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Browsers Go After ‘Tracking’

by Jim Harper on December 19, 2010 · 4 comments

Advocates of regulation will credit regulators for the fact that major browser providers Microsoft and Mozilla are going after online “tracking.” In forthcoming versions of their browsers, they will provide controls that protect against unwanted monitoring even better than the controls that now exist.

When consumer advocates cluster in Washington, D.C., asking federal agencies to solve consumer issues, of course, any progress on the issues will be credited to the threat of coercion. But experiments like these have no controls.

Decisions about the qualities of goods and services are made out at the leading edge of consumer demand, where producers work to anticipate developing public interests. Meeting demand after it has been realized is a recipe for business failure because competitors getting there before the others win market share and profits. Laggards are losers.

You can tell when regulators push for something that does not match up with consumer demand as perceived in the business sector. The regulators get nowhere. That would be the FTC’s call a decade ago for a suite of regulations requiring “notice, choice, access, and security.” The current push for “tracking” controls does appear to meet up with consumer demand, and, again, the browser providers are working on it years ahead of what any regulation would have required.

I’ve put “tracking” in scare quotes because the open question is just what anyone means by the word. The report linked above notes a comment from Google, provider of the Chrome browser:

“The idea of ‘Do Not Track’ is interesting, but there doesn’t seem to be consensus on what ‘tracking’ really means, nor how new proposals could be implemented in a way that respects people’s current privacy controls,” said the company…

Maybe Google will be the laggard and loser for not moving on “tracking” as fast as its competitors. That’s one approach, while Microsoft and Mozilla will each take a different tack to the problem. The result will be an experiment that does have controls. The browser provider that meets up with consumer interests, in the consumer-friendliest way, wins. Such would not be the case if a federal regulation—yes, one-size-fits-all—determined what “tracking” was and how browsers or others would provide protection against it.

Marketplace competition will do better than any other known method for determining what “tracking” means to consumers and what to do about it. There is no privacy advocate, there is no technologist, no advocacy group, nor academic who knows what to do here.

The one thing I recommend is that do-not-track efforts should control the content of the header and the domains the browser communicates with. Simply putting a “do-not-track” signal in the header would punt the problem back to regulators and the cadre that surrounds them. This group would come up with something that satisfies itself, the regulatory community, but that does not digest and reconcile actual consumers’ competing interests in privacy, convenience, access to content, and so on.

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A Response to Nick Carr on Privacy & Trade-Offs

by Adam Thierer on December 7, 2010 · 1 comment

This is a response to Nick Carr’s recent piece, “The Attack on Do Not Track,” in which he goes after me for some comments I made in this essay about the trade-offs at work in the privacy and online advertising debates. In his critique of my essay, he argues:

What the FTC is suggesting is that the unwritten quid pro quo be written, and that the general agreement be made specific. Does Thierer really believe that invisible tradeoffs are somehow better than visible ones? Shouldn’t people know the cost of “free” services, and then be allowed to make decisions based on their own cost-benefit analysis? Isn’t that the essence of the free market that Thierer so eloquently celebrates?

My response to Nick follows. Continue reading →

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Thoughts on Wu’s Master Switch, Part 6 (His Audacious Information Industrial Policy)

by Adam Thierer on November 2, 2010 · 602 comments

I’m going to close out my series of essays about Tim Wu’s new book, The Master Switch: The Rise and Fall of Information Empires, by discussing his proposed solutions. In the first five essays in the series, [1, 2, 3, 4, 5] I’ve critiqued Wu’s look at information history as well as his use of terms like “market failure,” “laissez-faire” and “open” vs. “closed.” I argued there’s a great deal of over-simplification, even outright distortion, in his use of those terms throughout the book.

Anyway, let’s run through the basics of the book once more before getting to Wu’s proposed solutions. By my reading of The Master Switch, Wu’s argument essentially goes something like this:

Information industries go through cycles. After a period of “openness” and competition, they tend to drift toward “closed,” corporate-controlled, anti-consumer models and outcomes.
The resulting “monopolists” then block much innovation, competition, and free speech.
Consequently, “the purely economic laissez-faire approach… is no longer feasible.”
Moreover, information industries are more important than all others (“information industries… can never be properly understood as ‘normal’ industries”) and even traditional forms of regulation, including antitrust, “are clearly inadequate for the regulation of information industries.” (p. 303).
Thus, special rules should apply to information-related sectors of our economy.

Again, I’ve challenged some of these assertions in my previous essays, specifically, Wu’s incomplete history of cycles and the fact that he greatly underplays the role of governments in “locking-in” sub-optimal market structures or, worse yet, creating those structures through misguided public policies or regulatory capture. Wu discusses some of those factors in his book, but he tends to regard them as secondary to the inquiry, whereas I believe they are crucial to understanding how most “closed” or anti-competitive scenarios develop or endure. Instead, Wu simplistically suggests that “the purely economic laissez-faire approach… is no longer feasible,” even though no such state of affairs has ever existed within communications or media industries. They have been subjected to varying levels of indirect influence or direct control almost since their inception.

Regardless, what does Tim Wu want done about the problems he has (mis-)diagnosed? Continue reading →

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The FTC Wants You!

by Jim Harper on September 2, 2010 · 4 comments

The Federal Trade Commission is looking for a computer scientist.

Have you always aspired to work at a “duty location”?

Do you think of yourself as a GS-1550-13/14 kinda guy or gal?

Then this is the gig for YOU!

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Financial Services Regulation Attacks Privacy

by Jim Harper on April 30, 2010 · 1 comment

No, I’m not here to tell you more about the “supersized” FTC. Berin has done yeoman’s work to highlight that issue, among other things with the PFF event you can review here. On TechDirt, Mike Masnick wrote this morning about how the feds are itching to regulate the Internet.

This is about the direct government invasions of privacy likely to occur if S. 3217 passes. On the Cato@Liberty blog I write about the detailed financial market research that new regulatory agencies would do—research aimed at you.

Example:

Section 1071(b) requires any deposit-taking financial institution to geo-code customer addresses and maintain records of deposits for at least three years. Think of the government having its own Google map of where you and your neighbors do your banking. The Bureau [of Consumer Financial Protection] may “use the data for any other purpose as permitted by law,” such as handing it off to other bureaus, like the Federal Bureau of Investigation.

“Washington, D.C. has determined that Washington, D.C. should manage the financial services industry. Your personal and private financial affairs will be managed there too.”

What would I say about my own writing but read the whole thing?

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Shortcuts That Don't Save Time

by Jerry Ellig on April 29, 2010 · 0 comments

The Washington Post carried an article earlier this week by Cecilia Kang that noted the Federal Trade Commission could gain enforcement power over online businesses as a result of the financial services legislation under discussion in Congress. Ms. Kang contrasted the possibility of an empowered FTC issuing fast-track regulations against the recent experience of the Federal Communications Commission, which has become bogged down in its search for legal authority to issue net neutrality regulations.

The comparison is insightful, but not for the reasons you might expect. Part of the debate over the FTC revolves around language in the House financial services bill that would repeal the “Magnuson-Moss” provisions that govern FTC promulgation of consumer protection regulations. (The name comes from the fact that these restrictions on FTC rulemaking were included in the Magnuson-Moss Warranty Act, which got the FTC into the business of regulating car warranties.)

If the FTC wants to regulate some type of general business practice under the FTC Act, it has to establish a factual record substantiating that there is actually a systemic problem that regulation can solve, hold a public hearing, allow cross-examination on factual matters, and conduct an economic analysis of the regulation’s effects. In short, the commission has to do the homework necessary to demonstrate that its proposed regulation will actually solve a widespread problem that actually exists.

When Tim Muris directed the FTC’s Bureau of Consumer Protection in the early 1980s, he authored an article in Regulation magazine pointing out that when the FTC does careful analysis before issuing a rule, the rule is more likely to benefit consumers, more likely to be upheld in court, and more likely to be issued expeditiously. He contrasted the evidence-based eyeglass rule, which took three years to issue, with the anecdote-based funeral rule, which took ten. Muris noted wryly, “Some critics of my position charge that it is revolutionary to ask a body of lawyers and economists not to impose its own view of proper regulation on the world without first systematically evaluating the problem.” Muris went on to serve as chairman of the FTC between 2001-04, and last month he defended the Magnuson-Moss restrictions in testimony before Congress.

What does this have to do with the FCC? The FCC lost its case against Comcast on appeal, precisely because the FCC tried to take shortcuts. The FCC tried to promote net neutrality by enforcing a set of “principles” that originated in a former chairman’s speech and were never promulgated in a notice-and-comment rulemaking. The FCC commissioners endorsed these principles without investigating whether there was a systemic problem (ie, more than a few anecdotes of misbehavior). Indeed, Chairman Martin’s Notice of Inquiry on “Broadband Industry Practices” that was launched around the same time the FCC took its enforcement action against Comcast turned up no evidence of a systemic problem. If the FCC now tries to impose net neutrality by reclassifying broadband as a “Title II” common carrier, it will have to do the difficult but necessary work of demonstrating, with real factual evidence, that broadband is more like a common carrier than like the lightly-regulated “information service” the commission previously decided it was.

We don’t need Congress to free the FTC from Magnuson-Moss. Instead, Congress should impose the same requirements on the FCC. Sometimes, taking the time to do your homework leads to better decisions, sooner.

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FTC Chairman Leibowitz: Just Trust Us, We Won’t Abuse Vast New Powers!

by Berin Szoka on March 21, 2010 · 8 comments

That’s basically what FTC Chairman Jon Leibowitz told the Association of National Advertisers when he spoke to their “Advertising Law & Public Policy” conference last Thursday. As I noted last week, there’s intense pressure in Congress to pass a financial regulatory overhaul and, unfortunately, the version passed by the House in December—Rep. Barney Frank’s “Wall Street Reform and Consumer Protection Act of 2009” (H.R. 4173)—would also grant the Federal Trade Commission vast new powers for all its regulations, not just those relating to the non-bank financial institutions it currently regulates. In particular, HR 4173 would:

Make it far easier (and not just faster) for the FTC to issue all kinds of new regulations on its own, without a specific Congressional mandate to do so and instead of relying on case-by-case enforcement to punish “unfair” or “deceptive” acts and practices;
Reduce public input into those regulations;
Impose heavy civil penalties on companies before notifying them that a practice might be “unfair” or “deceptive”;
Prosecute those who merely provided “substantial assistance” to someone engaged in “unfair” or “deceptive” acts or practices; and
Sue on its own authority, instead of through DOJ (as now).

I summarized my concerns about this bill in this short interview with PFF’s new communications director, Mike Wendy, last week: [display_podcast]

Leibowitz has lobbied hard to have his agency put on steroids (as former FTC Chairman Jim Miller put it), asking for all these things, as well as more funding, at the first Senate hearing on Hr 4173 back in February. (Conveniently, he was the only witness!) He repeated his calls for these powers on Thursday but tried to allay fears about how they’d be used. Continue reading →

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From Pac-Man to Realistic Men: New ACT Paper on Software Creation Through Processor Innovation

by Braden Cox on December 15, 2009 · 7 comments

Pacman ACT represents the interests of software companies, but today we’ve released a new paper trumpeting the virtues of hardware.

We highlight how software developers and computer chip makers increasingly depend on one another for better products. This symbiotic hardware/software relationship is crucial for the sort of exponential innovation we’ve grown accustomed to in the IT industry. And it is something ACT recently highlighted in a letter to the FTC signed by 37 software developers.

The old days of understanding computer processors and its effect on software was easy. Chips increased in clock speed (first in MHz, then in GHz) and this made software run faster. This worked well for years, but then it became apparent that high clock speed processors often ran idle because other system components couldn’t keep up. These processors also ran very hot, consuming lots of power and creating heat problems.

Today’s chips take a different approach. Chips now have processors with multiple cores (or CPUs) to separately but simultaneously handle independent tasks. In a survey of ACT members that we conducted for the paper, 58% of the respondents identified multicore technology as the processor advancement that has most improved their software products. One member said “multicore makes programming harder, but when my apps leverage it, they can do more.”

But how do programmers know what to do so they can better leverage processor designs such as multicore? Every major chip manufacturer worth a grain of sand has established support programs and created tools for the developer community. Sun has its Sun Developer Network, Intel has a Software Partner Program (and just announced a new software development kit (SDK) for its mobile Atom processor), and AMD has the CodeAnalyst Performance Analyzer to analyze software performance and help developers optimize applications.

In some ways it seems like chip manufacturers are sucking up to software developers. Continue reading →

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Comments at FTC Workshop Panel on Privacy Polls & Surveys

by Adam Thierer on December 7, 2009

Today, Berin Szoka and I both testified at the first of three Federal Trade Commission workshops on “Exploring Privacy.” Today’s all-day event featured five panel discussions, and remarks by FTC Chairman Jon Leibowitz, Commissioner Pamela Jones Harbour, and David C. Vladeck, Director of the FTC’s Bureau of Consumer Protection. Our TLF co-blogging colleague Jim Harper also testified on the first panel of the day on “Benefits and Risks of Collecting, Using, and Retaining Consumer Data.” I was on the second panel of the day on “Consumer Expectations and Disclosures.” And Berin was on the third panel on “Online Behavioral Advertising.” The fourth panel was on “Information Brokers” and the fifth panel was on “Exploring Existing Regulatory Frameworks.” On my panel, we discussed the usefulness of privacy polls and surveys. I attempted to make a few simple points when asked for my opinions:

While privacy polls and surveys may offer us some interesting insights into how some in the public think about advertising and privacy in the abstract, ultimately, they are no substitute for real-world experiments in which people make real choices, in real time, often with real money, and face many real trade-offs. [See this paper.]
Moreover, such polls and surveys fail to account for the fact that consumers are empowered with real privacy controls so they can make the privacy choices that are right for them, rather than a one-size-fits-all choice imposed by someone else. [See this ongoing series and this paper.]
(1) & (2) are especially the case since privacy is a highly subjective condition. [See this paper by Jim Harper.]
It remains unclear what the harms are that we are trying to protect consumers against. [See this paper and this blog post.]
Because of (1), (2), (3), and (4) we need to understand that rational ignorance may often be at work here. Many consumers likely won’t feel the need to read privacy policies or take steps to “protect their privacy” online.

Continue reading →

A “Public Option” for Media? The Free Press Plan to Put Journalists on the Public Dole

by Adam Thierer on November 24, 2009 · 25 comments

Free Press, the radical pro-regulatory media activist group, recently filed comments with the Federal Trade Commission (FTC) for the agency’s upcoming workshop on “How Will Journalism Survive the Internet Age?” The Free Press comments provide an enlightening glimpse into the mind of how many on the Left now think about media policy in America. Their approach can be summarized as follows:

Nothing the private sector can do will save journalism (unless it is entirely non-profit / non-commercial in nature);
Even if there was something that private players could do to save journalism, Free Press would likely have federal authorities forbid it anyway (especially if it involved new business ownership patterns or combinations); and,
The only thing that can really save journalism is a “public option” for the press in the form of massive state subsidization of media in this country.

To elaborate on the last point, here’s how Free Press summarizes what they are looking for:

For U.S. public media to become a truly world-class system will require a substantial increase in funding. This could be accomplished by an increase in direct congressional appropriations to the Corporation for Public Broadcasting. With increased funding — to as little as $5 per person, increasing annual appropriations to some $1.5 billion — the American public media system could dramatically increase its capacity, reach, diversity and relevance.

But they stress that a simple expansion of the PBS/NPR/CPB non-commercial model will not be enough since that system is “vulnerable to repeated threats of funding cuts” and too “reliant on corporate backing, via the underwriting process.” They want to go well beyond non-commercial media, therefore, and have the state start building a massive public media infrastructure. Here’s where their pitch for a public option for the press comes in: Continue reading →

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