Advertisers urge FTC to stick with self-regulatory model

Advertisers are urging the Federal Trade Commission to abandon a proposal included in the commission's staff privacy report calling for the creation of a "do-not-track" mechanism that would allow consumers to opt out of being tracked on the Web.

In comments filed with the FTC on its draft privacy report, groups representing advertisers and marketers argued that a self-regulatory approach allows for more flexibility to adapt to changing technologies while still enabling online advertising that helps pay for much of the free content on the Internet.

Friday was the deadline for filing comments on the FTC's draft privacy report, which was released December 1, and more than 400 groups provided their input.

In calling for the creation of a do-not-track mechanism, the FTC report said technology has bypassed current self-regulatory approaches. The report also called for companies to build privacy into their products and services, provide adequate security for consumer information, limit collection and retention of data, and provide reasonable procedures to promote data accuracy. The commission left open for further comment whether Congress should pass legislation providing baseline privacy protections.

Many firms now track consumers as they surf the web. The information is used to help target ads at consumers based on their preferences, a concept known as online behavioral advertising.

In its comments on the report, the Interactive Advertising Bureau said while it supports the FTC's "concept of a uniform choice" for online behavioral advertising, the group said a do-not-track mechanism mandated by the federal government is "unnecessary" given the steps online firms are taking on their own to provide consumers with more choices.

"Indeed, IAB is concerned that the 'Do Not Track' proposal unfairly sows consumer distrust of online advertising practices that are widespread and legitimate," the group said in its comments.

The Direct Marketing Association echoed such concerns, saying government intervention is unwarranted.

"There is no empirical evidence supporting'harm' to consumers resulting from online behavioral advertising and government intervention in this area runs the risk of effectively creating a harm where none exists, spreading consumer mistrust," the DMA said in its comments. "Industry self-regulation can achieve far more than regulation in this context, by being responsive to changes in technology and flexible enough to handle new challenges as they arise."

Several commenters noted that Microsoft, Mozilla and Google, which offer the most popular Internet browsers, have said the newest versions of their browsers would provide some sort of do-not-track option for consumers. "We believe that browser vendors are likely to integrate DNT tools into browsers, and that such a requirement will be unnecessary," the Electronic Frontier Foundation said in its comments of calls for legislation to require a do-not-track option.

In its comments, Google said any do-not-track proposal must still enable online advertising.

"While there are many options emerging for consumers to set a do not track preference, we applaud the commission for recognizing that any solution to this issue must recognize that advertising is the primary means of support for free content on the Internet," Google wrote. "All stakeholders should agree that do not track can be achieved without large-scale blocking of third-party content, including advertising. Blocking such content would have a significant, unintended economic cost -- particularly borne by small publishers."

Facebook also argued in favor of self regulation over calls for Congress to implement baseline privacy rules.

"Sector-specific codes, unlike slow-paced legislation or agency rules, can be updated quickly to accommodate rapidly developing technologies and user expectations of privacy," the social networking site wrote in its comments. "In the ever-evolving world of online services, specificity and adaptability are essential to preserving the kind of accountability that users demand."

But not all tech firms oppose privacy legislation. Microsoft has joined with Intel and eBay in calling on Congress to pass legislation setting base-line privacy standards. Last year, the three companies endorsed, for the most part, online privacy legislation offered by Rep. Bobby Rush, D-Ill., who re-introduced his bill earlier this month.

"Legislation must work in conjunction with industry self-regulation and best practices, technology solutions, and consumer education," Microsoft said in its comments. "While legislation is an appropriate vehicle for setting flexible, baseline standards, it is difficult for legislation to keep pace with evolving technologies and business models. Search and online advertising are examples of such rapidly evolving areas, and we commend the FTC for recognizing the important role that self-regulation plays in the context of online behavioral advertising."

Privacy advocates argued that self regulation has not worked, saying it puts too much of the burden on consumers.

"Self-regulation of online marketing to protect consumer privacy has been a failure from the start, as research makes clear," the Center for Digital Democracy and U.S. PIRG wrote in their comments to the FTC. "Until the FTC adopts its proposed framework, along with action by other regulators and Congress, the online consumer data targeting industry will continue to expand its capabilities without regard to privacy."