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02.23.12

Obama Pushes for New Internet-Privacy Law to Protect Consumers

The proposed Consumer Privacy Bill of Rights would give people greater control over what information Internet companies can gather about them. It’s great news for us, but a possible headache for tech companies.

Every few weeks, it seems, we’re hit with some new scandal when a tech company gets caught invading the privacy of its users. Now the Obama administration is saying enough is enough, and has proposed a Consumer Privacy Bill of Rights that it hopes will lead to new regulations on tech companies.

“American consumers can’t wait any longer for clear rules of the road to ensure their personal information is safe online,” President Obama said in a press release.

The bill of rights says consumers should have greater control over what information about them gets collected. It would require Internet companies to make their rules easier to understand and says there should be “reasonable limits” on the amount of data that websites gather.

Right now this is all just a set of principles that will get reviewed by tech companies and privacy experts.

The administration says that after convening those companies and experts, it will press Congress to craft laws that put these rules into effect, with the Federal Trade Commission playing the role of sheriff, enforcing the laws.

The Obama administration insists the rules are not meant to hamper innovation or hurt the business of Internet companies. Rather, it says, the rules would “help assure continued growth in the Internet economy,” since consumers would trust Web companies more.

That sounds nice, but much will depend on what kind of legislation actually ends up being created. There’s a chance that whatever laws finally get passed will be a headache for tech companies and impede their ability to generate revenues.

Tech companies will lobby to keep the regulation to a minimum, and for good reason. Facebook, Google, and an entire new generation of Internet companies have embraced a business model based on targeted advertising, which creates an incentive to gather ever more information about users. It’s no surprise, then, that to date most Internet companies have not shown much interest in being transparent to users or in giving individuals more control over what gets collected.

Facebook started out with a privacy policy that was one sentence long and said that none of your information would be shared with anyone who wasn’t in one of your groups. By 2010 the policy was contained in a document that was longer than the U.S. Constitution and so complicated that you need a law degree to parse its meaning. And now Facebook requires that if you want to use its service you must make some information about yourself available to the public.

Facebook, Google, and an entire new generation of Internet companies have embraced a business model based on targeted advertising, which creates an incentive to gather ever more information about users.

Facebook and Google have both landed in hot water with regulators over privacy and data-collection issues. Last year Facebook settled charges brought by the FTC that it had engaged in practices that were “unfair and deceptive, and violated federal law.” Earlier last year, the FTC ruled that Google had similarly misbehaved and said Google would be subjected to periodic privacy audits.

In its press release, the Obama administration said several top tech companies, including Google, Yahoo, Microsoft, and AOL, had committed to use “do not track” technology in Web browsers, which would make it easier for people to control how much they’re tracked as they move around on the Internet.

“We’re pleased to join a broad industry agreement to respect the 'do not track’ header in a consistent and meaningful way that offers users choice and clearly explained browser controls,” said Susan Wojcicki, senior vice president of advertising at Google.

Representatives for Facebook and Microsoft said their companies would provide a comment on Thursday.

For now these principles proposed by the Obama administration represent simply a first step. But for people who have grown weary of the constant revelations of new prying by Internet companies, it’s a step in the right direction.