Feds May Opt-In On Privacy Rules

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November 26, 1999 (4:23 AM EST)

By Mo Krochmal,

NEW YORK -- Government may soon opt-in for privacy standards while industry is seeking to opt-out, an online advertising executive said this week.

Dave Morgan, the president and chief executive officer of Real Media, a New York City-based company that distributes ads over a network of websites, said he thinks the federal government will step in to regulate companies that use the Internet to collect consumer data to build profiles for advertising and marketing.

Real Media is a member of the Network Advertising Initiative, a group of companies that have agreed on a regulatory code for such activity. The companies include DoubleClick, 24/7 Media, Flycast Communications, AdForce, AdKnowledge, Adsmart and Engage Technologies.

The companies came together after a Federal Trade Commission workshop on privacy issues and announced that each company will develop a system to notify consumers that the site they are visiting uses data-profiling technology, and to give them the opportunity to turn it off.

Morgan talked to TechWeb about profiling and the growing threat of government regulation.

What did the companies in the Network Advertising Initiative decide?

We were trying to get an industry solution to profiling and privacy issues to forestall a need for the government to get involved. We decided to provide lots of information to consumers and to disclose opt-out options. We [Real Media] think that is a minimum standard. But we are preparing our business with the belief that the market may require much more -- it may require opt-in-oriented standards.

How will that play out?

If you want to maintain a profile, you have to let people know you are doing it and let them opt-in. It will be something like: if you are using this site, you are consenting to data capture on any page beyond the front page.

What kind of data is being captured?

There is a fair amount being done. Lots of the information that is being taken in tends to be technical information -- who you are and where you are from. Historic activities are being captured on the sites you are visiting. And, on a campaign basis, how people have reacted to certain ads in the past.

How does that differ from profiling?

Profiling is creating a dossier or file on an individual and enhancing that by watching their activities and asking them questions on the way and adding other data that you may have.

What do you see happening outside industry?

Privacy is a constant undercurrent. It's going to pop suddenly and become relevant. This may happen in the next nine months, after Christmas. Somewhere little Johnny or his family will get used and abused by some data pirates. In this political year, who is going to fight against it? I think the government is skeptical of industry self-regulation and is eager to be pro-active if the mood of the general consumer really starts focusing on this.

I think industry has less than nine months. We have an election coming up and people are going to focus on issues high on consumers' minds.