Privacy laws threaten e-commerce innovation, as Wayne Crews and I argue in an op-ed in yesterday’s San Jose Mercury News:
Politicians have long used corporations as convenient whipping boys, and the technology industry is no exception. Today, tech companies face political attacks over their online privacy policies. Rep. Joe Barton, R-Texas, for instance, recently demanded that Google provide a detailed explanation of how it stores user search queries.
The federal government, so eager to safeguard privacy, is itself the worst offender, unwilling to abide by the same stringent opt-in standards that regulations would impose on private firms. The post-Sept. 11 push for compulsory national ID cards, warrantless wiretapping and escalating data retention mandates reveal a government inclined toward violating privacy, not protecting it.
Washington’s drive to regulate online business and consumer relationships threatens to undermine diverse individual privacy preferences and hinder the evolution of better standards.
Government should get out of the way of e-commerce innovation. Web sites often collect and sell information about their visitors. The latest twist is that behavioral marketing firms “watch” our clicks to better target their ads. This has stoked privacy concerns that are overblown; a seller does not need to know who you are, but simply what someone like you tends to buy.
Now there are calls for the Federal Trade Commission to regulate what information marketing firms may collect and share. A bill pending in the New York state Legislature would impose drastic opt-in standards, preventing companies from gathering personalized information without explicit user permission.
When Microsoft bid for Yahoo, the Justice Department faced immediate pressure to scrutinize whether the combined firm would possess “too much” consumer data. And a few weeks ago, Canada announced an investigation into Facebook’s privacy protections in response to customer complaints about potential vulnerabilities.
Is all this justified? Sure, some people are bothered. Yet most people can live with the fact that advertisers traffic in personal information. Business use of personal information can be irritating, but one-size-fits-all privacy mandates will impair e-commerce – and consumers. Sweeping regulations are especially harmful to start-ups that lack the vast data repositories already amassed by their larger competitors.
There simply is no single set of privacy safeguards appropriate for everyone that can be codified in federal legislation. Privacy encompasses innumerable relationships between consumers and businesses. Some people are secretive, while others air their dirty laundry online on video blogs.
While government demands information disclosure, profit-driven firms compete to offer robust privacy assurances. As businesses respond to evolving consumer preferences, stronger privacy policies will emerge as needed.
Users already exercise the choice allegedly sought in privacy legislation; they can simply choose not to disclose sensitive information on certain sites. Consumers are further empowered by privacy software that can thwart unwanted data collection and allow anonymous Web browsing.
Rigid government mandates can hinder evolving privacy technologies before they mature and even put consumers at risk by fostering a false sense of security.
In the fast-moving world of e-commerce, the proper role of government is not to predetermine privacy arrangements, but to enforce contracts between participating private parties. Our greatest privacy concern should be government collection of our information, not the emergence of targeted marketing.
The Technology Liberation Front is the tech policy blog dedicated to keeping politicians' hands off the 'net and everything else related to technology.