Earlier this month American Senator John Rockefeller introduced a controversial bill which would force online advertising and tracking companies to allow users to opt-out of online advertising. This comes after California Representative Jackie Spears, and state Senator Alan Lowenthal successfully passed legislation within the California legislature that effectively prohibits online tracking.
While some could herald this a consumer rights and privacy victory on par with the “Do Not Call” list, others have not taken such a jubilant approach. Some of this biggest names in tech such as Facebook, Google and a consortium of other technology firms have gone as far as to label Spears’ legislation as a “threat to the Californian economy”. In a letter to state legislators, the web-giant duo and their motley crew of co-signers argue that consumer privacy is not threatened since legislation already exists to sufficiently protect the privacy of consumers. Further they believe that this bill will create a new set of standards that need to be followed, and thus create a bureaucratic and possibly job killing nightmare.
Though neither Rockefeller’s bill nor its Californian counterpart has yet to be signed into law an important question needs to be raised: does this anti-tracking legislation completely threaten the business model of web companies like Google, or are their claims rife with hyperbole?
A press release which accompanied Senator Rockefeller’s bill explained the ideology behind this issue: “Consumers have a right to know when and how their personal and sensitive information is being used online — and most importantly to be able to say ‘no thanks’ when companies seek to gather that information without their approval.”
While these ideas may seem egalitarian, the Web 2.0 business model is based upon tracking consumers online. For instance, Google’s targeted advertising system works by synthesizing a compiled list of keyword’s used in user’s previous searches with cookies to serve up targeted advertising. Facebook’s advertising service works in a similar way, by serving the user ads on Facebook from keywords in their profile and previous websites that they have logged into through Facebook connect. Apple is also a secondary signatory as their iAds platform for iOS apps runs on a similar platform of targeted advertising.
It is important to note that there is already protection for consumers privacy through web browsers, and existing legislation. All major browsers (even Internet Explorer) have functions that prevent users from being tracked by advertising companies — Chrome’s incognito mode is such an example. Secondly, within California the Consumer Protection Against Spyware Act prohibits the collection of personally identifiable information in a deceptive fashion.
What has seemed to escape legislators is the very nature of the Internet would seemingly nullify any of these types of bills. Although operating in California may have its advantages, if need be tech giants like Google or Facebook could move operations to a state which has more lenient laws. And websites with less than savoury privacy practices, which consumers and legislators should be concerned about, prefer to operate from offshore hideouts and are therefore outside the grasp of lawmakers anyway.
Corporations need to be vigilant with user’s privacy; Apple’s “locationgate” and Sony’s Playstation Network break-in are evidence of this. However, the targeted advertising that powers Web 2.0 like Google’s Adwords requires that user’s sacrifice a sliver of privacy in order that websites can generate revenue though not exactly the “Faustian bargain” that some legislators might have imagined.