In Depth

Understanding the Proposed Online Privacy Bill

By Edmund Lee
Advertising Age


(March 16, 2011) The Obama administration has asked Congress to pass an online-privacy law, a set of "baseline" protections that would act as a privacy bill of rights, a significant move designed to settle the continuing digital-privacy debate.

But an important factor here that has not been discussed is the timing of the president's call to Congress.

In the past year or so, digital privacy has come to the forefront, as a slew of privacy bills have bubbled up on the Hill; the Federal Trade Commission presented privacy papers along with calls for comment; and the ad industry has taken aggressive steps to implement a self-regulatory program, no doubt to stem the growing legislative sentiments. The Wall Street Journal has been runnning a series on data tracking, called "What They Know," that has attracted the attention of lawmakers.

When the Obama administration announced three months ago its creation of the Privacy Policy Office to evaluate possible legal measures, it was clear some form of legislation would take shape. But when? And how? Today's proposal, made by Mr. Obama's information-policy adviser, Lawrence Strickling, suggests any law should be "broad and flexible enough to allow consumer-privacy protection and business practices to adapt."

It's a smart, open-ended approach, designed to draw both Democratic and Republican backers. But another reason is to ensure that the U.S. can eventually sign data accords with foreign governments, namely the European Union and countries in the Asia-Pacific region.

According to insiders in Washington, the U.S. is looking to sign data treaties with both regions fairly soon, which makes getting a Capitol roll call that much more important.

At the moment, there's little international agreement around data -- how it's collected, and how it can be used. The European Union recently adopted a stringent set of codes around data collection that require companies to get a user's explicit consent in order to collect and use personal information, including the supposedly "anonymous" demographic and location pieces that online marketers rely upon. Privacy has been a core component of European law for centuries, a sentiment that has carried over to the digital domain. But while much of international law itself doesn't quite exist yet, international agreement around data has become a much more urgent proposition. Facebook, for example, is growing faster outside the U.S.

At the other end of the international spectrum, some countries in Asia have more lax rules
governing the use of data, not too dissimilar from the U.S. One of the proposals being bandied about is that the U.S. would be willing to sign agreements where each region recognizes another government's data laws while enforcing its own. A U.S. company operating in the EU, for example, would have to abide by the EU's laws, but it wouldn't have to apply those stiffer standards outside the EU. Data would effectively be administered across three tiers of protection around the globe, with the U.S. sitting somewhere in the middle.

For U.S. companies and advertisers, this maneuvering will result in some new piece of legislation, but that may not necessarily include a do-not-track provision, an important factor to how online marketers operate.

The current self-regulatory effort, called About Ads, allows consumers to decline being targeted for advertising purposes, but it does not allow people to decline being tracked altogether. The FTC has been looking for more legislative teeth in the form of a do-not-track law that would prevent companies from collecting any data on anyone who chooses not to be tracked, no matter the purpose.

The Wall Street Journal reported today that a group of 30 online ad companies is looking to support a do-not-track tool that would work with web browsers, which is different from the About Ads program, suggesting that there's a fair amount of jockeying going on to curry favor with government regulators and consumers.

But while some bills that have recently been proposed center around a do-not-track tool, the bill that has the best chance of passing so far, according to insiders, is the draft legislation currently being circulated by Sen. John Kerry, D.-Mass., and Sen. John McCain, R-Ariz., which, so far, does not include a call for a do-not-track provision.

Of course, that could all change very quickly, but the very specific concerns of online marketers are a small part of a larger political process that includes nations abroad and bipartisan wrangling at home, and it will be months before legislative details come to the fore.