No. 43
January 18, 2000
Sonia Arrison*

Internet privacy will be one of the hottest issues of the new millennium, a fact which has not been lost on California’s bureaucrats. Busy thinking of new and improved ways to regulate consumers, one wonders if any of them found time to celebrate the holidays.

Cheered on by privacy advocates, California’s Assembly Consumer Protection Committee is thinking of telling businesses what they can and can’t do with consumer information. I guess they haven’t heard —one person’s privacy violation is another’s golden coupon. I don’t mind if I’m offered a discount on a new blender when I am buying a digital camera. If I happen to need one, it saves me time; if not, I can always say "no thanks" and move on. Annoying? Perhaps, but hardly a re-make of Orwell’s 1984, and maybe a necessary by-product of that great American principle: freedom of choice.

Government regulations, on the other hand, are like those one-size-fits-all baseball caps, without the adjustment strap in the back. They fit about 2% of the population (those who are fanatical about their privacy), and the rest of us have to suffer with ill-fitting rules.

"What do you mean by privacy?" asked Katrina Heron, editor of Wired Magazine, at a recent Pacific Research Institute event. Even the tech-savvy crowd couldn’t agree.

Because there are so many different ideas of privacy, the best policy is a hands-off approach that lets consumers control their own information. And not only that, in today’s global economy, information is currency. Companies are willing to pay for it, and some consumers are willing to sell it. That’s one of the best things about the marketplace: no one can force you to give them your information. If I don’t want a company to have my name and address, I don’t give it to them—regardless of what gizmos and gadgets they offer in return.

But with government it’s different. Unlike businesses, governments have the power of the sword, and they use it. Local, state, and federal governments do not ask consumers to hand over information, they force them to do so. Government agencies have then sold that information to businesses with no compensation to the individuals involved and, in some cases, no protection. For example, the California Department of Motor Vehicles has given away personal information to other individuals, including stalkers and violent criminals. Fortunately, there is now a constitutionally sound federal law prohibiting states from selling DMV data. But who’s watching the feds?

Recall the intrusive campaigns of J. Edgar Hoover’s FBI, a tradition that continues in the Clinton Administration’s designs to spy on Americans through the Federal Intrusion Detection Network (FIDNET) and perhaps through the Echelon plan too. No one, especially privacy advocates, should think that governments are our best line of defense against prying eyes.

Instead, the path to better protection of personal data is achieved through consumer pressure, new technologies, and private policies that act as privacy contracts. Consider how quickly RealNetworks fixed its RealJukebox software after it was revealed that there was an unknown tracking mechanism built inside. Or, think about how quickly Amazon acted to allow customers to opt out of its "purchase circles"—a published list of group purchasing patterns—after some customers voiced opposition. And beyond simple consumer pressure, individuals enjoy many other options to protect their privacy.

New software technologies, such as Zero Knowledge Systems’ Freedom software and Enonymous.com’s Advisor (which is downloadable free of charge), are installed on a user’s computer and protect a consumer’s identity on-line. Likewise, many companies now post their privacy policies on-line and have joined certification programs offering "seals of approval," such as the ones offered by BBB Online and TRUSTe. And if you don’t want to read the privacy policy every time you visit a site, programs like Advisor, Novell’s Digitalme, and soon to be released Superprofile by Lumeria Incorporated will rate the sites for you based on your personal preferences.

These safeguards and products have been created because industry knows that its best interests require responding meaningfully to consumer privacy concerns. With their purchasing power, consumers can wield more impact on information practices than government at any level.

The challenge for all Americans, as beneficiaries of this information revolution, is to utilize the many privacy protections already available. The challenge for policymakers, if they are truly concerned about protecting privacy, is to reject the latest attempts of government bureaucrats to meddle in every corner of American life.

* Sonia Arrison is director of the Center for Freedom and Technology at the San Francisco-based Pacific Research Institute. A version of this appeared on CBS Marketwatch in December, 1999.