Industry Seeks Light Touch On the Mouse

Billions of targeted ad dollars could be on the line

It is clear that either Congress or the administration,
or both, are going to take some action in the online
privacy space. At stake are billions of dollars in targeted
advertising. Having heard in last week’s issue from government
movers and shakers and a high-profile professor on the importance
of a privacy protection regime, B&C looks at some
arguments from the other side on why government needs to be
careful about putting too heavy a hand on the mouse.

The American Bar Association, for example, suggests that
overregulation of the online ad space in the interest of protecting
privacy might depress prices by reducing competition. And
while that would hurt ISPs like cable
operators, the ABA suggests it
might actually benefit broadcasters.

Not surprisingly, self-regulation
and industry codes of conduct
were the order of the day from industry
fans of a government light
touch. But if there has to be more
government involvement, cable
operators argue, it should be “platform
neutral.” Translation: Whatever
you do to us, you have to do
to our competition, and not just in the ISP space.

Boon to Broadcasters: Calling for a rigorous cost-benefit
analysis of any proposed privacy-protection regime, the ABA, in
comments to the Federal Trade Commission (which is preparing
a report to Congress on privacy), argues that a too heavyhanded
privacy-protection regime could actually reduce price
competition, to the advantage of broadcasters.

The way the ABA sees it, the FTC needs to do that analysis
before it recommends a do-not-track regime for behavioral advertising.
It argues that do-not-track could reduce the number
of online ads, raising the price and providing less competition
to targeted local advertisers like broadcasters who “have information
about local readers and viewers that allow better audience
targeting and thus support higher prices for advertising.”

The $140 Billion Connection: The American Association
of Advertising Agencies tells the Commerce Department that
online ads/marketing “significantly subsidize[d]” the U.S.’ $140
billion in online retail in 2009, as well as the 3 million people
employed in online sales. And while Commerce is considering
government oversight of a self-regulatory framework, including
a new Privacy Policy Office, the 4As says a government framework
for self-reg would be too cumbersome and not responsive
to a fast-changing market.

Competitive Neutrality: The
National Cable & Telecommunications
Association points out that
wearing their ISP hats, cable operators
are looking at expanding
their interactive advertising. Government
should not be a regulator
in the privacy space, it argues, but
more of a “coordinator” of voluntary
codes. The NCTA has two
fundamental requests of any privacy regime: 1) that it draws
a distinction between personally identifiable information and
anonymized information and 2) that it establishes “competitive
neutrality” as a “bedrock” principle. In other words, whatever
framework the government comes up with, search engines and
not just networks should be included. “Cable operators compete,
of course, with other providers of broadband Internet access
service, including telephone companies and, increasingly,
wireless service providers,” says the NCTA. But ISPs “also compete
with other Internet entities—including entities with access
to consumer information—in the highly competitive Internet
advertising marketplace.” The Digital Marketing Association
seconded NCTA’s call for “competitive neutrality.”

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