Privacy groups, business firms firing warning shots on new online ad privacy bill

Privacy advocates and business groups drew early battle lines on Tuesday in the debate over a new bill to rein in Web advertisements that are based on consumers’ online shopping habits and Internet browsing histories.

It took only hours for those industry leaders to question the size and scope of that new effort, spearheaded by Reps. Rick Boucher (D-Va.) and Cliff Stearns (R-Fla.). In fact, one of the only strong points of consensus to emerge late Tuesday among stakeholders was a recognition that they would have to work closely with lawmakers over the coming months to shape legislation they say could have serious effects on both the Internet economy and consumer privacy.

Stearns and Boucher’s bill bill, which is still in draft form, would require companies to disclose whenever they collected information from consumers and ported that data into Web ads. Businesses that failed to publish their methods appropriately would face punishment from the Federal Trade Commission, which the bill would grant statutory authority to enforce behavior-based advertisement rules. 

Consumers who feel their privacy remains at risk could ultimately opt out of a site’s targeted advertisements. The default setting for more sensitive bits of information — including sexual orientation, a user’s location or a computer’s IP address — would universally require users’ permission before collection.

But both privacy associations and business lobbies are already questioning many of the bill’s key provisions and arguing the legislation goes too far or simply misses the mark.

Public-interest groups, including the Electronic Frontier Foundation and the Center for Digital Democracy, railed against the bill Tuesday for authorizing a weak enforcement regime they said would do little to shield consumers from potential abuse.

“We don’t think it effectively protects consumer information online, and we think it needs substantial revision,” Michelle DeMooy, senior associate for National Priorities at Consumer Action, said on a conference call with reporters, along with other dissatisfied public-interest group leaders.

“While the discussion has started on this privacy issue because of this bill, I can’t really say very much good about it,” John Simpson from Consumer Watchdog later said on the call. “This bill really adopts and endorses an archaic, bankrupt notice-and-consent regime that we all know does not work.”

Other firms said anything more aggressive would stifle innovation, create confusion and result in lost Web ad revenue.

According to Mike Zaneis, vice president of public policy at the Interactive Advertising Bureau, a system in which every targeted-ad campaign first required a user’s permission would amount to the “worst anti-stimulus bill Congress could pass.”

“It would kill hundreds of thousands of jobs in America, and it would disproportionately put small publications out of business, because consumers won’t opt in,” said Zaneis, who later noted a series of positive aspects of the current legislation. His organization, the Interactive Advertising Bureau, represents 375 organizations and includes such members as Microsoft, Google and a host of publishing firms. 

Zaneis later noted that many of the legislation’s rules about disclosure could prove “overly granular” and especially burdensome to most publishers, in particular, who may not have the resources to comply. And he said lawmakers’ decision to prevent advertisers from incorporating a computer’s unique identifier, called an IP address, into their advertising campaigns could have “unintended consequences.”

Debates over the nature of the bill’s opt-out rules and enforcement provisions are sure to play out further over the coming months, as Boucher and Stearns solicit public comment on their legislation and eventually bring it before the House Energy and Commerce subcommittee they lead. 

All of the organizations that sounded off on Tuesday, though, promised to be vocal during that process. Both Google and Facebook separately assured they would work closely with congressional lawmakers on the bill, as did a host of industry interest groups.

But Zaneis described the early concern about the two House lawmakers’ bill as a sign that compromise is still possible on Internet ad privacy.

“[They’ve] got a bill that consumer advocates are complaining about and the industry is raising concerns about,” he said. “But this is a good beginning point for discussion.”