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Democracy & Technology Blog Regulating behaviorial ads

Rep. Rick Boucher (D-Va.), chairman of the House Subcommittee on Communications, Technology and the Internet, is planning to introduce legislation to ensure privacy protection for Internet users. According to Boucher,

Industry is to be commended for its recent advancement of self-regulatory principles. However, while proactive, these entirely voluntary principles do not go far enough, and there is no guarantee that every company that collects information from the Internet-using public will abide by them.
* * * *The structure I have set forth should not prove burdensome for Internet-based businesses that rely on targeted advertising. In fact, it is in line with the practices of reputable service providers today. More importantly, by giving Internet users a greater confidence that they have control over the collection and use of information about them by websites, it will encourage greater levels of general Internet usage and e-commerce, benefiting not only consumers, but also the companies that transact business online and our nation’s economy.

In other words, Boucher is identifying the “best practices” which have already emerged within the industry in the absence of regulation, and he is planning to impose them by legislative fiat on every industry participant.
If consumers like the best practices, other industry participants will adopt them in the absence of regulation as a matter of competitive necessity. Legislation isn’t necessary.
But the issue is as politically hot as fears of cellphone radiation causing cancer, which was the subject of a recent Senate hearing.
Note: According to the National Cancer Institute, there is no evidence cellphones cause cancer.

Studies suggest that the amount of RF energy produced by cellular telephones is too low to produce significant tissue heating or an increase in body temperature. However, more research is needed to determine what effects, if any, low-level non-ionizing RF energy has on the body and whether it poses a health danger. (footnote omitted.)

Today the New York Times reported that a survey of 1,000 Internet users revealed that two-thirds object to online tracking by advertisers.

Tailored ads in general did not appeal to 66 percent of respondents. Then the respondents were told about different ways companies tailor ads: by following what someone does on the company’s site, on other sites and in offline places like stores.
The respondents’ aversion to tailored ads increased once they learned about targeting methods. In addition to the original 66 percent that said tailored ads were “not O.K.,” an additional 7 percent said such ads were not O.K. when they were tracked on the site. An additional 18 percent said it was not O.K. when they were tracked via other Web sites, and an additional 20 percent said it was not O.K. when they were tracked offline.
The survey company also asked about customized discounts and customized news. Fifty-one percent of respondents said that tailored discounts were O.K., and 58 percent said that customized news was fine.

Boucher correctly notes that targeted advertising has many important benefits for consumers and should not be disrupted:

It is also important to note that online advertising supports much of the commercial content, applications and services that are available to Internet users today without charge, and I have no intention of disrupting this well-established and successful business model.

The real problem here is not that Web sites collect and use customer data. The data is only read by machines, not humans; and it can be disaggregated and stored in different places so that even in the event of a data breach no one has access to enough pieces of information to assemble the whole puzzle.
The bigger danger is there is insufficient Fourth Amendment protection against unreasonable searches and seizures of information in the possession of third parties.
The Third Party Rule is unworkable in the cloud computing age, because storage and processing are migrating from the desktop to data centers. And consumers won’t always be able to tell the difference, which will undermine the justification for the Third Party Rule.

Hance Haney

Director and Senior Fellow of the Technology & Democracy Project
Hance Haney served as Director and Senior Fellow of the Technology & Democracy Project at the Discovery Institute, in Washington, D.C. Haney spent ten years as an aide to former Senator Bob Packwood (OR), and advised him in his capacity as chairman of the Senate Communications Subcommittee during the deliberations leading to the Telecommunications Act of 1996. He subsequently held various positions with the United States Telecom Association and Qwest Communications. He earned a B.A. in history from Willamette University and a J.D. from Lewis and Clark Law School in Portland, Oregon.