Online advertisers cautioned against privacy blunders

Wed Mar 28, 2012 6:16pm EDT

* Privacy, self-regulation top concerns for advertisers

* Trade group pushing against tougher EU standards

* Privacy expert says time to show self-regulation works

By Jasmin Melvin

WASHINGTON, March 28 (Reuters) - Online advertisers facing scrutiny from governments wanting to give Internet users more control over personal data online were urged at an industry conference on Wednesday to avoid privacy blunders that could undermine calls for self-regulation.

The White House and U.S. Federal Trade Commission have unveiled privacy frameworks that rely heavily on voluntary commitments by the advertisers to address lack of controls over the collection and trading of vast amounts of detailed information about the online activities and real-life identities of consumers.

Google Inc, Facebook Inc, Apple Inc and other technology companies have lobbied against congressional and federal agency proposals that crack down on data collection.

Companies also have a close eye on European Union proposals that would give Internet users the right to bar any collection of personal data.

"If you don't want to be regulated, do it yourself," the Council of Better Business Bureau's Genie Barton warned participants at a conference held by the Association of National Advertisers (ANA).

Barton, vice president and director of the organization's online behavioral advertising program, said the U.S. government's stance on privacy is very close to the principles of the Digital Advertising Alliance's (DAA) self-regulatory program followed by 90 percent of the ad industry.

"Right now, we have a confidence-building exercise where we can use the existing DAA program to continue to prove to the FTC that we as an industry can adequately regulate ourselves," said privacy expert Amy Mushahwar, an attorney with Reed Smith.

But the EU has not endorsed self-regulation.

"The EU is still highly distrustful of anything but heavy regulation. It is, however, recognizing that the privacy bill of rights is a big step," Barton said.

The White House called last month for a "privacy bill of rights," while the FTC on Monday pushed the industry to implement by the end of the year a Do Not Track system that would let consumers click a button on their Internet browsers to ensure their data is not being collected.

Barton said a further "softening in Europe" appeared to be occurring thanks to the DAA pledge to create a Do Not Track solution.

FTC Chairman Jon Leibowitz earlier in the week commended the progress the industry has made on this front, but said it was clear more was needed.

Last year's findings from the FTC that Facebook and Google engaged in deceptive privacy practices, and embarrassing revelations that Internet companies secretly tracked the locations of users, sold data to advertisers without the knowledge of consumers and other blunders have not helped the argument for self-regulation.

At stake is a billion-dollar industry. Advertising dollars account for about 96 percent of Google's revenue and 85 percent of Facebook's, financial statements and filings showed.

Data collection on the Internet allows advertisers to target users in a demographic who are more likely to buy their product. These ads often subsidize Web content.

"On issue after issue that is critical to our community, I believe the Congress and the regulatory agencies are setting the table for major action," said Dan Jaffe, ANA's vice president of government relations.

"We have learned that, if we're not at the table when it's being set, we will be on the menu."

Jaffe said privacy and the future of advertising self-regulation were among the top issues the trade group would be focused on this year.

Particularly, the group will fight an EU push to move U.S. data collection policy toward an opt-in system he said would have a destructive impact on the growth of the Internet.

Reed Smith's Mushahwar said this is as much a legal clash as it is a shake out of an economic model.

"Ultimately, what we don't want to have happen is moving towards the European standard and then having companies that are not able to optimize their websites and optimize their revenue," Mushahwar added.

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