Lawmakers disagree on need for online privacy legislation

Government legislation could not keep up with changes in online advertising practices, critics say

While representatives of the online advertising industry questioned whether new laws are needed to protect consumer privacy online, several U.S. lawmakers on Thursday called for new regulations targeting online tracking.

Members of the commerce subcommittee of the U.S. House of Representatives Energy and Commerce Committee were split on whether Congress should pass new privacy legislation, including regulations limiting online tracking by websites and advertising networks.

New legislation isn't needed because online advertising groups have created their own sets of rules that allow Web users to opt out of targeted advertising based on surfing habits, said Linda Woolley, executive vice president of the Direct Marketing Association, a trade group representing online advertisers. Online companies can do a better job of protecting consumer privacy than the government can, she said during a subcommittee hearing on consumer attitudes about online privacy.

The Digital Advertising Alliance, a coalition of advertising trade groups, launched a self-regulatory program governing behavioral advertising a year ago, after less than a year of preparation, Woolley said.

"We are nimble, and we can move quickly," she said. "To do that in less than a year is something that government could not do."

The hearing, focused on consumer attitudes about privacy, included testimony from a professor studying privacy issues and a privacy advocate, but no ordinary consumers.

New regulations that cut down on the number of targeted ads delivered to Web users could cripple the online advertising industry, several Republican lawmakers said. "When it comes to privacy protections in the online space, is there an issue industry can't correct on their own?" said Representative Pete Olson, a Texas Republican. "If there's a problem industry can't correct without negative impact on jobs ... can the government correct these problems?"

Consumer data should be treated like a "natural resource," said Representative Marsha Blackburn, a Tennessee Republican. Consumer information "really is the life blood of a thriving Internet economy," she said. "Should we allow our free market to explore this natural resource and learn to commercialize it, protect it and respect it, or are we going to restrict it altogether?"

Other lawmakers questioned whether self-regulation efforts would give consumers as much privacy protections as they want. Online companies are rolling out a new privacy "outrage" every week, said Representative Joe Barton, a Texas Republican.

"I think it's time that the Congress of the United States pass a strong, explicit privacy protection law," he said. "Enough is enough."

Online users expect privacy, added Representative G.K. Butterfield, a North Carolina Democrat. A 2009 survey found that nearly two-thirds of U.S. residents don't want targeted ads, and 86 percent don't want ads targeted through tracking across multiple websites, he noted.

"One thing is clear: Consumers aren't clamoring for tailored advertising," he said.

While Woolley and Scott Meyer, CEO of online ad compliance vendor Evidon, questioned the need for new regulations, a representative of Microsoft called for Congress to pass a "baseline" privacy law.

But self-regulation, consumer education and technology tools should also play a part in protecting consumer privacy, said Michael Hintze, Microsoft's associate general counsel. "Self-regulatory efforts are generally better than prescriptive legislation to keep pace with evolving technologies," he said.

With major new privacy legislation unlikely to pass, online companies could take steps to improve privacy protections, said Pam Dixon, executive director of the World Privacy Forum. Current self-regulatory efforts focused on consumer tracking could be improved by adding oversight boards with consumer members, by adding meaningful sanctions for noncompliance, and by promoting complaint procedures, she said.

Many consumers don't understand how much data online companies are collecting about them, Dixon said. "Consumers just don't know what the risks out there are," she said. "It'd be very challenging for a consumer to simply keep up with everything that's going on" with online tracking.

Grant Gross covers technology and telecom policy in the U.S. government for The IDG News Service. Follow Grant on Twitter at GrantGross. Grant's e-mail address is grant_gross@idg.com.

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Tags governmentsecurityprivacyMicrosoftregulationinternetlegislationadvertisinge-commerceU.S. House of Representatives Energy and Commerce CommitteeJoe BartonDirect Marketing AssociationWorld Privacy ForumPam DixonMarsha BlackburnG.K. ButterfieldScott MeyerDigital Advertising AllianceMichael HintzeLinda WoolleyPete Olson

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