13 Insights Into DNT Issues

A Senate hearing is designed for two things: First, to gather information as an important part of law-making; second, to position Senators as protectors of the people. The Senate Commerce Committee hearing last Wednesday (April 24, 2013), certainly did both. Entitled, “Status Update on the Development of Voluntary Do-Not-Track Standards,” the hearing was intended to examine what steps, if any, industry stakeholders have taken to fulfill their public commitment to honor do-not-track (DNT) requests from consumers, according to the Commerce Committee spokesperson.

Among the witnesses testifying before the Committee was Lou Mastria, managing director of the Digital Advertising Alliance (DAA). (Full disclosure: My employer, DMA, is a founding member of the Alliance.) The Committee also heard from Harvey Anderson, senior vice president of business and legal affairs and general counsel of Mozilla; Justin Brookman, director of the Project on Consumer Privacy at the Center for Democracy and Technology (CDT); and Adam Thierer, senior research fellow of the Mercatus Center at George Mason University.

Jerry Cerasale, SVP of Government Affairs, DMA, and Stu Ingis, Esq., of Venable, a law firm representing DMA, attended the hearing and said that there does not seem to be consensus among the Committee members as to the need for regulation in this area.

“Our position is that there is no reason to regulate a situation that industry has already successfully and rigorously self-regulated,” Cerasale said. “The DAA solution covers 97% of the Internet, and uses a persistent cookie technology that provides a true and lasting ‘opt out’ for consumers who wish to do so.”

“This is a problem that has already been solved,” Ingis agreed. “The DAA ad options icon is seen by millions of consumers every day. Consumers are smart enough to manage their options, and more than 90 percent of Americans said that free, ad-supported content is important to the overall value of the Internet, and more than 65 percent said they’d like at least some of the ads they see to be tailored to their interests,” he said, referencing a recent poll commissioned by the DAA.

Rather than seeking to impose untested and potentially harmful new restrictions on Internet advertising, lawmakers and technologists should throw their support behind the program that is already providing consumers with pinpoint choice and control over their own data, said DAA’s Mastria. A copy of his full testimony is available here.

Unfortunately, as Mastria explained at the hearing, and as reported in USAToday, Mozilla and Microsoft have confused the issue by offering browser—not consumer—choice solutions that are out of compliance with the White House-Congress-Industry agreement, which is the foundation for the DAA solution. Cerasale stressed, “We are very much for consumer choice—not company choice—in all data-driven marketing and advertising,” he said. “We are also very much opposed to needless regulation in an area that already successfully provides consumer protections.”

For a blow-by-blow account of the hearing, Cerasale and Ingis report:

• Chairman John D. Rockefeller (D-WV) began by discussing an agreement reached by the DAA, the White House, the Federal Trade Commission (FTC), the Department of Commerce (DoC) and other stakeholders in February 2012 to develop a system for honoring browser-based header signals, and raising his concerns with the progress thus far.
• Ranking Member John Thune (R-SD) emphasized the importance of consumer spending online and the role that digital advertising and Web publishers play in this area. He noted that targeted advertising makes sense in certain contexts, and mentioned that consumers by and large are capable of making informed choices reflecting their preferences.
• Senator Dean Heller (R-NV) began his statement by pointing out the free nature of the Internet and the role that targeted advertising plays in keeping the Internet free. He also stated that any agreement on the issue of online tracking, collection, and use must be (a) technology neutral; (b) business model neutral; and (c) cannot pick winners and losers. He also questioned whether there was any actual harm being caused by advertising.
• Mozilla’s Anderson said that the Internet is still very young, without clear boundaries on collection and use of data. Anderson further stated that trust, not money, is at stake in the debate over privacy, and that trust is the currency that needs to be protected. He characterized Mozilla’s recent announcement to block third-party cookies as a proposal that is in a “testing phase,” and concluded by calling for more congressional oversight and action in this area.
• Mastria discussed the DAA’s self-regulatory program and the agreement reached with the White House, the FTC, and the DoC in February 2012 to develop a program to recognize browser-based choice as part of the DAA’s existing choice tools under the DAA Principles. He explained that the delay in full implementation has been caused by the unilateral decisions of Microsoft and Mozilla to implement DNT features into their browsers in direct conflict with the agreement.
• CDT’s Brookman discussed how the advertising industry “won” the fight between opt-out versus opt-in, but argued that the resulting opt-out approach has not produced a “real” opt-out process. He pointed out that now all major browsers offer DNT signals but that most advertisers ignore them. He then cited perceived flaws in the DAA’s opt-out, namely: it only applies to DAA members; the opt-out is cookie-based; it only applies to targeted ads, and does not prevent tracking; and, the interface is confusing.
• DAA’s Mastria clarified and corrected these inaccuracies by explaining five points: 1. the DAA offers a simple, easy-to-use, one button choice mechanism; 2. the DAA Principles apply to the collection of all Web-viewing data across unrelated sites; 3. the DAA offers users persistent choice that continues to work even when users delete their cookies; 4. the DAA Principles restrict both the collection and use of data; and, 5. the DAA’s enforcement applies to all marketplace participants, regardless of whether they have enrolled in the program. He also explained that DNT as currently implemented by Microsoft and Mozilla has no meaning to consumers and businesses as it is not tied to a standard and is in direct conflict with the agreement made at the White House.
• Thierer, of George Mason University, discussed how restrictions on data collection harm industry and that alternative approaches to DNT are needed, such as consumer education and targeted enforcement of existing laws. He stated that legislative or regulatory DNT requirements would raise costs for consumers and lead to more Internet pay-walls. Thierer compared the U.S. success in the Internet economy with Europe, challenging the participants in the hearing to name a single major European Internet company.
• Chairman Rockefeller began the questioning by asking all the witnesses to explain the cause of the delay in implementing the February 2012 agreement. Mastria responded that implementation has been delayed due to how Mozilla and Microsoft have implemented browser-based choice in direct conflict with the agreement reached at the White House in 2012.
• Senator Thune asked the witnesses whether a multi-stakeholder program is better than a legal or regulatory approach. Mastria responded in the affirmative, and that the DAA was delivering on such a program. Senator Thune then asked whether there were any actual harms taking place in the marketplace that needed to be redressed.
• Anderson answered by arguing that the harm taking place is the deleterious effect on consumer trust, and that the longer these practices are taking place online, the less consumers will engage. He likened the situation to consumers’ hesitation to use credit card numbers online, until the widespread use of encryption changed the dynamic. Mastria responded that there is no harm.
• In a second round of questioning, Chairman Rockefeller asked the DAA whether there was any meaningful opt-out at all. Mastria said yes, and discussed the features of the DAA icon and related functions and programs. Chairman Rockefeller then asked why Mozilla had decided to block third-party cookies. Anderson stated that doing so would create a Web that “reflects users’ expectations,” but also noted that Mozilla is still studying the project and is deciding whether to move forward.
• Senator Thune asked the witnesses whether DNT helps or hurts the marketplace. Thierer answered that both are true, depending on the circumstances. Mastria said that DNT and cookie-blocking could hurt the marketplace, and referenced a letter from the Interactive Advertising Bureau (IAB) with 700 small publishers claiming that Mozilla’s actions would harm their ability to publish online and continue to exist.