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Online Privacy Regs May Move Into the Open

With the administration pushing broadband deployment and adoption, protecting privacy in that online world is getting traction. And given the increased attention, ISPs and others are trying to make sure that does not translate to overregulation of their space.

Upcoming elections could spur an effort toward action on the high-profile issue, but the Obama White House has been pushing self-regulation, which sits just fine with industry players.

Both sides of the debate agree with what’s at stake: the billions in targeted advertising that relies on building online preference profiles, and the free-content model that drives the Web. And under the banner of protecting children and adults, many in Congress have been pushing for a trust-but-verify system of online protections that industry players fear will take a big bite out of their business.

Putting an exclamation point on the issue are current efforts by the European Union to get U.S. companies to commit to tougher online protections, along with upcoming Federal Trade Commission and Commerce Department recommendations that could provide the basis for new laws.

At a Hill hearing earlier this month, MIT professor Catherine Tucker, whose research the ad industry has used to make its point, said that European-style privacy protections have done a number on the effectiveness of online advertising there.

According to a study of the impact of EU regs, which include an optin tracking regime that industry players in this country are trying to avoid, online ads were 6% less effective.

That could be bad news for general news sites such as, Tucker says, since the biggest hit from behavioral ad restrictions was on ads whose content “did not relate obviously to any commercial product.” By contrast, ads that targeted surfers to sites for travel or baby tips were least affected, since the content has already done the targeting— surfers are likely to be interested in diapers or rental cars, for instance.

Tucker says marketers and Websites wouldn’t be the only ones adversely affected by restrictions on behavioral targeting. Viewers might, as a result, be bombarded with more “distracting” ads in an effort to get their attention.

Given that Republicans and Democrats would have a hard time agreeing on the colors in the American flag, is there any real threat of new legislation?

Stephen Balkam, president of the Family Online Safety Institute (FOSI), says yes. “I think there is always concern, simply because it is one of the very few areas where there is bipartisan support for something to be done about protecting kids online,” he says. And with an election coming up, “there is certainly potential for not-wonderfullythought- through legislation next year.”

Still, the Administration has been emphasizing self-regulation, much to the chagrin of some online privacy advocates. That perspective is driven in part by the recognition that targeted advertising supports all that free online content that has come to seem like a birthright of digital citizenship.

Balkam, for one, believes the White House “gets it.” He cites the kids do-not-track bill that has been pushed by Reps. Ed Markey (D-Mass.) and Joe Barton (R-Tex.). He points to “out there” proposals like an “eraser button” that would “magically scrub” Facebook postings or tweets from errant 13-year-olds.

“I don’t see Administration support for that, and yes, I think this White House has been pretty good at promoting the notion of self-regulation,” Balkam says.

The FOSI, whose members include the National Cable & Telecommunications Association, Google, AT&T, Microsoft and Verizon, issued a study two weeks ago showing that a quarter of the parents of kids with smartphones were employing parental control tools, which Balkram says is already more than those using the V-chip on TVs.

Balkam attributes that to the fact that Congress mandated V-chip technology. “All innovation in the space pretty much disappeared,” he says.

While the study had no cable company backing, that doesn’t mean the industry is sitting this one out. Balkam tells B&C to look for FOSI to release a survey in early November, funded by cable companies—which are among the leading ISPs—that focuses on kids and online behaviors.

As Balkam warns, if the government gets it wrong, “We could see a decline in revenue, a decline in innovation and a decline in the ability to provide free content. We have gotten very used to free services. I think most of the administration gets that, but you never know.”

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