* Rep. Bono Mack says Web users may demand legislation
* Urges companies to create better safeguards
* Analyst cites congressional pressure on privacy
* Yahoo! announces plans to roll out “Do Not Track”
By Jasmin Melvin
WASHINGTON, March 29 (Reuters) - Internet companies and advertisers got a nudge from U.S. lawmakers on Thursday to voluntarily give consumers greater control over the personal data collected when they surf the Web, or else face legal mandates to do so.
Federal regulators and lawmakers are hoping they can pressure Web giants into adopting “Do Not Track” buttons on Internet browsers and to give users transparency into how their online data is collected, used and sold.
“I‘m still not certain legislation is necessary,” Representative Mary Bono Mack, chairman of the House subcommittee on commerce, manufacturing and trade, said at a hearing before her panel on Thursday.
But Internet users are likely to demand legislation “if industry doesn’t come up with better safeguards for consumers in the future,” Bono Mack said.
There is growing consumer concern about how Internet giants such as Google, Facebook and Twitter collect and trade in vast amounts of detailed information about their users’ online activities and real-life identities.
The White House and Federal Trade Commission have unveiled privacy frameworks that rely heavily on voluntary commitments by Internet companies and advertisers.
Both have asked Congress to pass broad privacy legislation to curtail the tracking of online users.
But the specter of legislation is largely being wielded to encourage self-policing, as a tough crackdown would face a difficult path through the divided U.S. Congress.
Fred Upton, chairman of the full House Energy and Commerce Committee, expressed skepticism that Congress or regulators could keep pace with the rapidly changing technology of the Internet.
Rather than wrap the Web with red tape, Upton told the hearing, more credit should be given to companies’ strong self-interest in protecting their customers.
“Online consumers are savvy customers who will not be loyal to a company that puts their personal information at risk,” he said.
Google, Facebook, Apple and other technology companies have lobbied heavily against congressional and federal agency proposals on data collection.
Legislation that would curtail Internet companies’ ability to collect and cash in on users’ data would be a severe blow to a multi-billion-dollar industry.
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.
Guggenheim Securities analyst Paul Gallant said the strategy of threatening legislation seems to be working.
“There was enough concern even from Republicans that ad companies will feel sufficient pressure from Congress to work with the FTC and administration on fully implementing the Do Not Track system,” Gallant said in a note to clients on Thursday.
Yahoo! Inc said on Thursday it would implement a Do Not Track solution by early summer, and Gallant said that announcement creates momentum for others to follow suit by January 2013.