Tuesday, March 29, 2011

The 0.00002% Privacy Solution

by L. Gordon Crovitz

Wall Street Journal

March 28, 2011

A digital milestone was reached last week, with news that more than half of Americans 12 and older now have Facebook accounts. The study by Arbitron and Edison Research raises this question: If most Americans are happy to have Facebook accounts, knowingly trading personal information for other benefits, why is Washington so focused on new privacy laws?

There is little evidence that people want new rules. The Federal Trade Commission has proposed regulations limiting how advertisers use behavioral and other tracking systems to deliver more targeted advertisements. There have been more than 400 formal responses since the FTC issued its plan in December, including many from advertisers hoping self-regulation will keep regulators at bay. Some in Congress want a Do Not Track system similar to the Do Not Call rules that limit nuisance phone calls.

Unlike intrusive telemarketing phone calls, people seem largely relaxed about behavioral targeting. The advertising industry is using a service called TRUSTe, which adds an icon to online advertisements giving consumers the opportunity to learn more about how they are being tracked and to opt out. A recent study by DoubleVerify found that of five billion advertising impressions, only about 100,000, or 0.002%, led to a click on the icon to learn more about the advertising system serving the advertisement. Of the people who clicked to learn more about information being collected about them, only 1% then opted out of behavior targeted advertising.

That's an opt-out rate of just 0.00002%. People seem to have adjusted to this new technology faster than regulators are willing to admit.

There's no doubt that some advertising companies have abused data, as a Wall Street Journal news investigation called "What They Know" made clear. Until recent industry standards, there was little self-regulation or transparency for consumers. This contributed to abuses such as spamming. But there is nothing inherently wrong about using technology to learn more about people.


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