A Federal Trade Commission official on Thursday issued a warning of sorts to Internet companies: stop collecting information about your users by default, and give them shorter, more conspicuous details about what's going on with their data.
The government doesn't need to force such practices "at this point," said Commissioner Jon Leibowitz, a Democrat. But in his view, online services need to start offering users more "meaningful choices," such as the ability to "opt in" to placement of Web cookies on their machines from the start, rather than the typical "opt out" scenario. Those options are especially important as more and more sites share information gleaned from those tracking tools with third parties, he said.
The logo for the FTC's two-day town hall event.
(Credit: Federal Trade Commission)"The current 'don't ask, don't tell' mentality in online profile tracking needs to end," he said in a speech near the start of a two-day FTC workshop on behavioral marketing.
In any case, he said the FTC won't hesitate to bring lawsuits against companies if there's evidence of "problematic practices" in the increasingly sophisticated world of behavioral marketing, in which companies seek to deliver ads based on tracking consumers' search, searching and other Internet-based habits.
"As the Internet has evolved, the ad targeting has become more sophisticated, arguably bringing greater benefits and a richer experience to consumers, but the question is, at what cost?" Leibowitz asked. "Are we paying too high a price in privacy?"
The online advertising industry, not surprisingly, says it's aware of potential privacy threats but argues self-regulation is the best way to manage them.
Burdensome government regulations could stunt the delivery of new services, Randall Rothenberg, president of the Interactive Advertising Bureau (of which News.com parent company CNET Networks is a member), told workshop attendees. That's because increasingly sophisticated analysis of "non-personally-identifiable data to detect patterns in peoples' interests and consumption habits" has led to a surge in interactive, often free content and has helped to usher in a "renaissance" in American mom and pop shops, he said.
But Leibowitz said he wasn't so sure a hands-off government approach will be enough. One "very promising approach," he said, would be creating a "do-not-track" list for Web surfers. That idea, proposed to the FTC Wednesday by nine privacy and consumer advocacy groups, would involve requiring all online advertisers that use "persistent tracking technologies" (such as cookies) to register domain names of all such servers with the federal agency, so that consumers could set their browsers to block them. (It's modeled after the do-not-call list, which allows consumers to register their phone numbers with the FTC in order to evade telemarketing calls.)
It's particularly troubling when online ads target children and teenagers, Leibowitz added. A 1998 federal law called the Children's Online Privacy Protection Act, requires sites targeting children under 13 to post their data-collection practices and obtain verifiable parental consent before gathering information about children or sharing it with a third party.
But with the rise of targeted advertising approaches, the "parental buffer between advertisers and our children" seems to be "eroding," Leibowitz said. Although he seemed to suggest legal updates may be necessary, he said it wasn't yet clear what specific steps the government should take.
Leibowitz acknowledged that Internet companies are already "making progress." The major U.S. search engines in particular are "literally tripping over each other," as he put it, to improve their privacy policies, minimize data retention and anonymize personal information.
Still, his comments included many of the same concerns detailed in a supplemental privacy complaint that two public-interest groups filed Thursday with the FTC. They called out the rise of social-networking sites and increasingly "invasive" marketing techniques as reason for a federal investigation and, potentially, new Internet privacy rules.
Privacy groups have already asked the FTC to investigate the potential privacy implications of Google's proposed buyout of online ad-tech company DoubleClick.
Leibowitz said he wasn't at liberty to give any details on that review process, except to say the staff "is working through this matter as expeditiously as possible given the complexity of the deal."
He added, however, that "our analysis of the merger has got to be about competition and potential competition. It can't be about privacy per se."
Updated at 2:29 p.m. PDT Thursday: Two public-interest groups are asking the U.S. government to target what they claim are "invasive" online marketing schemes--especially those involving social-networking Web sites or targeting children and teenagers.
In a lengthy new complaint expected to be filed Thursday with the Federal Trade Commission, the Center for Digital Democracy and the U.S. Public Interest Research Group (PIRG) say they're concerned that Internet users are more "vulnerable" than ever to increasingly sophisticated advertising techniques that depend on tracking and compartmentalizing people's behavior and preferences.
"The new business models of the Internet and mobile commerce can stimulate the economy and offer consumers choices," Ed Mierzwinski, PIRG's consumer program director said in a statement. "But unless the FTC steps in now and sets some basic rules for privacy protection, the costs to consumers posed by so-called behavioral targeting, the manipulation of both surfing and price choices, and the 24/7 corporate surveillance and dossier-building will easily outweigh any supposed benefits to consumers."
The complaint is timed to coincide with the FTC's online advertising workshop on Thursday and Friday in Washington, D.C.
The latest filing builds on a complaint filed by the same two groups around the same time last year. Singling out Microsoft's new-at-the-time advertising ventures, they had called on the FTC to review and potentially limit online business models dependent on technologies that "aggressively track us wherever we go, creating data profiles to be used in ever-more sophisticated and personalized 'one-to-one' targeting schemes." The latest filing also reiterates a call for Congress to pass new federal legislation.
Raising a fuss
The groups aren't alone in raising a fuss over emerging online-marketing approaches. Separately on Wednesday, a coalition of nine privacy and consumer groups launched a campaign urging the FTC to establish a "do-not-track" list designed to allow consumers to evade aggressive, targeted advertising messages. That proposal would require online advertisers that use "persistent tracking technologies" (such as cookies) to register domain names of all such servers with the FTC, so that consumers could set their browsers to block them.
Even in the absence of new legislation or regulations, however, all modern Web browsers can be configured to reject cookies--which means that a search engine or other Web site can't track you across visits. (See CNET News.com's FAQ on search privacy and FAQ on protecting yourself from search engines.)
The Center for Digital Democracy and PIRG say that social-networking sites--most notably the wildly popular MySpace.com and Facebook, with their some 140 million combined users--are increasingly "exploiting behavioral targeting and other advanced micro-marketing techniques" based on the detailed personal information that people include in their profiles.
"Instead of online communities supported by advertising, they are fast becoming marketing vehicles that host communications," an early version of the complaint states.
The groups also criticize companies that target their ads based on a person's perceived racial and ethnic background, citing, for instance, AOL's attempts to reach African-Americans through its "AOL Black Voices" portal. They also say it's worrisome from a privacy perspective that they're witnessing advertisers that attempt to group visitors into "behavioral groups" like "fashion freaks" or "nutrition nuts"--which has been a commonplace practice for decades in the magazine and direct-mail world.
Negative perceptions
The goal of the complaint is for the FTC to launch an investigation into each of those concerns and, more broadly, the data collection and behavioral targeting practices of various major Web advertising players. The groups said they hope the agency will use its existing legal authority to crack down on "unfair and deceptive practices" and suggested additional privacy rules would be advisable.
Companies called out by privacy advocates for their advertising practices have already been scrambling recently to fend off negative perceptions of their activities. Google launched on Wednesday a "privacy channel" on YouTube, which features descriptions of its privacy policies. Earlier this year, Google and other major search engines announced greater privacy protections for people, including procedures to delete or partially anonymize search logs.
AOL said on Wednesday that it would allow people to opt out of cookies that track surfing habits and use them to serve up targeted ads. In addition, the Network Advertising Initiative has long allowed people to opt out of targeted advertising displayed by companies including 24/7 Real Media and DoubleClick.
Rep. Edward Markey, a Massachusetts Democrat who heads a House of Representatives panel dealing with Internet issues, released a statement on Thursday supporting the need for the FTC to look into "the privacy impacts of Internet tracking and targeting techniques."
"When consumers search for information online," he said, "they may be unaware of marketers in their wake, who are scooping up the digital traces of consumers' online activities and compiling profiles that could undermine privacy."
Google launched a privacy channel on YouTube Wednesday with videos explaining its privacy policies. The move comes on the eve of a two-day Federal Trade Commission-hosted town hall event on behavioral ad targeting to be held in Washington, D.C.
In a Google video titled "Google Search Privacy: Plain and Simple," a Google support engineer draws on a whiteboard, explaining what type of information is collected by Google servers, such as IP address and cookie data, when you conduct a Google search.
A video on Google's privacy channel explains the basics about the company's privacy practices. This screenshot shows a whiteboard drawing of the type of log data Google keeps when someone conducts a Web search.
(Credit: Google)"In future videos, we'll talk about why Google keeps logs, what information we record when you're signed into a Google account, and steps you can take to increase your privacy when surfing online," a description under the video says.
Another video shows Peter Fleischer, Google's Global Privacy Council, speaking at the 29th International Conference of Data Protection and Privacy Commissioners in Montreal in September. But you'll have to speak French to understand that one.
An entry on the Google Public Policy Blog announces the privacy channel and says that those speaking at the town hall meeting will include Tim Armstrong, Google's president of North American advertising and commerce; Nicole Wong, deputy general counsel; and Jane Horvath, senior privacy counsel.
"This is the first time since 2000 that the Commission has taken an industrywide look at online advertising practices, and given the recent acquisitions in the space by Google, Microsoft, Yahoo, AOL, and others, it's a good time to explore the privacy implications of new ad technologies, and in an industrywide way," writes Google Policy Counsel Pablo Chavez.
He was referring to recent acquisitions of online ad companies, including Microsoft buying aQuantive, Yahoo acquiring Right Media and Blue Lithium, and AOL's buying Tacoda. But it's Google's proposed purchase of DoubleClick that has provoked the most concern.
Privacy advocates are worried about the threat posed if Google were to marry its Web search data with data collected by DoubleClick's online display advertising technology. While approval for the proposed Google-DoubleClick merger is pending in the U.S. and Europe, Australia has given it the OK.
Google has increasingly been turning to videos on YouTube to explain its policies and even how to use its products. For example, there is one on Google adding new cities to its Street View map service.
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