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US FEDS PROPOSE TOUGH NEW RULES TO LIMIT ONLINE 'TRACKING'

Posted on December 14, 2010

Wading into the increasingly contentious debate over online privacy, the US Federal Trade Commission said Internet users ought to be able to easily block others from monitoring their online activity -- a move that could curtail the ability of advertisers such as Google to sell lucrative targeted ads to users.

The commission is proposing to mandate a "do not track" setting on Web browsers, which would take an act of Congress to impose. Its proposal -- the strongest privacy protection it has advocated to date -- comes amid building momentum for the government to do something to ensure consumer privacy in the online world.

"Consumers live in a world where information about their purchasing behavior, online browsing habits and other online and offline activity is collected, analyzed, combined, used, and shared, often instantaneously and invisibly," the report stated.

The do-not-track mechanism would work differently from the popular "Do Not Call" registry that allows people to add their phone number to a list that's off-limits to telemarketers. In this case, an icon would appear on Web browsers enabling users to permanently opt out of Web tracking.

Online advertisers say they are already taking steps to protect consumer privacy and warn that expansive government rules could hamper a growing industry that topped $22 billion in revenues last year. They also say many targeted ads are useful to consumers.

"Most people would rather get a relevant ad rather than an irrelevant ad, which is by definition, spam," said Mike Zaneis, a senior vice president and general counsel for the Interactive Advertising Bureau, a leading online ad firm.

More than 80 percent of ads online are targeted, he said. However, Zaneis acknowledged, "We don't know exactly how many people would opt out or what the economic impact would be."

Officials at Google and Facebook, both of which have come under criticism for privacy breaches and likely would be affected by new government privacy rules, offered muted responses to the report.

"We agree with the FTC that people should be able to understand what information they share and how it's used," Google spokeswoman Christine Chen said. She added that the company has recently adopted measures to make its privacy policies more transparent to users.

Facebook spokesman Andrew Noyes said in a statement that the social networking site is reviewing the report and is "supportive of proposals that preserve companies' ability to innovate and offer robust tools for users to control their experiences online."

The FTC also called on Web companies to implement stricter practices on how they handle consumer data and build "privacy protections into their everyday business practices." Sites should provide easy-to-grasp disclosures, the report added, so people understand how their personal data is being used.

The suggestions in the 123-page report are meant to exert pressure on online advertisers and Web firms to regulate themselves, FTC Chairman Jon Leibowitz said in a conference call with reporters. But if industry doesn't act soon, he added, Congress should step in.

"We're going to give these companies a little time, but we'd like to see them work a lot faster and make consumer choice a lot easier," he said.

Google and others in the past have criticized the idea of a do-not-track feature on the Web as technologically difficult or infeasible. But Leibowitz said he is confident that the technology exists to make it happen, and, he said, some Web browser firms are already experimenting with it.

Several browsers, including Internet Explorer and Google Chrome, do allow users to go into "invisible mode," so their searches and browsing aren't monitored. But people who want that protection must turn on the function at the start of each browsing session. A do-not-track tool would be ongoing.

"Industry needs to step up to the plate," Leibowitz said. "We know it's a feasible thing to do."

Web firms are likely to step up their efforts to self-regulate in order to head off privacy legislation in Congress. Google, Microsoft and Yahoo all have recently introduced features designed to give users more control over the type of information that's collected and the ads they receive.

But it's unclear whether that will be enough to placate lawmakers. Members of both parties have expressed interest in cracking down on privacy breaches, a rare instance of bipartisanship on Capitol Hill. A House committee today is holding a hearing on the do-not-track idea.

Chris Soghoian, a privacy and security researcher who has advised the FTC, said Web browser companies are unlikely to offer adequate privacy safeguards on their own because many, such as Google and Microsoft, profit handsomely from targeted ads.

"I don't think the ad networks are going to support any kind of strong mechanism," Soghoian said during a privacy conference Wednesday hosted by Consumer Watchdog. "Unless their arms are twisted."

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