Privacy vs. Commerce: Lawmakers Debate Wisdom of 'Do Not Track' Laws

Dec. 2, 2010— -- Lawmakers on Capitol Hill pondered 'Do Not Track' legislation that would allow consumers to choose whether they want their Internet browsing monitored by online businesses and advertisers. The congressional hearing came on the heels of the Federal Trade Commission's proposal on Wednesday to let people decide whether they want their online visits to be private.

Tracking online activity is mostly invisible, leaving many people unaware that companies monitor their Web browsing in order to show them targeted ads. 'Do Not Track' tools would give consumers some control over marketers – similar to the 'Do Not Call' registry that allowed consumers to opt out of calls from telemarketers.

At today's hearing there were mixed responses, from both lawmakers and witnesses, on the wisdom of federally regulating online tracking. David Vladeck of the Federal Trade Commission testified that the current opt-out choices offered by the private sector are confusing; consumers think they are opting out of third-party tracking, for example, when they are in fact just opting out of receiving targeted ads.

"A robust 'Do Not Track' mechanism must be clear, easy to locate and use, and effectively implement the user's choice to opt out of third-party tracking," said Vladeck.

Beyond the issue of government intervention were the questions of online privacy and commerce, and whether one supersedes the other in importance and value. Susan Grant , director of consumer protection at the Consumer Federation of America, said companies already track consumers' every online move, often without their consent.

"If someone were following you around… tailing you and making note of everywhere you go, what you read, who you talk to, what you eat, the music that you listen to, what you buy, what you watch," Grant said, "you might find this disturbing."

Targeted Advertising is Equivalent to 'Spying'

Eben Moglen, a law professor at Columbia University, said tracking consumers – collecting their information and hoping to influence their behavior – is remarkably similar to targeted surveillance.

"There is in fact no practicable distinction between the public activity we call collecting intelligence, and the private activity we call targeted advertising," he said. "They are both spying."

The rebuttal and defense of this so-called spying, or what Grant called online "stalking," is that the business of targeted advertising is thriving and contributing a lot of money to a strained economy. Daniel Castro, senior analyst with the Information Technology and Innovation Foundation, said online advertising accounts for about $300 billion, or roughly 2 percent, of GDP.

Moreover, Castro testified, 'Do Not Track' may not give consumers the control they want.

"'Do Not Track,' of course, doesn't actually stop online advertising, it only limits the ability of ad networks to deliver ads the user might actually want," said Castro. "Users who opt out of tracking would receive more – not less – unwanted advertising."

The competition to deliver relevant ads also advances the industry, testified Joan Gillman, president of media sales at Time Warner Cable. Regulation, Gillman said, would stifle the vibrancy of the Internet.

"There are unintended consequences of a 'Do Not Track,' warned Gillman. "It prevents companies like ours from innovating."

Similarly, Rep. Steve Scalise (R-La.) said America's Internet industry has advanced and grown just fine without government interference.

Jonathan Mayer of Stanford University had an eye on Thursday's hearing, and said he was surprised to hear this line of argument.

"Claims that 'Do Not Track' would fundamentally change the Internet just aren't true," said Mayer.

Moglen, of Columbia University, dismissed arguments that online privacy would likely affect either commerce or Internet innovation.

"The attempt to connect the advertising business model to the importance of vibrant content on the net," Moglen said, "is poppy cock."

ABC News' Maya Srikrishnan contributed to this report.