Groups Spar Over Behavioral Web Ads - Page 2

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Industry responds

In its comments to the FTC, Google said it favored some kind of federal baseline privacy legislation that would punish "bad actors" who violate consumer privacy, but for the general practices of Internet advertisers, it favored the FTC's self-regulatory approach.

Echoing the sentiments of many in the Internet industry, Google argued that technology and business models are developing so rapidly that the rush to regulation would stifle innovation.

For its part, Microsoft (NASDAQ: MSFT) applauded the FTC's work on the issue, but suggested it go a little further. The company pitched a five-tiered plan that would impose more rigid safeguards on companies collecting sensitive information, and apply distinct requirements for sites engaging different ad-targeting practices.

Google qualified its support for the FTC behavioral targeting principles with the recommendation that their scope be refined to distinguish between what constitutes personally identifiable information (PII) and what does not. IP addresses, for instance, would only be considered PII when tagged to other information, such as an account number.

Google also urged the agency to scale back the activities it considered behavioral targeting, a definition Microsoft said should be expanded. The company claimed that its contextual advertising, where it serves search and display ads based on a user's search queries or browsing history, should not be considered behavioral targeting because it is not based on PII.

"The staff should be aware, moreover, that failing to define behavioral advertising precisely, or an attempt to categorize specific activities as elements of behavioral advertising (e.g., search queries, clicks and other similar online activities) could have unintended and very negative consequences," Google said.

Like all advocates of a scaled-down, self-regulatory policy for online advertisers, Google argues that targeted advertising has a positive effect for consumers. It makes Web content free, drives innovation and has been the engine of tremendous economic growth. Further, Google points out that consumers prefer to see relevant ads.

"Our hope is that the privacy principles … will be adopted widely by the online advertising industry and will serve as a model for industry self-regulation in jurisdictions beyond the United States," Google wrote in its comments.

In Europe, where regulators are typically more active about enacting privacy requirements, an advisory body to the European Commission recommended last week that IP addresses be defined as personal information. It also suggested that search engines be required to irreversibly anonymize their server logs after six months. Last June Google announced that it would reduce the maximum data-retention period from 24 months to 18 months.

Responding to the latest recommendations from the European group, Peter Fleischer, Google's global privacy counsel, wrote in a company blog post acknowledging that privacy concerns are important.

He also argued for consideration of how data helps companies create better products, such as more accurate search results. Fleischer called attention to some of Google's online safety and privacy initiatives, such as the use of data from its server logs to scout for malware and phishing attacks.

In the broadest sense, the debate fissures over the role that regulatory authorities should play in a rapidly changing industry that is a powerful engine of the Internet economy. As the FTC moves closer to codifying its self-regulatory approach, privacy groups will continue to press for legislation on the state and national level to limit how much and what types of information companies can collect about people's Web habits.