EU to Play Sheriff on "World Wild West"

The European Union this week called out social networking sites and online advertisers, charging them to establish a self-regulatory framework that better respects consumer privacy. The European Commissioner for Consumers, Bulgaria's Meglena Kuneva, says that it's a "last chance" for Internet companies to get their collective act together before the regulators intervene.

What sorts of practices is Kuneva worried about? In a speech given ahead of a major "Consumer Summit" in Brussels, Kuneva refused to name names, but singled out a social network (*cough* Facebook *cough*) that "recently included without warning a clause in their terms and conditions that amounted to users rescinding ownership of all their content in their favor. This is a social network site taking ownership of your personal photo albums. Although regulators did not react, people obviously thought the clause was not fair and the uproar of users and the threat of legal action has led the platform to rethink this clause."

Europe takes data protection seriously, and always has tough rules on the books related to storing and sharing personally identifiable information (PII) such as names, phone numbers, and even IP addresses. But Kuneva recognizes that even without PII, large data sets can be used to identify individuals (just ask AOL or Netflix).

80 percent of those under 18 "believe that their personal information is somehow used without their knowledge and shared with third parties without their agreement," she said. "They are right."

The bottom line is that the "World Wide Web is turning out to be the world 'wild west'" (groan) and Kuneva is ready to play the sheriff. Now that consumers are "in fact paying for services with their personal data and their exposure to ads," she intends to make sure that this new kind of commercial exchange is subject to the "same fairness and transparency standards that are commonly accepted in commercial contracts."

None of this should be seen as anti-advertising, she says; rather, it's about setting the necessary ground rules for privacy, transparency, and data protection to ensure that advertising works on the Web. But if the industry doesn't get serious about this soon, the regulators will start writing rules.

The newly-tough rhetoric echoes the Federal Trade Commission here in the US. The FTC in late 2007 adopted a similar industry self-regulation approach to dealing with behavioral online advertising, but last month warned darkly that "a day of reckoning may be fast approaching."

Those words were spoken by FTC Commissioner Jon Leibowitz, who was quoted by Kuneva in her speech. The message was clear: the US and EU aren't far apart on their current approach, and companies on both sides of the Atlantic had better get serious about data protection and privacy if they want to stave off the regulatory shackles.

"Consumer rights must adapt to technology, not be crushed by it... I want to send a warning signal today that we cannot afford foot dragging in this area," said Kuneva at the end of her talk. "[Regulators] will not shy away from our duties nor wait for a cataclysm to wake us up."

by Nate Anderson for Ars Technica

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