Progress & Freedom Foundation Comes to Aid of its Data-Collecting Backers (Using a `save the newspapers’ as a ploy to permit violations of consumer privacy protection!)

This report from on the Progress and Freedom Foundation’s “Congressional” briefing illustrates how desperate some online marketers are that a growing number of bi-partisan congressional leaders want to protect consumer privacy.  So it’s not surprising that some groups that are actually financially supported by the biggest online marketing data collectors in the world would hold a Hill event to help out the friends who pay their bills.

It should have been noted in Ken Corbin’s that Google, Microsoft, Time Warner (AOL), News Corp. (MySpace) financially back the Progress and Freedom Foundation (PFF).  Other behavioral data targeting `want to be’s’ who monopolize U.S. online and other platforms are also backers:  AT&T, Comcast, NBC, Disney/ABC, Viacom/MTV/Nick, etc. For a list, see here.

PFF and some of its allies deliberately distort the critique of consumer and privacy groups.  We are not opposed to online marketing and also understand and support its revenue role for online publishing.  But many of us do oppose as unfair to consumers a stealth-like data collection, profiling and ubiquitous tracking system that targets people online.  One would suppose that as a sort of quasi-libertarian organization, PFF would support individual rights.  But given all the financial support PFF gets from the major online data collectors, how the group addresses the consumer privacy issue must be viewed under the `special interests pays the bills’ lens.

PFF and its allies are playing the ‘save the newspaper’ card in their desperate attempt to undermine the call for lawmakers to protect consumer privacy.  Newspapers and online publishers should be in the forefront of supporting reader/user privacy; it enhances, not conflicts, with the First Amendment in the digital era.  Finally, PFF’s positions on media issues over the years has actually contributed to the present crisis where journalism is on the endangered species list.  This is a group that has worked to dismantle the FCC, eliminate rules designed to foster diverse media ownership, and undermine network neutrality.

PS:  The article quotes from Prof. Howard Beales of George Washington University (and a fCV,ormer Bush FTC official with oversight on privacy).  Prof. Beales was on the PFF panel.  Prof. Beales, according to his CV has served as a consultant to AOL and others (including  Primerica and the Mortgage Insurance Companies of America).  Time Warner, which owns AOL, is a PFF financial backer.  All this should have been noted in the press coverage.

The IAB’s new lobbying “study”–this term paper gets a failing grade [plus, amazingly, it was co-authored by an ad giant board member]

The Interactive Ad Bureau, a trade association that lobbies for the online ad industry, wants to help derail legislation that would protect consumer privacy.  On Wednesday, it released a report designed to sway Congress; it claimed that the “Ad-Supported Internet Contributes $300 Billion to U.S. Economy, Has Created 3.1 Million U.S. Jobs.”  Incredibly–and so revealing–was the failure of the report to discuss the privacy issue at all.  In fact, the term privacy is only mentioned once (and doesn’t refer to the civil liberties issues at the core of the debate).

In fact, this report appears more like some sort of term paper where various facts and figures were piled on in an attempt to make an argument.  The report conflates the Internet with the online ad market (and misses the larger critical issues).

But what’s astounding is that it was co-authored by a board member of WPP, the world’s largest ad agency.  Harvard Professor John Quelch has been on the WPP board since 1988, earning some 60,000 pounds a year for his service. WPP has a huge financial stake, needless to say, in the digital ad business.  Professor Quelch is also on the Pepsi Bottling Group board.  The report was developed by Hamilton Consultants, which has represented online giants such as AT&T, Time Warner, Verizon, along with other major online marketers Coca Cola, GE and–of course–WPP.

The IAB’s stance appears to be that if Congress protects our privacy, it will somehow undermine the Internet’s role in economic growth.  The opposite, I believe, is true.  An Internet that reflects the values of democracy will do a better job for us all—including the lobbyists and academic consultants working on behalf of the IAB.

Time Warner’s AOL Spin-off: How the Failure to Require Network Neutrality (Open Access) Led to a Failed Mega-Media Merger

News that Time Warner will spin-off AOL should also be analyzed in the context of the network neutrality debate.   AOL would never have had to pursue merging with Time Warner if the Clinton FCC had supported its call–backed by many consumer groups–for “open access” to broadband.  Denied the ability to migrate its successful telephone/common carrier-based business model to cable broadband by the FCC, AOL had no choice but to buy its way into the cozy cable industry club.  Here’s what Steve Case, then president of AOL, said at the National Press Club in 1998, as covered by my CDD:

“Government,” as he told the National Press Club in October 1998, “has a responsibility to preserve an open playing field—to preserve the openness, innovation and competition that are at the heart of the Internet….” Nor did Case shrink from suggesting that regulation was the key to untangling the broadband puzzle. “Significant challenges currently face regulators in the communications realm,” he conceded. “There is currently one set of policies that governs telecommunications, and another governing cable. These legal, policy and regulatory frameworks have little to do with each other….” Thus it was the government’s responsibility, Case concluded, to see that the cable broadband environment conformed to the “openness, competition and rapid innovation” that is the very “DNA” of the Internet. “The bottom line,” Case insisted, “is that competition in all ‘last mile facilities’ should remain open so that consumers have the same kind of choices in broadband that they do in narrowband.”

If the Clinton FCC, then under Chairman William Kennard, had supported open access, we (including the many Time Warner and AOL investors who lost considerable sums) may have avoided further media consolidation and the wreck which became AOL Time Warner.  It’s a history lesson the in-coming FCC chair and others should review.

Google Does Behavioral Targeting. Why Is It Trying to Fool Users & PolicyMakers By Claiming it’s “Interest-Based” Advertising? [Annals of Commercial Surveillance]

Google has finally fully entered the behavioral targeting business, although they are trying to disguise it through an Orwellian change of language by calling it “interest-based” advertising. The world’s largest and most dominant online ad system is expanding its data collection and targeting activities whenever we search, view videos or read blogs.  This isn’t really about, as Google’s blog suggests, “more interesting” ads for consumers. It’s about a further expansion of Google’s already considerable data-mining and interactive marketing and data-tracking/targeting arsenal, which now also includes using neuroscience for its YouTube ads.  Google is further endorsing a global culture with data collection, profiling and targeting at its core.  No matter how Google attempts to frame it as “better for you ads,” digital advertising is designed to influence our behaviors in non-transparent ways.

This announcement, which was done so Google can better incorporate all the behavioral targeting technologies it acquired when it bought online ad targeting giant DoubleClick, is also designed to help head-off the enactment of privacy laws in the US and EU (Google isn’t alone here.  Microsoft, Yahoo and others are in a global race in attempt to preserve the data collection status quo under the cover of industry self-regulation).  Giving consumers access to their (incomplete and likely to constantly be revised with even more targeting categories) profile has to be viewed with such a perspective–it serves as a smokescreen so Google can broaden its data collection and targeting (and become even more dominant in the global online ad business).  Instead of having the default be no data collection without prior expressed informed consent, Google has created the system as an flawed opt-out.  Missing from what users should know and control in their profile are the applications online marketers use to develop the ad so it can more effectively target (and collect data), including: neuromarketing, viral videos, rich immersive media, social networks, online product placement, etc.

Yesterday, Google should have called on Congress, the EU and other governments to enact meaningful consumer privacy safeguards.  While it is entirely to be expected that as the world’s largest online ad company Google would fully embrace behavioral targeting,  it’s also unfortunate.  Eventually–and we hope soon–responsible shareholders, such as socially conscious investment funds, and global regulators will hold Google–and other online marketers–more accountable to the public.

But stay tuned for the next entry, on what Google, Microsoft and Yahoo have done to evade privacy safeguards for behavioural targeting in the UK!

Baby Steps for Online Privacy: Why the FTC Self-Regulatory Principles For Online Behavioral Advertising Fails to Protect the Public

Statement of Jeff Chester, Exec. Director, Center for Digital Democracy:

The Federal Trade Commission is supposed to serve as the nation’s leading consumer protection agency.  But for too long it has buried its mandate in the `digital’ sand, as far as ensuring U.S. consumer privacy is protected online.    The commission embraced a narrow intellectual framework as it examined online marketing and data collection for this proceeding.  Since 2001, the Bush FTC has made industry self-regulation for privacy and online marketing the only acceptable approach when considering any policy safeguards (although the Clinton FTC was also inadequate in this regard as well).  Consequently, FTC staff—placed in a sort of intellectual straitjacket—was hampered in their efforts to propose meaningful safeguards.

Advertisers and marketers have developed an array of sophisticated and ever-evolving data collection and profiling applications, honed from the latest developments in such fields as semantics, artificial intelligence, auction theory, social network analysis, data-mining, and statistical modeling.  Unknown to many members of the public, a vast commercial surveillance system is at the core of most search engines, online video channels, videogames, mobile services and social networks.  We are being digitally shadowed across the online medium, our actions monitored and analyzed.

Behavioral targeting (BT), the online marketing technique that analyzes how an individual user acts online so they can be sent more precise marketing messages, is just one tool in the interactive advertisers’ arsenal.  Today, we are witnessing a dramatic growth in the capabilities of marketers to track and assess our activities and communication habits on the Internet.  Social media monitoring, so-called “rich-media” immersive marketing, new forms of viral and virtual advertising and product placement, and a renewed interest (and growing investment in) neuromarketing, all contribute to the panoply of approaches that also includes BT.  Behavioral targeting itself has also grown more complex.  That modest little “cookie” data file on our browsers, which created the potential for behavioral ads, now permits a more diverse set of approaches for delivering targeted advertising.

We don’t believe that the FTC has sufficiently analyzed the current state of interactive marketing and data collection.  Otherwise, it would have been able to articulate a better definition of behavioral targeting that would illustrate why legislative safeguards are now required.  It should have not exempted “First Party” sites from the Principles; users need to know and approve what kinds of data collection for targeting are being done at that specific online location.

The commission should have created specific policies for so-called sensitive data, especially in the financial, health, and children/adolescent area.  By urging a conversation between industry and consumer groups to “develop more specific standards,” the commission has effectively and needlessly delayed the enactment of meaningful safeguards.

On the positive side, the FTC has finally recognized that given today’s contemporary marketing practices, the distinction between so-called personally identifiable information (PII) and non-PII is no longer relevant.  The commission is finally catching up with the work of the Article 29 Working Party in the EU (the organization of privacy commissioners from member states), which has made significant advances in this area.

We acknowledge that many on the FTC staff worked diligently to develop these principles.  We personally thank them for their commitment to the public interest.  Both Commissioners Leibowitz and Harbour played especially critical roles by supporting a serious examination of these issues.  We urge everyone to review their separate statements issued today.  Today’s release of the privacy principles continues the conversation.  But meaningful action is required.  We cannot leave the American public—now pressed by all manner of financial and other pressures—to remain vulnerable to the data collection and targeting lures of interactive marketing.

FTC’s Behavioral Ad Principles–the last act of the Bush Administration? Why is the Obama White House Allowing the FTC To Remain Under the Leadership Appointed by Pres. Bush?

In a few hours, approximately between 10-11 am eastern, the FTC is expected to release its final “Online Behavioral Advertising Principles.” Originally released for comment in December 2007, the principles are a sort of Valentine’s Day present to the online ad industry from the (supposedly departed) Bush Administration.  From what we know, the FTC principles support self-regulation.  Online marketers will be told they should behave better–and here are suggestions.  It’s like a teacher telling a misbehaving student–‘behave better, dear,’ or else we will have to tell your parent (in this case, the guardian being potential congressional action).

My CDD urged Commissioners Harbour and Leibowitz to issue separate statements on the principles, and call for tougher requirements—especially in the area of so-called sensitive information.  This would include data connected to our financial and health related online activities (think mortgage and loan applications or queries for prescription drugs).  CDD and a coalition of groups also formally asked the commission to impose serious privacy safeguards for both children and adolescents.

But these principles were crafted within the narrow confines of the Bush Administration philosophy prevailing at the FTC.  Only self-regulation is permitted.  Consequently, such an approach likely means these rules leave the online data collection, profiling and targeted marketing system which comprise behavioral marketing off the privacy protection hook.

But one question looms at the moment.  Why has the new Obama administration allowed the FTC to remain under the leadership of Bush-appointee William E. Kovacic? The principles being issued today, in fact, reflect the “old” FTC, not one run under the philosophy of President Obama.  Why is the Obama White House failing to ensure a change of leadership at the FTC?  The agency is responsible for overseeing a huge portion of the economy, including critical financial issues.  It’s also supposed to be the leading agency on consumer protection issues.   The Obama White House should have–by now-found someone who would led the FTC, so it can better protect the public.

The principles being released today were only made possible because of the Bush FTC give-away to Google, when it approved its takeover of online ad giant DoubleClick.  CDD, the Electronic Privacy Information Center (EPIC), and USPIRG fought the merger, including on privacy grounds.  FTC Commissioner Pamela Harbour played a key role forcing the agency (then run by Chairwoman Majoris, whose husband’s law firm represented DoubleClick) to address the privacy concerns. As a consequence of the political pressure from its failure to seriously examine the consumer privacy issues of the Google deal, the FTC staff were told to develop these principles.

The next chair of the FTC needs to take privacy and online consumer protection issues seriously.  The agency does need more resources, but also a new spirit.  If the FTC had been on the job, and was examining how lending institutions were recklessly promoting loans and mortgages, maybe today’s mess wouldn’t be as tragic as it is.  More to come after the commission releases the principles.

30,000 media jobs lost in ’08–Congress should hold hearings and pass new laws to address the Journalism crisis

Ad Age reports that “the media industries have shed more than 30,000 jobs in 2008, according to an Ad Age analysis of Department of Labor employment statistics and news reports.” More than 200,000 media jobs have been lost since 2000, the story notes.

But we all know that the mainstream news industry has been in trouble for decades, with mega mergers and various financial schemes saddling them with debt. Now the downturn in the economy, with ads on the decline, as well as the fundamental shift to digital news sources, is helping further erode the support system for serious journalism. Congress should hold hearings on why journalism is in crisis, investigating who is responsible, and what can be done about it. Among the possibilities: New laws permitting employee buy-outs of newspapers (real ones, not the phony kind engineered by Trib’s Sam Zell); changes in the tax and corporate governance rules so public service comes before shareholder profits; and regulations that reward non-profit and philanthropic news media ownership. There should also be funds from the economic stimulus designed to foster diverse ownership of news outlets. If we can bail-out Wall Street and automakers, we should certainly do something for a profession essential to our democracy.

source: “Media Companies Cull 30,000 in Fight for Their Future.” Michael Learmouth. Ad Age. December 8, 2008

Google’s “Policy Fellowships”–Self-Serving Efforts to Help Ward Off Privacy and Online Marketing Protections?

Google has selected 15 organizations for its 2009 “Google Policy Fellowship.” Fellows are funded by Google and will work on “Internet and technology policy” issues over the summer. Take a look at some of the groups it selected and what they say the projects will be (and their positions on Internet issues). And then ask–is Google working to help undermine the public interest in communications policy? Think online privacy and interactive marketing as you read these following excerpts from a number of these groups:

“The Competitive Enterprise Institute is a 501(c)(3) non-profit public interest organization dedicated to advancing the principles of free enterprise and limited government. We believe that individuals are best helped not by government intervention, but by making their own choices in a free marketplace…Electronic privacy: CEI seeks to reframe the online privacy debate in terms of the potential benefits to consumers of greater information sharing, transparency, and marketing. Fellows will explore competing privacy policies and how they are evolving as the public grows more aware of privacy risks. This research will also encompass privacy-enhancing technologies that empower consumers to safeguard personal data on an individualized basis.”

“The Progress & Freedom Foundation (PFF) is a market-oriented think tank that studies the digital revolution and its implications for public policy… Online Advertising & Privacy Policy Issues: PFF defends online advertising as the lifeblood of online content and services, particularly for the “long tail,” and emphasizes a layered approach to privacy protection, including technological self-help, user education, industry self-regulation, and enforcement of existing laws, as a less restrictive—and generally more effective—alternative to increased regulation.”

“The Technology Policy Institute is a think tank that focuses on the economics of innovation, technological change, and related regulation in the United States and around the world… Privacy and data security: benefits and costs to consumers of online information flows, and the effects of alternative privacy policies on consumers and the development of the Internet.”

“The Cato Institute’s research on telecommunications and information policy advances the Institute’s vision of free minds and free markets within the information policy, information technology, and telecommunications sectors of the American economy…Information Policy: Examining how increased data sensing, storage, transfer, processing, and use affect human values like privacy, fairness and Due Process, personal security, and seclusion. Articulating complex technological, social, and legal issues in ordinary language. Promoting the policies that protect these human values consistent with a free society and maximal human liberty.”

Google is also funding fellowships at other groups, including the partially Google funded Center for Democracy and Technology. The CDT connected Internet Education Foundation (which helps run the Congressional Internet Caucus, where Google is a corporate Advisory member) also will house a Google Fellow. There are a few public interest groups hosting Fellows that have an independent track record, including Media Access Project, EFF, and Public Knowledge. But awarding Fellowships to groups which will help it fight off responsible privacy and online marketing safeguards provides another insight into Google’s own political agenda.

Two years after CDD & USPIRG warn about online advertising & media consolidation, a call to “monitor the state of competition”

Yesterday, Sen. Herb Kohl, the chair of the Senate Antitrust Committee, sent a letter to the Department of Justice about the proposed Google/Yahoo alliance. Two years ago next month, in its initial complaint filed at the Federal Trade Commission calling for an investigation into behavioral online ad targeting, CDD and USPIRG also petitioned the agency to open up an antitrust investigation. It was clear two years ago–as one surveyed the dizzying global shopping spree by Google, Yahoo, Microsoft, Time Warner/AOL–that a tiny handful would soon dominate the online ad market. Given that online ad revenues are the key to the funding of almost all interactive and online content, we were disturbed by the trend then towards consolidation. Of course, fewer companies controlling all that consumer data also raised fundamental privacy concerns.

Two years later, of course, we have even fewer independent companies left standing. Google swallowed DoubleClick (and is poised to partially operate Yahoo); Yahoo acquired Blue Lithium and Right Media; Microsoft acquired giant aQuantive; Time Warner bought Tacoda and Third Screen Media. Etc.

Regulators on both sides of the Atlantic have been asleep at the digital switch. They have failed to both protect competition and privacy. However, there is a growing awareness that there are serious problems looming. As we know, the same deregulatory philosophy which helped wreck our economy is also the foundation for communications and media policy. It is accompanied, of course, by a `golden’ revolving door between government and private industry that has left consumers and citizens vulnerable to a wholesale set of unfair practices. Addressing these issues will be the focus of much work over the next several years.

The Financial Meltdown & Media Deregulation Connection

Much of journalism has a `deer-caught-in-the-headlights’ quality as it reports on the current fiscal crisis. Why was this issue off the radar screen for so many reporters and producers? Part of it is that the very system that underlies professional reporting is connected (and funded) by the very forces that have helped wreck the economy. But over the last ten years, journalism in the U.S. has undergone a further serious deterioration, with its ranks thinned. Investigative reporting is on the endangered professions list (with investment bankers perhaps now joining that list as well).

Media consolidation has helped play a role here, further contributing to a news culture where reporters and their parent news organizations really don’t spend time examining beneath the surface of events. All the media mergers we have witnessed since the 1996 Telecom Act has decimated newsrooms, slashed news budgets, and has left journalism on life support (at best).

Just as the Congress failed to engage in meaningful oversight of the financial markets–and spurred the crisis along through deregulation– so too have they largely failed to address the impact of what’s called media deregulation (which meant eliminating rules designed to benefit both the public and press with policies that favored their largely giant corporate owners). As we write in Digital Destiny, Republican and Democrats have long been captured by the influence-wielding (and job promising and donation giving) Big Media “well-connected.” We blame the current deep crisis that has undermined the country’s system of reporting and journalism on the failure of policymakers to ensure meaningful diversity of ownership, public service rules, and new proactive policies which would have addressed this critical problem.

Former FCC Chairman Michael Powell’s key congressional patron was Sen. John McCain. Powell’s enthusiastic and uncritical embrace of a deregulatory philosophy during his recent tenure at the helm of that oversight agency helped spur media mergers, journalism lay-offs and other editorial cutbacks. Powell is currently a “technology adviser” for the McCain campaign.  For those of you who are interested in learning more about Mr. Powell and Senator McCain, it’s covered in Digital Destiny (New Press, 2007).

We don’t want to suggest our column is intended to be partisan. Many people know we have been equally critical for the failure of William Kennard, Mr. Powell’s predecessor during the Clinton era, to respond to the call by consumer groups to implement open access for broadband (now known as network neutrality). Mr. Kennard is one of Senator Obama’s major donors. We were also critical of Reed Hundt, Mr. Kennard’s predecessor. Both Pres. Clinton and Al Gore hailed the passage of the 1996 Telecom Act. Frankly, we have concerns about the fate of public interest media and telecommunications policies regardless of who wins the election. But it’s important, in our view, to recall history–including the recent events involving former FCC chairman Michael Powell. How both candidates would fix the mess with our communications system–including ensuring meaningful content and ownership diversity for digital media–should be part of the national debate.

We should realize by now that deregulation of the financial markets contributed to a culture of greed that bought down—at taxpayers expense–an economic house of cards. Fixing our system of journalism for the digital era must be on the policy agenda [we need legions of investigative reporters asap].