Infotech & Telecom News (Heartland Institute), May 1, 2009

Self-described public advocacy groups are pressuring the Obama administration to create strong mandates regarding how much information Internet companies can collect on their customers and how it is used.

The U.S. Public Interest Research Group and Center for Digital Democracy have been urging the Federal Trade Commission to investigate mobile marketing practices. The group filed a complaint with the FTC in January.

In addition, a Washington, DC-based group called The Future of Privacy Forum, backed by AT&T, is calling on the Obama administration to create a position of “chief privacy officer” to oversee the process of creating standards for the collection and use of consumer data.

Resisting Government Action

Technology experts question whether such new, aggressive government steps are necessary.

“Creating a chief privacy officer would certainly send a clear signal that the Obama administration is serious about protecting consumer privacy, but it is not necessary to simply create more robust privacy protections for consumers,” said Daniel Castro, a senior analyst for the Washington DC-based Information Technology and Innovation Foundation.

“An alternative would be to simply allow the FTC to continue to provide oversight, but perhaps encourage it to move from the current self-regulatory framework to one that embraces the same principles but is no longer self-regulatory,” Castro said.

“Both the Department of Homeland Security and the Department of Justice already have chief privacy officers, but I could envision a role for a Cabinet-level chief privacy officer that would consolidate these posts and monitor all government collection and use of citizens’ personal information,” said Daniel Ballon, a senior fellow in technology studies at the San Francisco-based Pacific Research Institute.

Letting Market Regulate

The most common reason companies such as Google collect information about where customers click is to target advertising toward individuals’ interests.

For example, Web surfers who search often for sports-related articles in Google’s search engine are more likely to see ads for fantasy sports sites. A computer user who visits many cooking sites would see banner ads relating to gourmet food.

“Private companies collect information for the clearly defined purpose of building products that consumers want to use,” said Ballon. “If they cross a line and offend the sensibilities of their users, companies will be held to account by consumers and shareholders.”

Creating Abuses, Cost Hikes

Ballon says there is little reason to trust government to regulate privacy, since it often abuses its power to collect and store information.

“Government collects information for vague and ambiguous purposes, often with the intent of consolidating power and restricting freedom,” Ballon said. “If government crosses the line, it can shroud its activities and avoid any accountability to the public.”

A further concern about government intervention in the handling of consumer data is the potential effect on the cost and accessibility of online content.

“Government should take a practical approach to privacy that not only protects a user’s privacy online but also protects other consumer interests, such as the widespread availability of free or low-cost, high-quality online content,” Castro said.

“The risk of government intervention,” Castro continued, “is that it will skew the playing field away from ad-based revenue models that work better for some types of technology and hurt access to digital content for those who cannot otherwise afford to pay subscriptions to electronic content.”

Voting With Their Feet

Castro points to a popular social networking site as a prime example of consumer participation in the policymaking process in protecting individuals’ online information. He advises other consumers to follow suit.

“Consumers should engage private industry on privacy issues they feel are important, and ‘vote with their feet,’” Castro said. “Facebook, for example, has learned that its user base is well-tuned in to its privacy practices and has responded in kind.

“In fact, consumer behavior in this case represents probably one of the most effective means of promoting good privacy practices,” Castro added. “Consumers force companies to adopt privacy as a core corporate value rather than a regulatory imperative that must be addressed.”

Aricka Flowers (atflowers@hotmail.com) writes from Chicago.