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
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?