Online privacy concerns are growing as websites and digital services gain increasingly sophisticated ways to collect information about consumers’ activities. From browsing and purchasing behavior to payment preferences and location data, online consumer tracking is creating valuable opportunities for marketers while raising questions about how much information companies should be permitted to collect and use.
Those concerns are beginning to attract greater attention from regulators and lawmakers. As new web technologies expand the amount of information that can potentially be stored and accessed, policymakers are considering whether consumers need stronger protections and more control over how their online behavior is tracked.
Every day, it seems, we learn of another marketer’s innovation enabling Web-based firms to track our every move. What products are we researching? What are we buying? What games are we playing? What online payment methods do we use? If we’re tracked by GPS or phone signal, where are we? Which merchants want to know we are there? Yes, it’s getting scary out there for individuals. Despite the fact that the largest web-based firms all profess to protect the privacy of users, somehow the enforcement has failed in multiple instances.
New Web Technology Raises Additional Online Privacy Concerns
Recent press suggests that the risks continue to grow. An October 10 article in the New York Times raises the prospect of increased exposure for individuals when HTML 5 begins to be adopted. (“New Web Code Draws Concern Over Privacy Risks,” by Tanzina Vega) Although this next version of the web-coding language reportedly incorporates many features that will make life easier for users, it also greatly expands the capability for collection and storage on the user’s own hard drive of substantial amounts of personal information and web-activity history, under the control of (and accessible by) network third parties rather than the user himself. Yikes!
Regulators Consider Stronger Consumer Privacy Protections
Battle lines are being drawn, and troops being rallied, by both sides of the privacy debate. On December 1, the Federal Trade Commission released a new report calling for increased regulation of data access and protection of privacy rights online. The report suggests a national “do not track online” opt-out mechanism, similar to the “do not call” registry that already limits telephone solicitation, but implemented locally by a setting on the user’s internet-enabled device. In the US Congress on December 2, the House Subcommittee on Commerce, Trade and Consumer Protection held hearings on the issue. In that context, Connecticut Attorney General Richard Blumenthal (who has been elected to join the next Congress) submitted testimony about the “deeply disturbing and disquieting” practice of web-based entities collecting and utilizing data on individuals without their knowledge. Other legislators have also indicated their intentions to initiate or support more consumer protection in this space. Clearly, the momentum is building to enact some sort of legislated privacy right.
Facebook Faces Growing Scrutiny Over Consumer Data
Where is the opposition? Also rallying its forces. Privately-owned Facebook has been a target of much criticism in the past year for its sometimes callous and/or indifferent attitude to the privacy rights of its users. It has attempted to refresh its image with new privacy-management capabilities introduced in 2010, but many Facebook users find the tools difficult to manage. Furthermore, Facebook has been forced to acknowledge that numerous of its developer-partners have violated its rules with respect to third party use of the data associated with specific individuals. Facebook has not been blind to the risks that privacy protectionists present to its business model. According to a recent Bloomberg News report by Sara Forden, Facebook’s Washington office, launched with one junior staffer in 2007, has expanded to six, including some recently-hired, high profile lobbyists. They are currently recruiting for two more relatively senior Washington positions.
Facebook is not the only vendor whose business model is vulnerable to privacy regulations, but it almost certainly has the deepest pockets. There is no doubt that many of their partners, as well as unrelated innovative startups, will ultimately be induced to enter the fray. The debate is just beginning; it should make for interesting politics in 2011.
The debate over online consumer tracking is likely to intensify as regulators, technology companies, marketers, and consumers consider where to draw the line between personalization and privacy. A national “do not track” mechanism could give consumers greater control, but it could also affect companies whose business models depend heavily on collecting and analyzing online behavior.
With lawmakers showing greater interest in consumer privacy and major technology companies preparing to defend their business practices, the issue could become an important policy battle. How that debate is resolved may ultimately determine how much control consumers have over their personal information and how online consumer tracking develops in the years ahead.
