Congress Targeting the Targeters

Sam Gustin thinks Congress could be getting ready to drop the boom on web snooping.

As internet service providers mull new technology that could drastically improve the ability of marketers to target advertising to users, lawmakers will Thursday be considering whether new laws are needed to protect consumer privacy.

At issue is a relatively new type of behavioral targeting offered by several upstart technology firms, including NebuAd, the U.K.-based Phorm, and Front Porch. They supply internet service providers with hardware capable of tracking every move a user makes online, as opposed to just their activity on individual sites or search engines.

But privacy advocates have argued that without increased regulation, this kind of targeting violates privacy laws and may even run afoul of federal wiretap laws.

Congress and federal agencies have thus far been divided over the need for new regulation. Rep. Edward Markey has suggested that new laws may be necessary to ensure that users should have the right to consent first--i.e., "opt-in"--before their surfing habits are tracked across websites.

But Lydia Parnes, Director of the Bureau of Consumer Protection at the Federal Trade Commission, testified before a recent U.S. Senate hearing that her agency is cautiously optimistic that self-regulation could be adequate.

The House Energy and Commerce Telecommunications subcommittee, which Markey chairs, will hold a hearing Thursday to examine the issue.

The market for this kind of behavioral targeting is currently small, but it could become a multi-billion dollar business in the next few years. And telephone and cable internet providers are licking their chops waiting for the new technology because it finally offers them a piece of the web advertising pie (NebuAd and Phorm pay I.S.P.'s a per-user fee to track their customers' activities).

The services have generated controversy in the U.S. and Britain, especially after several I.S.P.'s were found to be testing them without notifying their users.

In response, NebuAd and Phorm have bent over backwards to show that they are sensitive to privacy concerns, with Phorm even recently hiring its first chief privacy officer.

They'd better continue being careful lest Congress crack down on their goose before it has a chance to lay its golden eggs.