NCPA - National Center for Policy Analysis

The Dangers of Misapplied Internet Privacy Policies

April 5, 2013

Modern online advertising through social media and websites collects and analyzes information to match advertising to users' interests. Lawmakers continue to push for regulations on how the websites collect and use consumer information that could harm consumers, websites and the overall environment of the Internet, says Steven Titch, a policy analyst at the Reason Foundation.

  • The public has been embracing the Internet at record pace with Facebook acquiring over 1 billion members and other social networking sites growing rapidly.
  • The government has failed to understand the business models and consumer demand that drive the Internet forward.
  • Instead, the Federal Trade Commission, White House and Congress have been pushing for more oversight on the privacy policies that guide the Internet.

Most free Internet-based services are supported by advertising that is strategically targeted to individual users by collecting data.

  • Data on the Internet is collected when users enter the information directly, through embedded software codes called cookies, through clickstream data that records user activity on a website, and through user searches and web browsing history.
  • The current online advertising market operates efficiently because ads about products and prices reach potential buyers effectively and quickly.
  • Any disruption in how the current advertising model works could have drastic consequences for users who rely on websites that fund operation through advertising revenues.

Policymakers are pushing for an "Online Privacy Bill of Rights," which would be a top-down directive placing enforceable restrictions on how websites collect and use consumer information.

  • Proposed laws and regulations include mandatory or optional Opt-in/Opt-Out choices regarding disclosure of certain information, as well as do not track legislation that prohibits websites from collecting user browser data regardless of whether consumers consent.
  • Directives such as these would resemble the European Union's strict regulations, which specifically direct how data can be collected and used.

The top-down mandates will slow technology innovation, harm online advertising and hinder users' ability to decide for themselves if and how their information will be collected and used.

Source: Steven Titch, "It's Not Personal: The Dangers of Misapplied Privacy Policies to Search, Social Media and Other Web Content," Reason Foundation, March 2013.


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