Policy Documents

Research & Commentary: Internet Privacy and Do Not Track Legislation

June 29, 2012

Internet privacy has become a hot issue as technology to track user movements online has become more widespread. Much of the debate centers on “behavioral advertising,” through which businesses target their marketing based on Web users’ search and browsing histories.

Some critics of the practice argue tracking Internet users’ online activities is an invasion of privacy. They have pushed for laws and regulations limiting how and when companies can track online movements. Both the Federal Trade Commission (FTC) and U.S. Congress have proposed new regulations creating a “do not track” policy in which Internet browsers and Web sites will be forbidden to track online movements without explicit permission.

Some legislation addressing online privacy and do not track already has been introduced. The Do Not Track Me Online Act, proposed by Rep. Jackie Speier (D-CA) would give the FTC the authority to force online marketers to give consumers the choice to be tracked online and to disclose how they collect and share their data and with whom they share it. The Do-Not-Track Online Act of Sen. John D. Rockefeller IV (D-WV) is similar. The Do Not Track Kids Act, proposed by Reps. Edward Markey (D-MA) and Joe Barton (R-TX), would prohibit Internet companies from sending targeted advertising to children and from collecting personal and location information without parents’ consent. Both these bills are currently stalled in Congress.

Such regulations are already obsolete. Companies are integrating such privacy measures without government intervention. Currently, the most recent versions of the three major browsers (Firefox, Internet Explorer, and Chrome), making up 81 percent of Web use, include do-not-track features.

John Stephenson, director of the Communications and Technology Task Force at the American Legislative Exchange Council, argues further government intrusion is unnecessary and harmful. “Some argue for new, invasive laws and government mandates to protect our privacy. But why not use the consumer protection laws and sophisticated technologies currently at our disposal to exercise our freedom to protect our privacy?” asked Stephenson.

Overregulating behavioral advertising could suppress the growing Internet economy. Behavioral advertising is responsible for keeping most of the Internet services consumers take for granted free of charge. Regulating advertisers and limiting the techniques they can use would cause imposition of fees for currently free services such as Web-based email, social networking, and news. In addition, a ban on tracking will make it more difficult for small businesses to afford Internet advertising.

The following articles examine behavioral advertising, Internet privacy, and do not track proposals from multiple perspectives.

Ten Principles of Telecom Policy
http://heartland.org/policy-documents/ten-principles-telecom-policy
Hance Haney and George Gilder examine in this Heartland Institute Legislative Principles booklet the beneficial results of telecom reforms in Indiana, the advances made by other innovative leaders in the telecom market, and how other states can follow their lead to reap the rewards of new investment in telecommunications services.

Online ‘Do Not Track’ Bill Introduced in House
http://www.pcmag.com/article2/0,2817,2380151,00.asp
Chloe Albanesius of PC Magazine examines the Do Not Track Me Online Act, its origins, and its sponsor’s goals for improving Internet privacy.

FTC Prompts Congress to Enact Online Privacy Regulations
http://news.heartland.org/newspaper-article/ftc-prompts-congress-enact-online-privacy-regulations
The Heartlander digital magazine reports on the FTC’s proposals for online privacy regulations, quoting both opponents and supporters of do not track regulations.

‘Do Not Track’ Legislation Is On the Move
http://www.pcmag.com/article2/0,2817,2385045,00.asp
Mark Hachman discusses in PC Magazine the various bills being considered to regulate Internet privacy and impose do not track regulation, quoting several experts supporting the bills.

5 Reasons Why the Federal Trade Commission’s Proposed Online Privacy Rules Will Do More Harm Than Good
http://reason.org/news/printer/5-reasons-why-the-federal-trade-com
Steven Titch, a policy analyst at Reason Foundation, argues self-regulation, consumer choice, and market models are the best tools for protecting online consumer privacy, and he concludes the proposed rules from the FTC are likely to do more harm then good.

To Track or ‘Do Not Track’: Advancing Transparency and Individual Control in Online Behavioral Advertising
http://heartland.org/policy-documents/track-or-do-not-track-advancing-transparency-and-individual-control-online-behavior
Omer Tene and Jules Polonetsky argue any proposals to regulate use of Internet data should be informed by an understanding of the fundamental tradeoff between privacy and economic efficiency. They call for regulators and business leaders to work towards a common approach that achieves both goals.

To Track or Not to Track: Recent Legislative Proposals to Protect Consumer Privacy
http://heartland.org/policy-documents/track-or-not-track-recent-legislative-proposals-protect-consumer-privacy
Molly Jennings of Harvard University evaluates two privacy bills introduced in 2011 (the Commercial Privacy Bill of Rights and the Do Not Track Online Act) and concludes the former would provide the best protection for consumers while preserving the vibrancy and “generativity” of the Internet.

On FTC’s ‘Do Not Track’
http://heartland.org/policy-documents/ftcs-do-not-track
Raymond G. Sin and Jia Jia of Hong Kong University of Science and Technology examine the Federal Trade Commission’s proposed Do Not Track mechanism. They contend restricting information collection is a misplaced focus in addressing Internet privacy, and they offer an alternative mechanism that would alleviate consumers’ privacy concerns without sacrificing online firms’ business benefits from using customer information.

Protecting Consumer Privacy in an Era of Rapid Change: Recommendations for Businesses and Policymakers
http://news.heartland.org/sites/default/files/ftc_privacy_report_3_26_12.pdf
This report from the FTC presents “best practices” for businesses that collect and trade data on American consumers. According to the report, these practices would allow consumers to access and make changes and updates to the data collected on them.

Internet ‘Privacy Bill of Rights’ Poses Business Threats
http://news.heartland.org/newspaper-article/internet-%E2%80%98privacy-bill-rights%E2%80%99-poses-business-threats
Phil Britt reports in the Heartlander about the possible effects of do not track reforms and an Internet “privacy bill of rights” on the economy and internet commerce. Britt quotes representatives of several Internet firms who are concerned such laws could dent their advertising-driven business models.