Web firms defend ad, privacy policies

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Rep. John Dingell (D-MI) chairs a committee that is looking at regulating data use of online ads
Rep. John Dingell (D-MI) chairs a committee that is looking at regulating data use of online ads

Thirty companies, including Google, Yahoo and AOL, have responded to an August 1 letter from the US House Committee on Energy and Commerce questioning their online advertising data collection processes.

The letter was sent to the online giants and 31 other online and utility companies, including Verizon, Time Warner, Cox Communications, Earthlink, Comcast Cable and United Online, regarding the companies' tracking of online consumer behavior and how the data are used.

In Google's response letter, its direc­tor of public policy and government affairs, Alan Davidson, defended the legality of its privacy policy by pointing out that its practices are enforced by the Federal Trade Commission Act.

“One of our bedrock privacy principles is transparency, by which we mean that we are up front with our users about what information we collect and how we use it so that they can make informed choices about their personal information,” he said.

According to Davidson's letter, Google collects standard server log data, includ­ing the uniform resource locator; the Internet protocol (IP) address associ­ated with the computer or proxy server from which the request originated; the time and date of the request; the computer's operating system; the type of browser that's used, and a unique cookie, generated for the computer from which the request originated.

In Yahoo's response letter, David Hantman, VP of global public pol­icy, noted the benefits that advertis­ing offers to consumers, and stated that Yahoo does not share user data with advertisers and publishers.

“Consumers also experience enhance­ments as they receive customized con­tent, services and advertising that save them time and money,” the letter con­tinued. “Everyday information, such as weather, local news, mail alerts, stock alerts and offers for products and services they are interested in, is provided through customization techniques.”

Jules Ponetsky, chief privacy officer and SVP of consumer advocacy at AOL, also discussed the benefits to consumers, as well as the benefits to the economy. “Online advertising currently generates an estimated $21 billion in ad expendi­tures and also fosters development and growth in many other industries and sec­tors that are critical to the US economy,” the AOL letter read.

At press time, four companies that received letters had yet to reply. A spokesperson for the House com­mittee declined to be named or offer much comment , citing that the com­mittee was still in the process of “review­ing the responses as they come in, [but] we haven't received all of them yet.”

This is not the first time the federal government has investigated online advertising. Last year, a group of nine privacy organizations, including the Center for Democracy and Technology, Consumer Action and Consumer Federa­tion of America, asked the Federal Trade Commission to implement a do-not-track list that would protect consumers from having their online activities unknowingly tracked, stored and used by marketers and advertising networks.

The proposal included requiring adver­tisers to add a pop-up feature which con­sumers could use to opt out of allowing a site to track their behavior. The FTC has yet to issue any rulings on the subject.

AOL supported the inquiry — through its behavioral firm Tacoda, it designed a technology for consumers to opt out of behavioral targeting, and it planned a consumer awareness program about behaviorally targeted advertising.

This month's inquiry by Dingell's com­mittee is still unduly broad, says Mike Zaneis, VP of public policy at the Interac­tive Advertising Bureau.

“There continues to be increased atten­tion for the privacy issue, really for all of Internet advertising,” he says. “We're talking about potentially regulating the Internet for the first time, so there has to be a slow approach.”

Zaneis does not expect any legisla­tion proposals to come out this year, as Congress is just beginning to learn about the complex online advertising ecosys­tem. This space balances the fine line between consumers' privacy rights with the benefits of free services online, he notes, and the huge impact that Internet advertising has on the economy.

“I think we are heading into a protracted debate [about] how data is collected and used online,” Zaneis adds. “At some point, Congress will have to answer the most important question, ‘What problem are we trying to solve?'”

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