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Industry Seeks Light Touch On the Mouse

It is clear that either Congress or the administration, or both, are going to take some action in the online privacy space. At stake are billions of dollars in targeted advertising. Having heard in last week’s issue from government movers and shakers and a high-profile professor on the importance of a privacy protection regime, B&C looks at some arguments from the other side on why government needs to be careful about putting too heavy a hand on the mouse.

The American Bar Association, for example, suggests that overregulation of the online ad space in the interest of protecting privacy might depress prices by reducing competition. And while that would hurt ISPs like cable operators, the ABA suggests it might actually benefit broadcasters.

Not surprisingly, self-regulation and industry codes of conduct were the order of the day from industry fans of a government light touch. But if there has to be more government involvement, cable operators argue, it should be “platform neutral.” Translation: Whatever you do to us, you have to do to our competition, and not just in the ISP space.

Boon to Broadcasters: Calling for a rigorous cost-benefit analysis of any proposed privacy-protection regime, the ABA, in comments to the Federal Trade Commission (which is preparing a report to Congress on privacy), argues that a too heavyhanded privacy-protection regime could actually reduce price competition, to the advantage of broadcasters.

The way the ABA sees it, the FTC needs to do that analysis before it recommends a do-not-track regime for behavioral advertising. It argues that do-not-track could reduce the number of online ads, raising the price and providing less competition to targeted local advertisers like broadcasters who “have information about local readers and viewers that allow better audience targeting and thus support higher prices for advertising.”

The $140 Billion Connection: The American Association of Advertising Agencies tells the Commerce Department that online ads/marketing “significantly subsidize[d]” the U.S.’ $140 billion in online retail in 2009, as well as the 3 million people employed in online sales. And while Commerce is considering government oversight of a self-regulatory framework, including a new Privacy Policy Office, the 4As says a government framework for self-reg would be too cumbersome and not responsive to a fast-changing market.

Competitive Neutrality: The National Cable & Telecommunications Association points out that wearing their ISP hats, cable operators are looking at expanding their interactive advertising. Government should not be a regulator in the privacy space, it argues, but more of a “coordinator” of voluntary codes. The NCTA has two fundamental requests of any privacy regime: 1) that it draws a distinction between personally identifiable information and anonymized information and 2) that it establishes “competitive neutrality” as a “bedrock” principle. In other words, whatever framework the government comes up with, search engines and not just networks should be included. “Cable operators compete, of course, with other providers of broadband Internet access service, including telephone companies and, increasingly, wireless service providers,” says the NCTA. But ISPs “also compete with other Internet entities—including entities with access to consumer information—in the highly competitive Internet advertising marketplace.” The Digital Marketing Association seconded NCTA’s call for “competitive neutrality.”

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