November 26

Online Advertising: The Start of a Long Debate

By Patrick Romero

One of the principle missions of the Federal Trade Commission is to protect American consumers against activities such as false advertising and unfair business practices. Yet today, instead of confronting meat-packing and railroad industries, the FTC is going to have to monitor technology giants in order to protect American’s online experience and not stifle internet growth.

The FTC held a two-day forum earlier this month regarding online advertising and privacy. The meeting concerned the tactics of behavioral targeting, which is used by online publishers and advertisers to deliver ads based on user’s web-browsing behavior. Advertisers believe that this information helps them deliver better information to consumers and increases the effectiveness of their campaigns. Opponents and civil liberty advocates warn against the erosion of privacy and lack of consent by consumers. They argue that data collected through behavioral targeting could be used by government to monitor users without their consent and could potentially lead to racial profiling and discrimination.

Online privacy has become a major concern, especially in light of the news earlier this year that Google was purchasing internet advertising giant DoubleClick. While Google collects the history of its users through its search engine, DoubleClick tracks what websites people visit. In order to do this, DoubleClick creates profiles for users based on their IP address, domain, browser, local time and date, operating system, and page viewed. The ability for one company with the power to collect data on millions of individuals without any government oversight is disconcerting, to say the least.

The potential harm to consumer privacy that might occur out of the DoubleClick-Google purchase appears not to have stopped others from continuing down the path of online advertising. Social-networking sites are also trying to earn profits by allowing large advertising firms mine to mine for information on their subscriber pages to determine members’ interests and what specialized advertisements would be delivered to them. There has even been recent controversy as to whether this type of targeted advertising is even legal or not.

Past attempts to stop behavioral targeting have been unsuccessful. In 2001, a class action lawsuit was brought against DoubleClick for keeping cookies stored on internet user’s computers without their consent. The court ruled against the plaintiffs citing that there was no violation of the Electronic Communications Privacy Act or the Computer Fraud and Abuse Act because DoubleClick only gathers information concerning a user’s activities on a DoubleClick affiliated web site. The court held that since the user consents to Double Click’s access by visiting the website affiliated with the advertisement, there was no law being violated.

As a result of these legal and business developments, the FTC has to take a more active involvement in slowing down the pace of behavioral targeting. Privacy organizations are calling on the FTC to establish, among other things, an opt-out policy similar to the one applied to telemarketers. They would like to see fines for non-compliance and disclosure of all data-collection practices clearly visible on websites that engage in behavioral targeting.

Yet while these recommendations are a step in the right direction, the government should not try to develop a one-size-fits all model that would stifle the economics on which internet innovation relies upon. The most successful internet companies rely heavily on advertising dollars to sustain their growth and need this capital to generate new technologies. The concerns for consumer privacy should also be taken in tandem with the economic model that continues to fuel new technological advancements.

The Google-DoubleClick acquisition has put online privacy at the forefront of government concern. Congress and the EU have scheduled hearings on the impact that these two companies will have on consumer’s online experience. Proposals for government intervention will surely be considered in order to control how information is used and stored. The debate as to whether there should even be state intervention in this country appears to have begun.


Tags

compliance, privacy


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