Feds Target Computer 'Cookies,' 'Beacons' as Affront to Privacy

WASHINGTON, Nov. 12, 2010— -- The federal government is pushing on several fronts to limit those increasingly powerful tracking bugs -- so-called "cookies" or "beacons" -- that lurk on computers and follow consumers around the Internet.

For all the brutal partisan fighting of recent months, there is a growing consensus in Washington that the web-monitoring cookies installed in people's computers by most commercial websites are a major problem. But to what extent the solution requires new laws and more regulation is an open question.

The Federal Trade Commission is reviewing one possible approach: creating something akin to the "Do Not Call" list for telemarketers that would let consumers choose to forbid companies from spying on their online movements. An FTC official said the agency was looking into "whether it's even doable technologically." That approach would require an act of Congress.

The Commerce Department is preparing to open another front, putting the finishing touches on a government-wide plan that would create a new Privacy Policy Office. As outlined in a speech last month by Assistant Secretary of Commerce Lawrence Strickling, the new office would bring Internet companies to the table with government agencies and privacy advocates to develop "voluntary but enforceable codes of conduct."

The White House already has created a new task force – the Subcommittee on Privacy and Internet Policy -- with the stated goal "of fostering consensus in legislative, regulatory, and international Internet policy realms." The group will help implement the Commerce Department's plan that has been in the works for seven months.

But some privacy advocates question whether Commerce is committed to consumer protection.

"Having Commerce involved with the privacy issue is the digital fox running the data collection hen house," said Jeff Chester, CEO of the Center for Digital Democracy. "Commerce is not a pro-consumer agency. It works on behalf of business interests. I have real concerns about the direction Commerce wants to go."

Chester plans to meet soon with the new White House task force to share his view that the Federal Trade Commission should be the lead agency in the online privacy fight.

The Commerce Department would not comment on the report until it is released. But Marc Berejka, a senior policy adviser at the agency, told the New York Times, "In the 1990s the Commerce Department had an extremely prominent role in developing what we think of as Internet policy, and we are reinvigorating that historical role."

Government Plans Protecting Your Online Privacy

And in his recent speech, Assistant Secretary of Commerce Strickling said the Privacy Policy Office at Commerce "would complement, not supplant, the Federal Trade Commission or the other institutions in the federal government."

David C. Vladeck, the Federal Trade Commission's top consumer protection official, said his role would remain important.

"Because we have the franchise on privacy enforcement, we will undoubtedly retain a leading voice on privacy policy," Vladeck said in a prepared statement.

Some of the world's most powerful companies have weighed in to urge the Commerce Department to let them continue regulating themselves.

Microsoft, maker of the popular Internet Explorer browser that can be used to install cookies and beacons that track consumer behavior, warned against requiring any changes to its software.

"We do not believe that specific privacy enhancing technologies or processes should be mandated by law," Microsoft wrote in comments filed with the Commerce Department. "Incentives and encouragement to do so should be encouraged through flexible guidelines and standards."

The Network Advertising Initiative, a coalition of the largest online ad networks, told the Commerce Department, "existing legal regimes and self-regulatory approaches strike an appropriate balance between privacy and innovation with respect to the collection and use of information for online advertising."

And Facebook advised "great caution before pursuing a more interventionist government role."

"If social-networking sites take steps that users oppose, they will lose users and suffer in the highly vocal Internet court of public opinion," Facebook wrote in its Commerce Department filing.

Facebook's privacy policies drew scrutiny from Congress following a Wall Street Journal report that revealed the social networking website allowed third-party applications to collect and share personally identifiable information of users and their friends.

Texas congressman Joe Barton, who hopes to lead the powerful Energy & Commerce Committee when Republicans take charge of the House next year, has said he wants to grill Facebook CEO Mark Zuckerberg at a hearing early next year.

As for the Obama administration's moves, Barton says, "Better late than never."

"Neither the government nor the industry are doing enough to protect people's privacy," he said in a prepared statement. "But the Department of Commerce's decision to step up may shine some light on practices that seem to thrive in the dark. I am glad more and more folks -- in the government and otherwise -- are beginning to realize that there is a war against privacy."

What Congress might do about it remains up in the air. The author of one privacy rights bill, Rep. Rick Boucher, D-Va., lost his bid for re-election. But Barton, who co-chairs the bipartisan Congressional Privacy Caucus, said in a recent C-SPAN interview that a privacy rights bill "is certainly something we can work with our friends on the Democratic side on a bipartisan basis."

"I think privacy is one of those issues that is gaining in importance," he said. "And is something that certainly could be addressed if we can get the right coalition."