BUSINESSWEEK ONLINE : JULY 17, 2000 ISSUE
NEWS: ANALYSIS & COMMENTARY Commentary: Web Privacy: That's One Small Step One day soon, when Web surfers register at a travel company's Web site, a message might pop up as they type their names and other personal data. ''We'd like to share information about you with OnlineAd Networks,'' the notice would say, explaining that OnlineAd will use it to show them banner ads that match their interests. ''If you don't want us to share your name or e-mail address with OnlineAd, click here.'' Sound like you might be passing up some good deals? Internet advertisers hope so. Such notices are one of the voluntary rules they're proposing to police how they create and use profiles of consumers' Web-surfing habits. Industry representatives are now negotiating these issues with the Federal Trade Commission and the Commerce Dept. Later this month, online ad firms are expected to wrap up an agreement that they hope will stave off efforts by Congress and numerous states to pass stricter privacy laws. BEST BET. But even before the ink is dry, consumer advocates and privacy hawks on Capitol Hill are scoffing that the deal will be too weak. And at first glance, the FTC's willingness to bless a self-regulatory regime for these companies would appear to fly in the face of the commission's May 22 call for federal online privacy rules. The FTC, though, figures it is going for the best deal it can get now while leaving the door open to regulation in the future. With the chances slim that Congress will pass Net privacy legislation this year, FTC officials would rather cut a deal now to set voluntary standards with the industry group that represents 90% of online ad companies. What's more, they will enforce the agreed-on rules as if they were mandatory. Nor is the commission dropping its call for federal regulation. Even if the FTC and online ad companies conclude a self-policing scheme, Chairman Robert F. Pitofsky is likely to continue insisting that federally mandated online privacy standards are needed to make sure other Net profilers play by the rules. Much is at stake if online advertisers don't cut a deal. Severely curbing ad companies' ability to closely monitor consumers' movements, industry execs warn, could imperil a host of Internet sites. Many are still betting that selling premium-priced ads based on profiling will pay the bills. That's why it's hardly surprising that achieving a meaningful consensus has been tough. Engage Inc. (ENGA) and a handful of other ad companies have already agreed to give consumers better information about their surveillance practices. Profilers' privacy policies, often hard to find or decipher, would be more conspicuous and clear-cut. And ad companies have agreed that consumers should get notices about how personal data will be shared with a third party, such as DoubleClick Inc. (DCLK), at the time it's requested, rather than just be buried in the fine print of a privacy policy. But there's less agreement over another crucial issue: how easy it should be for consumers to say no to the monitoring of their Web travels. Ad companies prefer that consumers ''opt out'' of personal data-gathering by clicking on a notice. The feds want to make sure notices are posted prominently and strongly worded. BIG BURDEN? Privacy advocates, excluded from the talks because they were initiated by industry, still aren't happy. Opt-out, for instance, ''puts too much of a burden on consumers'' to protect their privacy says Marc Rotenberg, director of the nonpartisan Electronic Privacy Information Center. Other critics complain that the current deal doesn't include the growing cadre of companies that help businesses such as banks build online profiles of their customers and mine that data for new business. Requiring Internet ad companies to get consumers' consent before collecting personal data would be better than leaving it to consumers to opt out. But industry reps at the bargaining table balk at an ''opt-in'' requirement for most personal info-gathering. Nor can the FTC compel them to seek consumer opt-in without congressional authority. If widespread online privacy violations continue, will such authority be forthcoming? In a June 21 letter to Pitofsky, Senator Ernest F. Hollings (D-S.C.) and six other senators fired off a warning shot, calling self-regulation ''at best an interim measure to improve privacy protection in the absence of legislation.'' True, but for now, it's the only game in town. By Amy Borrus Borrus covers privacy issues from Washington. _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ BACK TO TOP					RELATED ITEMS Commentary: Web Privacy: That's One Small Step TABLE: Privacy Pact Proposals INTERACT E-Mail to Business Week Online

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