US “Privacy Bill of Rights” Proposal

The Federal Trade Commission, consumer advocates, and some legislators have been considering online privacy for years, but the issue has been increasingly in the forefront. The FTC released a “Do Not Track” Proposal in December, and several media sources have focused on the issue recently. The Wall Street Journal ran a series last summer entitled “What They Know”, which revealed that many websites install tracking tools on users’ computers without their knowledge. This allows companies to gather and sell information on users’ finances, religious interests, political beliefs, and purchasing habits. The WSJ’s research indicated that websites as varied as Yahoo, AOL, Google, Walmart, Amazon, Twitter, MySpace, Craigslist, msnbc.com, bbc.co.uk, imdb.com, weather.com, (as even wsj.com) frequently install these tracking devices and collect data. Dictionary.com installed an astonishing 234 trackers, according to the WSJ.

Last month, a bill was introduced in the House of Representatives which, similar to previous do not call measures, would force companies to allow users to opt-out of being tracked, or else face fines. The bill exempts state, local and federal governments, and permits the FTC to allow other exemptions. Interestingly, it would be unlikely to affect Facebook’s tracking mechanisms, because it is based on information that users supply about themselves while logged in (such as age, gender, interests), rather than simply monitoring users’ browsing habits, which is the more common mechanism used by Google, among other websites.

Unsurprisingly, the attention tracking has been getting has reached the ears of the Obama Administration, which backed a “Privacy Bill of Rights” last week. The administration has now changed its stance on internet privacy, having previously advocated voluntary codes of conduct for data companies. The legislation, proposed by senators John Kerry, a Massachusetts Democrat, and John McCain, an Arizona Republican, would require sites to ask for a user’s permission before sharing data with third parties, and would give users the right to see data that has been collected. The laws would apply to data such as names, addresses and fingerprints as well as unique IDs assigned to users’ cellphones or computers, and create a program to certify companies with high privacy standards, which would be permitted to sell data to third parties without getting permission from individual users. If passed, the bill would be the United States’ first comprehensive internet privacy law. The current scheme only protects certain kinds of information, such as health and financial information, and is generally much less stringent than similar legislation in Canada and the European Union.

While the senators’ proposal has garnered praise from many quarters, such as the White House and Microsoft, it is not without its critics. A senator from Missouri has raised concerns that the new “bill of rights” could impede the ability to provide free content, since sites often rely on advertising revenue to defray their costs. The online advertising market in the US was $1.12 billion in 2010, and it is suggested that it may grow to $1.25 billion this year. At the same time, online advertisers worry about how this proposal, when combined with other proposals backed by the advertising industry, could result in consumer confusion. Still others have suggested that American companies that do business with Europeans could benefit from the stricter scheme. Rather than meet arduous legal requirements to handle Europeans’ data, American companies might be able to convince the EU to be more lenient in light of the stricter domestic regulations.

The bill is still in draft stages, but the mounting furor over intrusive tracking practices seems likely to result in changes in American privacy law. Backing from the White House may make the changes come even sooner. The Chairman of the US Senate Committee on Commerce, Science and Transportation, Jay Rockefeller, referred to an “online privacy war”, urging support. It remains to be seen, however, whether it will gather enough support to pass the House and Senate.