Senate Commerce Committee Examines Online Privacy
Senate Commerce Committee holds hearing on ‘Privacy Implications of Online Advertising.’
By John Eggerton -- Broadcasting & Cable, 7/9/2008 9:15:00 AM
Online advertising got props from Democrats and Republicans alike on the Senate Commerce Committee Wednesday for its potential value to consumers, the Internet and, obviously, advertisers. But it was also at the center of a growing debate about its implications for online privacy.
In a hearing on the “Privacy Implications of Online Advertising,” Sen. Byron Dorgan (D-N.D.), who chaired the hearing, said there would be more hearings to follow.
He pointed out that Internet-service providers were invited to testify but declined, adding that he would call another hearing, focusing on the role of ISPs, and ask them again.
Far from being a "bash-the-industry" exercise, the committee members generally expressed support, but with the caveat that there were growing concerns about how the information used in behavioral online advertising was being collected and protected.
Dorgan said he recognized the value of advertising as the backbone of a breathtaking amount of free information on the Web and the desire of advertisers to better target their information.
"Online advertising is helpful and useful in my judgment," he said. "It is a necessary component of the Internet and helpful to consumers.” But he added that there were concerns about the invisibility of online-data protection, the security of that data and how it is used that Congress may have to address in legislation.
The witnesses included executives from the Federal Trade Commission, Microsoft, Google and NebuAd, the online-advertising network that saw its planned initiative with Charter Communications draw criticisms from Congress. It has been put on hold for now.
All agreed that there was a need for baseline privacy legislation that would set the ground rules for sharing online information in general. And all essentially agreed that it should come in combination with self-regulation, including disclosure to Web surfers of how their information was being used, an opportunity to opt out and security protections for that information.
Lydia Parnes, director of the FTC’s Bureau of Consumer Protection, said the keys to self-regulation are transparency and consumer control. She added that the FTC was still working on its online-data-collection guidelines and did not have a timetable for when those would be released.
From her testimony at the hearing about suggestions offered at an FTC town-hall meeting on online privacy, those principles will likely include the following:
• Companies collecting online data should provide disclosure of that fact, as well as an opportunity not to have the data collected (either as an opt in or an opt out);
• There should be a reasonable expectation of security, although likely stopping short of mandatory encryption;
• Changes in how the data will be used must get the OK from the person it was collected from; and
• Consent must be obtained before using any sensitive information -- health, financial -- for behavioral-advertising purposes.
Robert Dykes, chairman of NebuAd, defended his service, which groups online preferences into categories that allow advertisers to target them.
Dorgan asked why NebuAd's tracking of the surfing, in real-time, of an ISP's customers was any different from wiretapping. Dykes said his company was in compliance with the law and does not collect any personally identifiable information, but rather transforms an Internet-protocol address into an anonymous marker for the purposes of allowing advertisers to target market segments.
Mike Hintze, associate general counsel for Microsoft, said his company has long supported meaningful privacy legislation, combined with consumer education and technological solutions. But he added that Microsoft was a relatively small player in the online-advertising space and raised concerns that if one player became too dominant, there would not be a market incentive for privacy protections -- as there would be in a competitive market where privacy protection could be a selling point of one service over another.
Google senior privacy counsel Jane Horvath said her company supported a comprehensive federal privacy law and backed the creation of FTC online-privacy principles on behavioral advertising and urged the industry to follow them. She also said Google supported more labeling of online display ads.
Chris Kelly, chief privacy officer at Facebook, said his site was all about sharing information, but users had the control over how much and with whom to share it.
Arguing for the strongest protections for information was Leslie Harris of the Center for Democracy & Technology, who said self-regulation was good but not good enough, adding that the FTC's guidelines must be enforceable and Congress needs to make that clear.
In another online sector, network neutrality/network management, the Federal Communications Commission's nondiscrimination guidelines have become a source of hot debate over whether and how enforceable they are.
Online-Advertising Hearing July 9
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