the state of online privacy

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The State of Online Privacy

January 24, 2011

AGENDA

Headlines

Public opinion

Regulation

Effects on behavioral advertising

Facebook

Questions

HEADLINES

HEADLINES

―You have zero privacy. Get over it‖

Former Sun Microsystems CEO Scott McNealy

―If you have something that you don’t want anyone to know, maybe you shouldn’t be doing it in the first place‖

Former Google CEO Eric Schmidt

HEADLINES

HEADLINES

―People have really gotten comfortable not only sharing more information, but more openly and with more people‖

Facebook CEO Mark Zuckerberg

WHERE DOES THIS IMPACT US?

Behavioral advertising

PUBLIC OPINION

Three camps

Consumers who have no idea that any information collection and sharing is taking place

Consumers who are troubled by the collection and sharing of their information

Consumers who are aware of this collection and use of their information, but view it as a worthwhile trade-off for convenience and personalization

PUBLIC OPINION

Two-thirds of Internet users don’t believe advertisers should be allowed to target online ads to their interests based on the sites they have visited

Almost 72% of U.S. adult Internet users say they are concerned about the extent of information websites are collecting about them

Sources: Gallup; Future of Privacy Forum

REGULATION

Federal Trade Commission

U.S. Department of Commerce

Congress

OTHER STAKEHOLDERS

Industry groups

National Advertising Bureau

Interactive Advertising Bureau

Network Advertising Initiative

Privacy groups

Center for Digital Democracy

World Privacy Forum

BACKGROUND ON REGULATION

First FTC meetings held on online privacy in 1995

Numerous hearings and workshops have been held

The commission has mainly relied on industry self-regulation

COMPROMISE OF 2009 — SEVEN PRINCIPLES

Industry groups agree to a set of self-regulatory principles from the FTC

Education

Transparency

Consumer control

Data security

Material changes

Sensitive data

Accountability

SEVEN PRINCIPLES — EDUCATION

1. Education

Educate consumers and businesses about online behavioral advertising

Show how the data may be collected and how consumer choice and control may be exercised

SEVEN PRINCIPLES — EDUCATION

Privacy Matters Campaign

SEVEN PRINCIPLES — TRANSPARENCY

2. Transparency

Third parties and service providers should give clear, meaningful and prominent notice on their own websites that describes their online behavioral advertising data collection and use practices

SEVEN PRINCIPLES — TRANSPARENCY

Some companies/networks are explaining uses behind the ads

Linked icons within ad units are part of an industry-wide campaign

Multiple firms vying for endorsement to implement the icon

SEVEN PRINCIPLES — TRANSPARENCY

Examples

SEVEN PRINCIPLES — TRANSPARENCY

Examples

SEVEN PRINCIPLES — CONSUMER CONTROL

3. Consumer control

Advertisers should provide consumers with the ability to choose whether their data is collected, used and transferred for online behavioral advertising purposes

Ability should be given to users either at the website where the data is being collected or within the ad unit being displayed

SEVEN PRINCIPLES — CONSUMER CONTROL

Will giving consumers more control over how they are targeted help alleviate their fears?

Opt-in email vs. spam

Do consumers really see behavioral targeting as an invasion of privacy, or do they just want control over which marketers use their personal data?

SEVEN PRINCIPLES — CONSUMER CONTROL

SEVEN PRINCIPLES — CONSUMER CONTROL

National Advertising Initiative

Allows users to remove cookies by network

Browser-dependent

SEVEN PRINCIPLES — CONSUMER CONTROL

Internet Explorer 9

New privacy settings will allow users to create lists of sites with which they wish to share information, as well as sites with which they do not wish to share information

SEVEN PRINCIPLES — DATA SECURITY

4. Data security

Implement reasonable safeguards to protect data that is collected

Retain data only as long as necessary to fulfill a legitimate business need

Anonymize or randomize any personally identifiable information

SEVEN PRINCIPLES — MATERIAL CHANGES

5. Material changes

Requires consent before applying any change to online behavioral advertising data collection and use policy

SEVEN PRINCIPLES — SENSITIVE DATA

6. Sensitive data

Cannot collect personal information from children they have actual knowledge are under the age of 13

Requires consent for collection of financial account numbers, social security numbers, prescriptions or medical records

SEVEN PRINCIPLES — ACCOUNTABILITY

7. Accountability

Requires everyone in the online behavioral tracking space to develop and implement policies and programs to further adhere to these principles

Involves systematic or random monitoring of programs for compliance

SEVEN PRINCIPLES

Effectiveness of the principles is dependent upon self-regulation

Motivation for compliance is to avoid legislation

FTC REPORT OF 2010

―Industry efforts to address privacy through self-regulation have been too slow, and up to now have failed to provide adequate and meaningful protection‖

Recommends additional regulation to Congress

FTC REPORT OF 2010

Recommends the creation of a universal ―Do Not Track‖ feature

Modeled after the ―Do Not Call‖ registry

Simple, easy-to-use mechanism for consumers to opt out of the collection of information about their Internet behavior for targeted ads

Would most likely be built into a web browser or function as a plug-in

Released two weeks after the FTC report

Calls for the creation of a ―privacy bill of rights‖

Proposes set of ―fair information principles‖ that would become binding if industry agreed to them

COMMERCE REPORT OF 2010

Bill proposed in Congress in May 2010

Would have required companies that collect personal information from customers to disclose how they collect and share that information

Congressman Cliff Stearns, R-FL

Congressman Rick Boucher, D-VA

LEGISLATION

A WORLD WITHOUT BEHAVIORAL TRACKING?

―Any do-not-track mechanism would pretty much obliterate the way consumers use the Internet‖

– Debra Williamson, principal analyst, eMarketer

BEYOND ONLINE TRACKING

Many sites don’t rely on traditional tracking; they already have access to your information

As consumers continue to give away their information, advertisers will rely more on publishers that already have consumer data

BEYOND ONLINE TRACKING

Request for permission

BEYOND ONLINE TRACKING

The ever-expanding privacy policy

Source: The New York Times

Disconnect between outrage over anonymous online tracking and consumers voluntarily giving up their personal information on social networking sites

Only 24% of U.S. social media users are concerned about possible identity theft, compared to 42% making a purchase from an e-commerce site

BEYOND ONLINE TRACKING

Source: Ponemon Institute Survey sponsored by ProtectMyID.com

BEYOND ONLINE TRACKING

Advertising on social networks will increase rapidly over the next two years

Will move from $1.99 billion in 2010 to $3.08 billion in 2011

Source: eMarketer, January 2011

QUESTIONS?