
targeted advertisements. The default setting for more sensitive bits of
information — including sexual orientation, a user’s location or a
computer’s IP address — would universally require users’ permission before collection.

But both privacy associations and business lobbies are already
questioning many of the bill’s key provisions and arguing the
legislation goes too far or simply misses the mark.

Public-interest groups, including the Electronic Frontier Foundation
and the Center for Digital Democracy, railed against the bill Tuesday
for authorizing a weak enforcement regime they said would do little to
shield consumers from potential abuse.

“We don’t think it effectively protects  consumer information online,
and we think it needs substantial revision,” Michelle DeMooy, senior
associate for National Priorities at Consumer Action, said on a
conference call with reporters, along with other dissatisfied
public-interest group leaders.

“While the discussion has started on this privacy issue because of
this bill, I can’t really say very much good about it,” John Simpson
from Consumer Watchdog later said on the call. “This bill really adopts
and endorses an archaic, bankrupt notice-and-consent regime that we all
know does not work.”

Other firms said anything more aggressive would stifle innovation,
create confusion and result in lost Web ad revenue.

According  to Mike Zaneis, vice president of public policy at the
Interactive Advertising Bureau, a system in which every targeted-ad
campaign first required a user’s permission would amount to the “worst
anti-stimulus bill Congress could pass.”

“It would kill hundreds of thousands of jobs in America, and it
would disproportionately put small publications out of business, because
consumers won’t opt in,” said Zaneis, who later noted a series of
positive aspects of the current legislation. His organization, the
Interactive Advertising Bureau, represents 375 organizations and
includes such members as Microsoft, Google and a host of publishing

Zaneis later noted that many of the legislation’s rules about
disclosure could prove “overly granular” and especially burdensome to
most publishers, in particular, who may not have the resources to
comply. And he said lawmakers’ decision to prevent advertisers from
incorporating a computer’s unique identifier, called an IP address, into
their advertising campaigns could have “unintended consequences.”

Debates over the nature of the bill’s opt-out rules and enforcement
provisions are sure to play out further over the coming  months, as
Boucher and Stearns solicit public comment on their legislation and
eventually bring it before the House Energy and Commerce subcommittee
they lead.

All of the organizations that sounded off on Tuesday, though,
promised to be vocal during that process. Both Google and Facebook
separately assured they would work closely with congressional lawmakers
on the bill, as did a host of industry interest groups.

But Zaneis described the early concern about the two House lawmakers’
bill as a sign that compromise is still possible on Internet ad

“[They’ve] got a bill that consumer advocates are complaining about
and the industry is raising concerns about,” he said. “But this is a
good beginning point for discussion.”

Consumer Watchdog
Consumer Watchdog
Providing an effective voice for American consumers in an era when special interests dominate public discourse, government and politics. Non-partisan.

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