Category: Congress

EU Sets the Bar for Privacy–Will U.S. and online marketers work to undermine the rights of citizens and consumers?

The Obama Administration and several leading online companies are fearful that the EU’s interest in strengthening privacy safeguards will undercut the data collection, profiling, and interactive ad targeting of U.S. digital marketers.  The U.S. wants to seek a “separate, but equal” privacy and consumer protection regime–claiming that whatever we do in the U.S. on privacy should be treated as the equivalent by the EU.  Self-regulation and those silly icons won’t work, as we know.  This week, EU Justice Commissioner Viviane Reding laid out a vision to better protect EU citizen privacy.  Here’s an excerpt from it that should help guide the debate here–and with the negotiation between the US and EU on a new “safe harbor” treaty on data privacy:

EU Commissioner Reding’s speech this week reveals the battlelines bet. co’s, US, EU

excerpt:

Peoples’ rights need to be built on four pillars:

The first is the “right to be forgotten”: a comprehensive set of existing and new rules to better cope with privacy risks online. When modernising the legislation, I want to explicitly clarify that people shall have the right – and not only the “possibility” – to withdraw their consent to data processing. The burden of proof should be on data controllers – those who process your personal data. They must prove that they need to keep the data rather than individuals having to prove that collecting their data is not necessary.

The second pillar is “transparency”. It is a fundamental condition for exercising control over personal data and for building trust in the Internet.

Individuals must be informed about which data is collected and for what purposes. They need to know how it might be used by third parties. They must know their rights and which authority to address if those rights are violated. They must be told about the risks related to the processing of their personal data so that they don’t loose control over their data or that their data is not misused. This is particularly important for young people in the online world.

I want to make sure that greater clarity is required when signing up to social networking. Unfavourable conditions – restricting control of users over their private data or making data irretrievably public – are often not clearly mentioned. In particular, children should be fully aware of the possible consequences when they first sign up to social networks. All information on the protection of personal data must be given in a clear and intelligible way – easy to understand and easy to find.

The third pillar is “privacy by default”. Privacy settings often require considerable operational effort in order to be put in place. Such settings are not a reliable indication of consumers’ consent. This needs to be changed.

The “privacy by default” rule will also be helpful in cases of unfair, unexpected or unreasonable processing of data – such as when data is used for purposes other than for what an individual had initially given his or her consent or permission or when the data being collected is irrelevant. “Privacy by default” rules would prevent the collection of such data through, for example, software applications. The use of data for any other purposes than those specified should only be allowed with the explicit consent of the user or if another reason for lawful processing exists.

The fourth principle is “protection regardless of data location”. It means that homogeneous privacy standards for European citizens should apply independently of the area of the world in which their data is being processed. They should apply whatever the geographical location of the service provider and whatever technical means used to provide the service. There should be no exceptions for third countries’ service providers controlling our citizens’ data. Any company operating in the EU market or any online product that is targeted at EU consumers must comply with EU rules.

For example, a US-based social network company that has millions of active users in Europe needs to comply with EU rules. To enforce the EU law, national privacy watchdogs shall be endowed with powers to investigate and engage in legal proceedings against non-EU data controllers whose services target EU consumers.

Stakeholders at a recent public consultation on data protection asked me to make clear that our data protection rules also apply to data retention. Storage of data is already included in the broad definition of “processing” but the general public is unaware that processing includes storing / retention.

Microsoft’s Research into Behavioral Targeting & Profiling via its Beijing Research Lab

There’s a “Great Digital Game” going on, where companies such as Google, Facebook, Microsoft and leading ad agencies compete to expand the clout of online marketing around the globe.  As I told EU and other privacy regulators last Friday, the Obama Administration is being pressed by US online marketers to forge trade deals that will allow the leading companies to conduct business in the  Asia-Pacific and EU region without worrying about serious privacy and consumer protection rules.  I do think it’s ironic–and really misleading–to point to online marketing as a U.S. economic success story that requires special treatment.  The revenues generated by Google, Facebook and the others are principally from advertising.  Whether they are truly models of innovation that will bring the kind of sustainable long-term job and economic growth we need is questionable.

At the core of the “Great Digital Game”–where U.S. companies strive to dominate the global interactive ad marketplace–is data collection for user targeting.  Microsoft, which has a principal online ad research facility in Beijing, was recently seeking a Senior Data Mining Analyst.  Read this excerpt from the job description and think about privacy, civil liberties in China and other autocratic regimes, consumer protection and the ethical role of U.S. online ad companies:  “Microsoft Ad Platform China is building world-class engineering teams in Beijing, focusing on online Ads related systems and services such as behavior targeting and advertiser analytics. The team partner closely with the Redmond Ad Platform team, enabling the discovery and inference of user profiles, intent and interaction while respecting privacy and trust, with the ultimate goal of maximizing benefits for users, advertisers and publishers…Core Job Responsibilities: Conduct and manage applied research and modeling work in the areas of user segmentation, profiling, and targeting. Research and experiment on data mining algorithms for user segmentation and dynamic segment expansion. Utilize data mining technologies and use various data sources, some of which may include MSN/Windows Live web usage, search query, demographic, subscription, and 3rd party data, to gain insight into Internet user behavior and intent that will set the foundation for Microsoft targeting offerings and data services. Provide complete solutions to business problems using data mining techniques, statistics and data analysis. Serve as subject matter expert and drive thought leadership in the areas of user profiling, ad targeting, and personalization for Microsoft online services.”

First & Third Party Combined Data Targeting Grows–Safeguards Needed on Publisher Sites

As USPIRG and CDD told the FTC last month, the growing integration of first and third party data for consumer targeting requires a uniform approach to protect privacy.  Entangling a consumer via a host of outside third-party databases used for stealth profiling and targeting is unacceptable–especially when used for financial and health marketing, or targeting youth.  Adobe, for example, just announced that it’s “Online Marketing Suite” now incorporates “a wide range of third-party data from providers such as Acxiom (demographics, segmentation and buying behavior), Bizo (business demographics), DataLogix (buying behavior and purchase intent), eXelate (demographics, buying behavior and purchase intent) and TARGUSinfo’s AdAdvisor (demographics, brand preferences, product needs and CRM data).”  Adobe also is “partnering with DataXu, InviteMedia, MediaMath and Turn to provide customers with the means to act on valuable audience data. Publishers can deliver larger audiences to advertisers by combining their own ad inventory with inventory acquired through the use of DSP partners.”

Both the Congress, the FTC and the European Commission have to address the growing merging of first and third party data that occurs without a users awareness or informed consent.  Meanwhile, ad agencies such as Omnicom have created their own data tracking and targeting services.  One executive recently noted that “There’s been increasing momentum in the use of third-party data. It’s a critical element of our stack – to use the right third-party audience intelligence data both for targeting and sometimes more importantly for audience insights post impression delivery. I don’t know the exact percentage, but I would say there are a significant percentage of our impressions that are bought with some form of third party data.“

Google’s Eric Schmidt on Mobile Marketing [Annals of Why We Need Mobile Privacy and Consumer Protection Safeguards]

Google CEO Eric Schmidt gave the keynote address at the Interactive Advertising Bureau’s “Ecosystem 2.0” conference.  As reported, he explained that [our emphasis]:

“The smartphone is the iconic device of our time,” Schmidt told the record IAB audience of 750 in Palm Springs, California. A year ago, he added, he predicted that mobile use would surpass PCs within two years. “It happened two weeks ago. And the PC is not going to catch up,” Schmidt said, as he labeled the new era, “Mobile First.”…The hyperlocal potential of mobile, Schmidt continued, means that smartphones and tablets bring a practical application to marketing that no other medium can match: A connection that will lead you to the store, open the door, and direct you to a product you need. “A RadioShack ad can tell you where you are and how to get to the nearest store.” And equipped with Near Field Communication chip (NFC), the newest generation of smartphones not only can tell you what to buy, it can enable a tap-and-pay transaction…Think of the offers mechanisms for advertisers,” Schmidt offered. “We’ve spent 20 years trying to get here. And now there’s an explosion in commerce. Particularly for the consumer who says, “I want to buy something and want to buy it right now,” he added, “We can do it.”

And, in large part, that capability means that mobile media consumption “is happening faster than all our internal predictions.”

Some 78% of smartphone internet users already use their smartphones as they shop. And, as consumer comfort with – and acceptance of – new mobile technology continues, Schmidt envisions “a world, in the very near future, where computers remember things and you never need to worry about forgetting anything. You want it to remember something and it will. And you’re never lost. No one is ever lost. You never turn off the [mobile device] and you’ll always know where you are. And where you want to go….”

AOL Touts its “Powerful Data Warehouse” inc. from behavioral targeting. Hello, Arianna–Remember Privacy!

Excerpts from AOL’s Advertising.com “Adlearn” system and its experts:

* The sheer size and scale of AOL makes us a powerful data warehouse. We have massive amounts of data and raw ad serving logs coming from the AOL Advertising organization (including Advertising.com, ADTECH, behavioral and contextual logs, etc.). Our systems are processing five billion transactions (clicks, conversions, etc.) per second.

*access to inventory, data and analytics is going to become fairly liquid in the marketplace. This will lead to automation advancements in platforms and media planning tools that advertisers leverage to place campaigns…Automation will also impact the publishing side of the equation. Content will be created based on demand by users, and advertisers will align themselves with that content as it is created…Every impression in the future will be data-driven – we won’t serve run-of-network campaigns any longer. You will know something about the user before you serve an ad and every creative will be dynamically-generated.

and “eAddressable household level targeting”

  • Survey-based Targeting (MRI/Household Propensity): Target users within households that demonstrate the highest propensity to use certain products or services as indicated by MRI consumer survey panel data matched to Mosaic Household Lifestyle Clusters.
  • Purchase-based Targeting (IRI/Household Propensity): Target users within households that demonstrate the highest propensity to buy certain products as indicated by IRI consumer purchase panel data matched to Mosaic Household Lifestyle Clusters.
  • Offline Consumer Model Targeting (Experian eAddressable Audiences): Target users within households using Experian’s statistical modeling based on hundreds of offline data elements that are most predictive for defining the specific audience of consumers.
  • Custom Database Match: Target users within households that are both the advertiser’s best prospects and AOL media consumers with offline database matching.
  • Mosaic Household Lifestyle Cluster: Target users within households that are categorized by Experian’s 60 Mosaic lifestyle consumer segments.

Leading Health, Privacy, and Consumer Groups Call on FTC to Protect Adolescent Privacy online

For Immediate Release:  Feb. 18, 2011
Child, Health and Consumer Advocates Ask FTC for Teen Privacy Protections, including Do-Not-Track and No Behavioral Targeting

Today a Coalition of Child, Health and Consumer Advocates filed comments on the Federal Trade Commission’s proposed privacy framework asking for increased privacy protections for adolescents.   The coalition includes leading advocates such as the Center for Digital Democracy, the American Academy of Child and Adolescent Psychiatry, American Academy of Pediatrics, Children Now, and the Consumer Federation of America.

Privacy protections are needed as teens are increasingly subjected to privacy invasions online. Teens are using new media technologies for key social interactions and to explore their identities. This increased use of digital media subjects them to wholesale data collection and profiling of even their most intimate interactions with friends, family, and schools. Meanwhile, recent research in psychology and neuroscience reveals that teens are more prone to risky behavior when their anxieties and peer relations are exploited. Privacy protections are needed to keep the online world social and safe.

Companies should not use data to behaviorally profile teens. The framework should also provide enhanced choice for adolescents, including a Do Not Track feature. In implementing “privacy by design,” companies should consider the needs and vulnerabilities of teens.  They should address those vulnerabilities by, for example, minimizing the amount of data collected from teens.  Data that is collected should be retained for only short periods and should be afforded greater security.

“Teens live online today,” said Guilherme Roschke, attorney for CDD. “This time of development and maturation requires privacy protections. Teens cannot go it alone against the vast data collection and profiling infrastructure of new media technologies that not even adults can understand.”

“Because of their avid use of new media, adolescents are primary targets for digital marketing,” explained co-signer Kathryn C. Montgomery, Ph.D. “The unprecedented ability of digital technologies to track and profile individuals across the media landscape, and to engage in sophisticated forms of targeting, puts these young people at special risk of compromising their privacy.”

The full coalition includes:

Center for Digital Democracy, American Academy of Child and Adolescent Psychiatry, American Academy of Pediatrics, Berkeley Media Studies Group, a project of the Public Health Institute, Children Now, Consumer Federation of America, Consumer Watchdog, David VB Britt, Retired CEO, Sesame Workshop, Ellen Wartella, Kathryn Montgomery, National Policy & Legal Analysis Network to Prevent Childhood Obesity, a project of Public Health Law & Policy, The Praxis Project, Privacy Rights Clearinghouse, Public Good, Public Health Institute, Tamara R. Piety, and World Privacy Forum

Guilherme Roschke
Staff Attorney / Fellow
Institute for Public Representation
First Amendment and Media Center
Georgetown University Law Center
T:(202) 662-9543
F:(202) 662-9634
gcr22@law.georgetown.edu
http://www.law.georgetown.edu/clinics/ipr/
**********

Digital Pharma Watch—Study Shows Privacy at Risk on Social Media Health Sites

Just as the FTC and (we assume) the Commerce Department’s Internet Policy Task Force are examining what the new safeguards should be for sensitive data involving online health marketing, there is an important new research study in the Journal of the American Medical Infomatics Association.  As Information Week reports, the study “examined 10 diabetes-focused social networking sites [and]  found that the quality of clinical information, as well as privacy policies, significantly varied across these sites.  The study, “Social but safe? Quality and safety of diabetes-related online social networks,” was conducted by researchers in the Children’s Hospital Boston informatics program…and found that only 50% presented content consistent with diabetes science and clinical practice.  The research…also revealed that sites lacked scientific accuracy and other safeguards such as personal health information privacy protection, effective internal and external review processes, and appropriate advertising.”

The study underscores the issues raised by CDD and its colleague privacy and consumer protections groups last November in a complaint filed at the FTC.

NTIA’s Strickling on Privacy: He Forgets Consumers!

Here’s an excerpt via Politico from their interview with Department of Commerce NTIA Chief–and potential privacy policy maven–Lawrence Strickling.  Note the absence of consumers in his description of the problem and issues.  The Commerce Department, which is jockeying to have a greater role in the privacy debate (which the largest data collectors like because they are afraid of the consumer watchdog-minded FTC), better start making consumer needs come first–if they are to have any credibility here in the U.S. and with the EU.   It appears from the interview the Commerce Department has largely made up its mind to rely on “voluntary enforceable codes of conduct.”   Here’s what Larry said in a Q & A:

NTIA is also getting into the privacy discussions.

It’s part of the larger Internet Policy Task Force that’s underway here at Commerce where our agency — along with other agencies — is looking at a number of Internet policy issues. Privacy is first and foremost on the list, but we’re also looking at the protection of intellectual property, cybersecurity, and we’ll be looking at the free flow of information. For Commerce, our theme links all these topics around the notion of innovation, preserving the job creation and business expansion aspects of the Internet and trying to protect that going forward. So in the area of privacy, the task force did issue the green paper late last year. Comments just came in on that, so people are starting to work their way through them, with the goal that we’ll take the green paper and turn it into a more final pronouncement of the Department of Commerce or perhaps even the administration’s policy on privacy later this spring.

Do you think there should be a government office specifically dedicated to privacy?

We certainly believe that if we’re going to move forward with these voluntary enforceable codes of conduct with the industry that the function of convening and organizing that process should sit [in the government]. Our believe is that the Department of Commerce, and in particular NTIA, is the appropriate place for that function to reside. When we start talking about offices that sounds more bureaucratic and maybe requires departmental administrative orders. But on the issue of making sure that function is done, yes, based on what we see in the comments, we think that’s an appropriate idea. We think it’s a necessary idea in terms of working with industry and we’ll see how this all plays out over the course of the spring.

What is NTIA doing internationally on the privacy front?

Privacy has big international implications because the Council of Europe is looking at redoing what they’ve done in privacy. The European Union is looking at this issue. OECD is looking at the issue. So we’re very cognizant of the need to make sure our policy, whatever it is, is designed in a way to best harmonize with what’s happening in the rest of the world, and in particularly Europe.

Pandora to Investors: We are Afraid of “Do-Not-Track” Privacy Rules and also Google’s Clout

From Pandora’s recent S-1 IPO filing at the SEC [our bold]:
excerpt:  Existing privacy-related laws and regulations are evolving and subject to potentially differing interpretations, and various federal and state legislative and regulatory bodies may expand current or enact new laws regarding privacy and data security-related matters. We may find it necessary or desirable to join self-regulatory bodies or other privacy-related organizations that require compliance with their rules pertaining to privacy and data security. We also may be bound by contractual obligations that limit our ability to collect, use, disclose, and leverage listener data and to derive economic value from it. New laws, amendments to or re-interpretations of existing laws, rules of self-regulatory bodies, industry standards and contractual obligations, as well as changes in our listeners’ expectations and demands regarding privacy and data security, may limit our ability to collect, use, and disclose, and to leverage and derive economic value from listener data. We may also be required to expend significant resources to adapt to these changes and to develop new ways to deliver relevant advertising or otherwise provide value to our advertisers. In particular, government regulators have proposed “do not track” mechanisms, and requirements that users affirmatively “opt-in” to certain types of data collection that, if enacted into law or adopted by self-regulatory bodies or as part of industry standards, could significantly hinder our ability to collect and use data relating to listeners. Restrictions on our ability to collect, access and harness listener data, or to use or disclose listener data or any profiles that we develop using such data, would in turn limit our ability to stream personalized music content to our listeners and offer targeted advertising opportunities to our advertising customers, each of which are critical to the success of our business...


We use DoubleClick’s ad-serving platform to deliver and monitor ads for our service. There can be no assurance that our agreement with DoubleClick, which is owned by Google, will be extended or renewed upon expiration, that we will be able to extend or renew our agreement with DoubleClick on terms and conditions favorable to us or that we could identify another alternative vendor to take its place. Our agreement with DoubleClick also allows DoubleClick to terminate our relationship before the expiration of the agreement on the occurrence of certain events, including if DoubleClick determines that our use of its service could damage or cause injury to DoubleClick or reflect unfavorably on DoubleClick’s reputation….In fiscal 2010 and the nine months ended October 31, 2010, advertising revenue accounted for 90.9% and 86.4%, respectively, of our total revenue, and we expect that advertising will comprise a substantial majority of revenue for the foreseeable future. In fiscal 2010 and the nine months ended October 31, 2010, Google accounted for 11.4% and 7.4%, respectively, of our total revenue. We deliver online ads provided by Google through our service, and Google sources us with advertising customers through ad exchanges.

Innovation, Digital Marketing & Privacy: Debunking the Google, Facebook and online ad lobby myths






As was done during the 1990’s by the online marketing industry to oppose consumer privacy rules at the FTC and eleswhere, once again digital advertising companies disingenuously claim that enacting appropriate privacy safeguards will [as Google puts it]: “thwart the ability of companies to develop new services and tools, and in turn make U.S. Internet companies less competitive globally and make the Internet a less robust medium….an anti-innovation framework would counterproductively choke off the development of new tools and services to protect personal privacy.”  Facebook similarly told the industry-friendly Commerce Department that “imposing burden privacy restrictions could limit Facebook’s ability to innovate, making it harder for Facebook to compete...”  The facts—as Google, Facebook and the other companies undoubtedly know—show this to not be the case. First, online marketers, including Google, did not build-in serious privacy and consumer protection safeguards into their online marketing products.  All the innovation has and is focused on expanding the data collection, profiling and targeting of each user, across multiple platforms and applications.   Google, Yahoo, Microsoft, Facebook, ad agencies and digital marketing companies have significantly invested in creating new forms of digital data collection and new ways to measure it.  That point is something that the industry doesn’t volunteer and that regulators and policymakers should recognize.  It has taken a global public uproar and governmental pressure that has forced Google, Facebook and the entire online ad industry to more seriously acknowledge and respond to concerns on privacy practices.  (In fact, it was only due to the pressure brought by CDD, EPIC and colleagues opposing Google’s acquisition of DoubleClick that forced the FTC to issue new staff proposals for behavioral advertising and privacy.  Pressure from NGOs has been a key factor on industry and policymakers).

The U.S. is the global leader in developing and deploying online advertising applications and data targeting technologies.  It sets the standard in the E.U, Asia Pacific, South America and elsewhere.  Once the FTC establishes its new Framework, and as the EU revises its own to reflect contemporary online commercial data collection techniques, U.S. online marketers can engage in the same spirit of innovation that will make their online products and practices truly privacy friendly.  The FTC, the White House and Congress should not permit Google and other digital marketers to invoke the term “innovation” as it was some magic political talisman that automatically will choke-off reasonable consumer privacy policy safeguards.  Its time to set aside the self-serving claims that privacy safeguards will undermine innovation.  Indeed, it is common sense to also admit that once consumers know that their privacy is respected, there will be greater confidence in e-commerce and online marketing generally.  But many in the online ad lobby are afraid that if a consumer is honestly told about the digital marketing process, including the tactics used to harvest their data, an aware public will be wary of the online system.  They will undoubtedly be concerned–but it’s an excellent reason to work together and enact new serious public policies that ensure consumers are fairly treated in the digital marketplace.

PS:  In Facebook’s privacy filing it cites President Obama’s State of the Union speech where he singled out Facebook and Google as examples of innovation in the U.S.  We doubt the President intended Facebook to use his speech as a political tool arguing against protecting consumers online through privacy regulation.  Everyone should read Facebook’s submission–especially Facebook users.  It is one of the most self-serving and narrow-minded policy screeds I have read recently.  They invoke the concept of the “social web” as if it should automatically permit Facebook to be a consumer protection free- zone.  Note in the document how Facebook urges the FTC (which is likely investigating it as we speak) to “continue to pursue a retrained approach to enforcement.”  How wonder it just hired another lobbyist--a former Bush White House top staffer.