NEW YORK - Last Thursday federal regulators, members of advertising trade groups, and technology companies gathered in Washington to announce new initiatives to protect consumers’ privacy online.
But, as it turns out, privacy is in the eye of the beholder.
The Obama administration has pushed hard for a privacy bill of rights that would give consumers more control over what personal data is collected online and what limits would be placed on that data. The advertising and technology industries, which have been under pressure to do more to ensure privacy, said they would support a “Do Not Track’’ mechanism that would be clearly and uniformly adopted by browser vendors and would allow consumers to opt out of having some companies, but not all, keep data on their online activities.
But consumers would hardly be invisible on the Web.
“ ‘Do Not Track’ is a misnomer. It’s not an accurate depiction of what’s going on,’’ said Stuart P. Ingis, head of the Digital Advertising Alliance, a trade group representing the advertising industry. “This is stopping some data collection, but it’s not stopping all data collection.’’
Thursday’s announcement was the administration’s first digital initiative since the antipiracy legislation known as the Stop Online Piracy Act, or SOPA, was met with furious reaction from the technology industry last month, and eventually dropped. The issue of digital privacy, especially how a user’s data is collected online and then used to show that user ads tailored to them, has been hotly debated for years.
The announcements represent the attempt to satisfy consumer privacy concerns while not stifling the growth of online advertising, which is seen as the savior of media and publishing companies as well as the advertising industry. According to the Interactive Advertising Bureau, digital advertising revenues in the United States were $7.88 billion for the third quarter of 2011, a 22 percent increase over the same period in 2010.
The industry’s compromise on a Do Not Track mechanism is one result of ongoing negotiations between members of the Federal Trade Commission, which first called for such a mechanism in its initial privacy report, the Commerce Department, the White House, the Digital Advertising Alliance, and consumer privacy advocates.
Until now, methods for opting out of custom advertising varied. Under the new system, browser vendors will build an option into their browser settings that, when selected, will send a signal to companies collecting data that the user does not want to be tracked.
The agreement covers all Digital Advertising Alliance members including Google, Yahoo, AOL, Time Warner, and NBCUniversal. (One conspicuous absence is Facebook, which is not a member of the alliance.)
Privacy advocates say the mechanism does not go nearly far enough in part because it affects only certain marketers. Publishers and search engines like Google, Amazon, or The New York Times, are considered “first-party sites,’’ which means the consumer goes to these Web pages directly. First-party sites are still permitted to collect data on visitors and serve them ads based on what they collect.
But third-party sites, which are networks that collect and use data to serve advertising tailored to the user, like DoubleClick (owned by Google), AOL’s Advertising.com, and a multitude of smaller ad networks like Turn and Rocket Fuel would be restricted in the data they can collect on users if they select a Do Not Track option. Such companies would be limited to using data for purposes like market research and analytics but could not create detailed profiles on users or show them ads based on their online behavior.
Some consumer privacy advocates, while offering measured praise for the new privacy option, saw the move as an attempt to thwart a more restrictive stance on data collection. Jeffrey Chester, head of the Center for Digital Democracy, which is pushing for more restrictions, called the move a win for advertisers.
“We cannot accept any ‘deal’ that doesn’t really protect consumers, and merely allows the data-profiling status quo to remain,’’ Chester said. “Instead of negotiations, CDD would have preferred the White House to introduce new legislation that clearly protected consumers.’’
But the advertising business has plenty to fear if consumers use Do Not Track in large numbers.
“If there’s a high rate of opt-out, it’s an issue,’’ said George Pappachen, chief privacy officer of Kantar Group, the research and consultant unit of WPP. “Our position is data should flow,’’ Pappachen said, adding that data helps drive innovation and newer commercial models.
Mike Zaneis, senior vice president for public policy of the Interactive Advertising Bureau, said large-scale adoption of the opt-out mechanism would have a severe effect on digital advertising networks and third parties that work with publishers to sell behaviorally targeted ads.
“The reality is if you had 50 to 80 percent of consumers opting out it could have a really significant negative impact on the third-party ad model,’’ Zaneis said. “There is no eraser button for the Internet. But we can address consumers concerns about having certain data about them collected, especially data for advertising and marketing.’’
Google, one of the biggest players in online advertising, would also be affected because it is both a first- and third-party publisher. The company earns the bulk of its almost $40 billion in revenue through search-related advertising, which would not be affected by Do Not Track.
But its display advertising business, powered largely by its DoubleClick ad network that represents about $5 billion in revenue, is considered third-party and could be affected. The company expects to have Do Not Track available on its Chrome browser by the end of 2012.
For advertisers, a lot will depend on how consumers respond. A recent study from the Pew Research Center for the People and the Press seemed to contain mixed signals: 56 percent of the respondents thought the government should not get more involved with regulating how Internet companies handle privacy issues. Yet 59 percent of respondents said they felt that collection of user data for targeted advertising was an unjustified use of a person’s private information.
And there are still unresolved technical issues regarding Do Not Track.