02:05 PM

Schwartz On Security: Online Privacy Battles Advertising Profits

Do businesses have the right to make money from the unregulated buying and selling of personal information?

Are people being hurt when their browsing habits and personal details are collected by online advertising groups?

Privacy rights organizations say yes, that people's sensitive information shouldn't be left in the hands of businesses that benefit from buying and selling it. Online advertising and financial services groups, however, argue that tracking is essential for delivering more relevant advertising, and of course it's the uptake of this advertising that keeps the lights on at many a Web site.

Those opinions come from the 442 comments received by the FTC after it released, in December 2010, its proposal for a privacy framework for public feedback. In the framework, the FTC proposes regulating companies that handle or collect people's personal information, and providing options such as Do Not Track for consumers to opt out of online tracking.

As that proposal suggests, the currently unregulated, free-market approach to selling people's personal information is drawing intense scrutiny. That's due in no small part to The Wall Street Journal's July 2010 What They Know investigative reporting, which detailed the array of cookies and surveillance technologies being used to monitor the who, what, and where of Web site visits. The latest technology can even function in real time, correlating email addresses, movie preferences, income, medical conditions, and more, while resisting attempts to be deactivated.

Online tracking isn't a small business. Notably, the Journal's investigation found that the top 50 Web sites -- which account for about 40% of all page views -- kept close tabs on their users, installing on average 64 different pieces of surveillance technology. For comparison's sake, noted the reporters, Wikipedia installed none.

Furthermore, a thriving micro-economy has emerged in which collected information gets traded on stock-market-like exchanges. According to the report, "in between the Internet user and the advertiser, the Journal identified more than 100 middlemen -- tracking companies, data brokers, and advertising networks -- competing to meet the growing demand for data on individual behavior and interests."

These businesses like life just the way it is, thank you very much. In particular, the Interactive Advertising Bureau -- its nearly 500 members sell and support interactive advertising -- "believes that the appropriate approach to addressing consumer online privacy issues is through industry self-regulation and education," according to its comments on the proposed FTC privacy framework. Self-regulation, it said, will "address privacy concerns while ensuring that the Internet can thrive, thereby benefiting both consumers and the U.S. Economy."

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