IAB Reviews Preliminary FTC Staff Report on Protecting Consumer Privacy

December 1, 2010

The Federal Trade Commission released A Preliminary FTC Staff Report on Protecting Consumer Privacy in an Era of Rapid Change: A Proposed Framework for Businesses and Policymakers. This much-anticipated document covers a myriad of issues, including the need for greater consumer education, industry efforts to incorporate “privacy by design” into online services and improving consumer notice and choice.  Many IAB members are leaders in the area of consumer privacy, and as an industry we remain committed to furthering consumer trust across the entire interactive advertising ecosystem. The FTC has asked for comments to this report, and the IAB will work with its members to engage productively with the Commission in this process.

However, there is one recommendation made by the FTC staff that you are sure to hear much more about—the creation of a federally run Do Not Track mechanism. The IAB believes there are significant problems inherent in creating such a new government program. Though a Do Not Track list might resonate with the public because of its apparent resemblance to the National Do Not Call Registry, the two are similar in name only. Any notion that an online Do Not Track list could operate like the Do Not Call Registry is fundamentally flawed. Phone calls consist of one-to-one connections and are easily managed because each phone is identified by a consistent phone number. In contrast, the Internet is comprised of millions of interconnected websites, networks and computers—a literal ecosystem, all built upon the flow of different types of data. To create a Do Not Track program would require reengineering the Internet’s architecture.

Perhaps most important, consumers depend upon sharing of data within this architecture to customize news sites, optimize web services such as social networks, receive relevant content and advertising across the web, and much more. “Do Not Track” is a misnomer because you cannot turn off data sharing online and, if you could, consumers would encounter a severely diminished experience since they would lose out on the remarkable benefits provided by data sharing. Policy makers should not promise a “consumer protection program” they cannot deliver without disenfranchising the American public.

We are encouraged by the FTC’s recognition of our self-regulatory efforts and its acknowledgment that self regulation may be a viable option for achieving its own goals of consumer transparency and choice. However, we see several distinct problems with the preliminary recommendation:

  1. Foremost, we believe the industry’s Self-Regulatory Program for Online Behavioral Advertising will provide the enhanced notice and simple, comprehensive opt-out mechanism the FTC has called for. The industry successfully developed this program without the need for government regulation.
  2. The FTC seems to place great emphasis on consumer click-through rates as a measure for whether self-regulation is working. We believe consumers are best served by a system that makes them aware of online behavioral advertising (OBA) practices, provides real-time enhanced notice and empowers them to exercise an opt-out mechanism that is easy to use. Opt-out rates are not an accurate indicator of self-regulatory success, and the government should not be in the business of pushing consumers to opt out of OBA.
  3. The FTC “seeks comment on whether a universal choice mechanism should include an option that enables consumers to control the types of advertising they want to receive and the types of data they are willing to have collected about them.” (page 68) If mandated by the government, this would be tantamount to a government-sponsored, and possibly managed, ad-blocking program—something inimical to the First Amendment.  Flexibility in this area best serves consumers and industry.