My House Internet Privacy Testimony — ‘a consumer-driven, technology/competition neutral privacy framework’

June 21, 2009 | Filed Under Budget, Business, Congress, Democrats/Leftists, Economy/Finances, Free Trade, Google, Inernet, Liberals, Scott Cleland, Technology |

-By Scott Cleland

Today I testified before a Joint House Subcommittee hearing of the Energy & Commerce Committee on “The Potential Privacy Implications of Behavioral Advertising.”

A one-page summary is below and the full testimony is here.

Summary Testimony of Scott Cleland, President, Precursor LLC

“Why A Consumer-Driven, Technology/Competition-Neutral, Privacy Framework Is Superior to a Default ‘Finders Keepers Losers Weepers’ Privacy Framework”

Before the Joint House Energy & Commerce Hearing on Behavioral Advertising, June 18, 2009

Precursor LLC is an industry research and consulting firm specializing in the future of the converging techcom industry. For the last three years, I have also been Chairman of NetCompetition.org, a pro-competition e-forum funded by broadband companies. In addition, beginning in 2009, I have done consulting for Microsoft. My testimony today reflects my own personal views and not the views of any of my clients.

The Privacy Problem:

First, technology has turned privacy reality upside down. Before the Internet most people enjoyed substantial privacy because it was inefficient, difficult and expensive to collect and disseminate private information. However, Internet technology has flipped that reality on its head by making it hyper-efficient, easy and near free incrementally to collect and disseminate private information. As a result, we now have a technologically/competitively-skewed, “finders keepers losers weepers” privacy framework by default.

Second, the essence of the behavioral advertising or Internet privacy problem is captured well by the Consumer Reports 9-25-08 poll which spotlighted that the average American consumer believes they are in much more control of their private information online than in fact they are.

Third, all of the technology megatrends (social media, cloud computing, Internet mobility, and the Internet of Things) are converging to increase the risks to consumers who wish to safeguard their privacy online.

Fourth, there is a growing collection of “publicacy” interests among the technology elite that view privacy online very differently than most Americans view privacy offline. Increasingly, Congress will be forced to weigh these increasingly competing and conflicting online/offline privacy interests and trade-offs.

Fifth, increasingly the “underground currency” of the Internet is private data. Private information is valuable, because in the absence of a system where consumers can assert ownership of and control over their privacy, privacy can be taken from them for free and profited from with little to no obligation to, or compensation due, to the affected consumer. The increasing commercialization of privacy by publicacy businesses increasingly creates new risks for consumers in return for little to no protection or reward.

Finally, the current technology-driven, “Swiss cheese” privacy framework may be the worst of all possible worlds. In the absence of a consumer-driven, technology/competition neutral, privacy framework, consumers have neither a meaningful role in protecting their privacy nor the freedom to exploit some of the value of their private information — if that is their choice. Simply, the current haphazard privacy framework affords an individual no meaningful-informed choice to either protect or benefit themselves in the marketplace arena of their private information. The technology used should be irrelevant to privacy policy.

A Privacy Solution: A Consumer-Driven, Technology & Competition-Neutral Privacy Framework:

Since it is consumers’ private information that is being taken and exploited without much meaningful consent by the consumer, and since it is consumers that are most at risk of having their most private information stolen or used inappropriately, wouldn’t it be more logical for a privacy framework to be more oriented around a consumer perspective rather than a technology perspective? Clearly businesses should be free to fairly represent and engage consumers in a fair market transaction over the disposition of their private information — a fair market transaction where consumers are able to effectively understand and negotiate the risk/reward value of sharing their private information. Since a consumer is the only one who knows what information about their personal situation, interests, views and intentions they are comfortable in sharing for what purposes, wouldn’t it be logical to have a privacy framework that empowered consumers with real input and influence over either protecting or exploiting their own interests, whatever they may be?

Conclusion:

If Congress decides to legislate on Internet privacy, a consumer-driven, technology/competition-neutral privacy framework would be superior to a technology-driven privacy framework, because it would:

Emphasize protecting people not technologies;
Empower consumers with the control/freedom to choose to either protect or exploit their own privacy;
Prevent competitive arbitrage of asymmetric technology-driven privacy policies with a level playing field;
Stay current with ever-evolving technological innovation; and
Accomodate both privacy and publicacy interests by empowering real consumer choice.

Full testimony also can be found here.
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Scott Cleland is one of nation’s foremost techcom analysts and experts at the nexus of: capital markets, public policy and techcom industry change. He is widely-respected in industry, government, media and capital markets as a forward thinker, free market proponent, and leading authority on the future of communications. Precursor LLC is an industry research and consulting firm, specializing in the techcom sector, whose mission is to help companies anticipate change for competitive advantage. Cleland is also Chairman of NetCompetition.org, a wholly-owned subsidiary of Precursor LLC and an e-forum on Net Neutrality funded by a wide range of broadband telecom, cable and wireless companies. He previously founded The Precursor Group Inc., which Institutional Investor magazine ranked as the #1 “Best Independent” research firm in communications for two years in a row. His latest op eds can be seen at www.precursorblog.com.

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