Last Thursday federal regulators, members of advertising trade groups and technology companies gathered in Washington to announce new initiatives to protect consumers’ privacy online.
But, as it turns out, privacy is in the eye of the beholder.
The Obama administration has pushed hard for a privacy bill of rights that would give consumers more control over what personal data is collected online and what limits would be placed on that data. The advertising and technology industries, which have been under pressure to do more to ensure privacy, said they would support a "Do Not Track" mechanism that would be clearly and uniformly adopted by browser vendors and would allow consumers to opt out of having some companies, but not all, keep data on their online activities.
While the agreement would limit certain types of data collection, consumers would hardly be invisible on the Web.
"‘Do Not Track’ is a misnomer. It’s not an accurate depiction of what’s going on," said Stuart P. Ingis, the head of the Digital Advertising Alliance, a trade group representing the advertising industry, which regards consumer behavior as crucial to its business. "This is stopping some data collection, but it’s not stopping all data collection," he said.
Thursday’s announcement was the administration’s first digital initiative since the anti-piracy legislation known as the Stop Online Piracy Act, or SOPA, was met with furious reaction from the technology industry last month, and eventually dropped. The issue of digital privacy, especially how a user’s data is collected online and then used to show that user ads tailored to them, has been hotly debated for years.
The announcements represent the attempt to satisfy consumer privacy concerns while not stifling the growth of online advertising, which is seen as the savior of media and publishing companies as well as the advertising industry. According to the Interactive Advertising Bureau, digital advertising revenues in the United States were $7.88 billion for the third quarter of 2011, a 22 percent increase over the same period in 2010.
The industry’s compromise on a Do Not Track mechanism is one result of ongoing negotiations among members of the Federal Trade Commission, which first called for such a mechanism in its initial privacy report, the Commerce Department, the White House, the Digital Advertising Alliance and consumer privacy advocates.
Until now, methods for opting out of custom advertising varied depending on the privacy settings of a user’s browser or whether a user clicked on the blue triangle icons in the corners of some digital ads. Under the new system, browser vendors will build an option into their browser settings that, when selected, will send a signal to companies collecting data that the user does not want to be tracked.
The agreement covers all Digital Advertising Alliance members including Google, Yahoo, AOL, Time Warner and NBCUniversal. (One conspicuous absence is Facebook, which is not a member of the alliance.)
Privacy advocates complain that the mechanism does not go nearly far enough in part because it affects only certain marketers. Many publishers and search engines, like Google, Amazon or The , are considered "first-party sites," which means that the consumer goes to these Web pages directly. First-party sites are still permitted to collect data on visitors and serve them ads based on what they collect.
"There’s never been an expectation that all first-party data collection would be stopped," Ingis said.
But third-party sites, which are networks that collect and use data to serve advertising tailored to the user, like DoubleClick (which is owned by Google), Advertising.com owned by AOL, and a multitude of smaller ad networks like X(PLUS)1, Turn and Rocket Fuel would be restricted in the data they can collect on users if they select a Do Not Track option. Such companies would be limited to using data for purposes like market research and analytics but could not create detailed profiles on users or show them ads based on their online behavior.
Some consumer privacy advocates, while offering measured praise for the new privacy option, saw the move as an attempt to thwart a more restrictive stance on data collection. Jeffrey Chester, the head of the Center for Digital Democracy, which is pushing for more restrictions on data collection, called the move a win for the advertising lobby.
In a statement, Chester said, "We cannot accept any ‘deal’ that doesn’t really protect consumers, and merely allows the data-profiling status quo to remain. Instead of negotiations, CDD would have preferred the White House to introduce new legislation that clearly protected consumers online."
But advertisers have plenty to fear if consumers use Do Not Track in large numbers. "If there’s a high rate of opt-out, it’s an issue," said George Pappachen, the chief privacy officer of the Kantar Group, the research and consultant unit of WPP. "Our position is data should flow," Pappachen said, adding that data helps drive innovation and newer commercial models.
For advertisers, a lot will depend on how consumers respond. A recent study from the Pew Research Center for the People and the Press seemed to contain mixed signals on the issue: 56 percent of the respondents thought the government should not get more involved with regulating how Internet companies handle privacy issues. Yet 59 percent of respondents said they felt that collection of user data for targeted advertising was an unjustified used of a person’s private information.
And there are still unresolved technical issues regarding Do Not Track, including what defines tracking and how that would apply to first-party and third-party websites. Over the last few months the World Wide Web Consortium, an international group that sets voluntary technical standards for the Web, has been working with representatives from companies like Microsoft, Google and Nielsen, along with academics, privacy advocates, legislators and digital advertising groups, to define the technical standard of Do Not Track.
The consortium is also considering whether sites like Facebook, whose "like" button is used across multiple websites, would be considered first-party or third-party sites.