Inside Google

The privacy bill has arrived. Though it is only in preliminary draft form and has yet to be introduced officially, the long-promised House comprehensive privacy legislation should have online advertisers dancing in the streets. Many privacy advocates who have pushed for the legislation, hoping it would outlaw current approaches to behavioral advertising and other online privacy infringements, are beyond disappointed. To their chagrin, while the bill calls for increased notice of online consumer data use, it creates no opt-in requirement for publishers, advertisers, and third-parties to use that data for ad targeting.

When it comes to online advertising, the draft appears to be inspired by the very approaches online publishers, ad firms, and industry groups have employed in their own self-regulatory efforts. The bill would allow the collection, use, and disclosure of personal information including name, address, social security number, a persistent identifier such as a customer number – even fingerprints – as long as users are able to opt-out from those practices.

The draft bill would require advertisers and publishers to create opt-out mechanisms for the use of such data. Those mechanisms may take several forms. For instance, a publisher or advertiser may place a prominent symbol in or around any ad targeted using personal information – a tactic reflective of existing industry practices. That symbol would expose information about how that ad was delivered and what types of information the targeting was based on. It must also enable users to modify the information stored or opt out of having such data stored by publishers or ad networks.

That disclosure requirement is already within the scope of an industry coalition effort unveiled earlier this year. The coalition plan would link an icon displayed in behaviorally-targeted ads to information about how the ad appeared and how to opt out in the future. If the Boucher bill is passed in its current form, the industry icon could satisfy the proposed law if altered to actually enable opt out. Google also has a similar system that links behaviorally-targeted ads served through its network to a user profile page that includes information on interests associated with the user, and lets them modify it or opt out.

Indeed, the bill states outright, “Nothing in this Act shall prohibit [a publisher or ad network] from collecting or disclosing aggregate information or [personal] information that has been rendered anonymous.” For years, behavioral ad firms have stressed that the data used to target behavioral ads is essentially that – anonymized, or non personally-identifiable.

Privacy advocates panned the bill during a conference call this afternoon, suggesting its lack of opt-out requirements maintain the status quo. “This bill really adopts and endorses an archaic, bankrupt notice and consent regimen that we know does not work,” said a representative of ConsumerWatchdog.org.

Though they may not have expected such harsh criticism, sponsors Rep. Rick Boucher, chairman of the House Subcommittee on Communications, Technology, and the Internet, and ranking Republican Cliff Stearns, are looking for comment on the draft, which is publicly available. (It can be downloaded in .pdf form here.)

“My goal is to build a broad consensus among interested parties so that when the legislation is formally introduced it can receive rapid approval by the Congress,” Boucher stated in a press release today.

Considering the general rejection of the proposal by many privacy advocates, not to mention the fact that it does not address directly more recent concerns surrounding use and sharing of personal data by sites like Facebook, the bill may not pass muster among lawmakers. For example, four Senate Democrats last week called for Facebook to adopt an opt-in policy for third party data sharing.

As expected, the draft does require express opt-in consent for disclosure of location-based data, typically employed by mobile services and marketers who already ask users to opt in.

It also provides for the Federal Trade Commission to enforce the requirements associated with the would-be law.

Members of the Interactive Advertising Bureau’s Public Policy Council will convene May 11 in Washington, D.C. where they’ll receive a legislative update from a key House Committee representative. The IAB’s Political Action Committee contributed to Boucher’s reelection campaign in 2009, and to other House Internet Subcommittee members including Mike Rogers and John Shimkus.

Follow Kate Kaye on Twitter at @LowbrowKate.