Senate Democrats called for implementation of the Obama administration's privacy framework at a hearing Wednesday afternoon, during which Sen. John Kerry (D-Mass.) clashed with Sen. Pat Toomey (R-Pa.) on the need for privacy protections of any kind.
Sen. Jay Rockefeller (D-W.Va.), chairman of the Commerce, Science and Transportation Committee, warned that in a world where the "Internet has fundamentally transformed every aspect of our lives, unfettered collection of online data poses significant risks."
"Corporations are unlikely to regulate themselves out of profits," he said, comparing the current situation to the practice of "cramming" on phone bills, which phone companies said would be self-regulated away in the 1990s but took until recently for the Federal Communications Commission to ban it.
Rockefeller asked Federal Trade Commission Chairman Jon Liebowitz why self-regulation like the industry's do-not-track effort would succeed given the history of such efforts.
The Digital Advertising Alliance, an industry group, has made "meaningful progress" on do-not-track self-regulatory efforts, Liebowitz replied. But "we have to make sure do-not-track is, with a few exceptions, do-not-collect," he said.
Many tech companies want to be helpful on do-not-track, Liebowitz said. Regulatory efforts help because, though companies want to be helpful, they don't want to put themselves at a competitive disadvantage.
While Rockefeller admitted there remains no consensus on what privacy legislation should look like, he pledged to work with colleagues to develop a bill to "push the industry to develop strong consumer privacy protections."
"Consumers need strong protections and simple to understand rules, and easy to understand privacy policies rather than incomprehensible legalese," he said.
Toomey said he remains skeptical about the need to pass legislation.
"Neither this committee … nor the Commerce Department fully understand" what consumers want or need with regard to privacy, he said. "It's important that companies have maximum flexibility to work with their customers. Companies are already currently competing on privacy. This is a sign of a healthy, functioning and competitive market — something we should be encouraging."
But legislation could shift focus from competition to compliance, he warned. Market failure and consumer harm should be demonstrated before granting the FTC any new authority, Toomey said.
Toomey called for a cost-benefit analysis, calling it "irresponsible" for the government to ask companies to alter a business model, and said he doubts there has been actual consumer harm as of yet, absent actions the FTC has already taken under existing authority, such as settlements the FTC has made with Google, Facebook and MySpace.
"I have not heard a persuasive argument on why the FTC needs greater authority," he said, calling for "trust in the marketplace."
Kerry responded, telling Toomey that only companies that profit from assembling personal information have yet to conclude there is a need for comprehensive privacy legislation.
"The more the company knows about you, the more valuable you are, whether you have consented to that or not," Kerry said.
"Somebody is watching you, somebody is tracking you" every moment you are online, Kerry said, comparing the practice to a private investigator following you everywhere.
"You don't have privacy — they analyze and enhance that data and they reach a conclusion about you," Kerry said, calling this a practice that creates enormous wealth for some. "There is nothing to stop them from doing that … without consent."
The harm, Kerry told Toomey directly, is that "there are no limits to what can be collected and no rights to know what has been collected.
Kerry said that most people have no problem with collection of the data when it improves their experience, but added that the consumer should make the decisions about that data collection.
Kerry suggested using a bill he co-sponsored last year with Sen. John McCain (R-Az) as a starting point for developing standards.
"We're ready to negotiate," Kerry said, warning that "we can't afford another year of delay."