Online profiling is the process of tracking individuals’ online activity in order to deliver targeted advertising. Part I of this reading assignment provides an introduction to how it works, who does it and what is done with the information collected. Part II invites you to consider why online profiling might be of concern. Part III explores various forms of regulation.
A. How
Online profiling is accomplished through a variety of technical means. Please skim the following information on anything that is unfamiliar to you.
B. Who
Information—a tremendous amount of it—is collected through these means by many of the most commonly visited sites. Spend about ten minutes exploring http://blogs.wsj.com/wtk/
C. What
The FTC’s most recent report on online profiling provides a simple and accessible example of how online profiling might be used to target an individual. Read Section II.A of Self-Regulatory Principles for Online Behavioral Advertising.
There is a very complicated industry that capitalizes on user’s profiles. We have already seen one side of it in our discussion of DoubleClick. Rather than attempt to learn about all the ways publishers, advertisers and middlemen coordinate, please just consider how quickly they are able to act and how much information they consider in the process. Based on information about a user, advertisers can rely on automated algorithms to compute how much they are willing to bid to have their ads displayed to that user at any given moment. For explanation how this works, read Section III of a complaint recently filed with the FTC against Google, Yahoo! and others.
Profiling is not necessarily a terrible thing. Arguably, online profiling subsidizes many of the services we enjoy and supports a multi-billion dollar industry, and some people might even find targeted ads convenient. Read Section 1.2 of the Interactive Advertising Bureau’s study of the economic benefits consumers derive from online advertising. The advertising and publishing industries also benefit; read Sections III.B and C of a study by the Network Advertising Initiative. Nonetheless, take a moment to consider the ways in which it could be abused.
Discussions regarding online profiling and privacy in general commonly divide information into two categories: personally identifiable information (PII) and non-personally identifiable information (non-PII). Proponents argue that there is little harm to collection and distribution of non-PII. There is compelling evidence, however, that a very few pieces of non-PII can be combined to identify the user.
There are also concerns that advertisers and service providers might discriminate against users based on information gathered through online profiling. At least one user claims to have received different loan offers depending on which browser was used.
It is possible that many websites do not even know what is occurring on their own sites. For instance, Facebook has purportedly been unaware of the profiling functions of some of apps.
As you might suspect, some consumers also dislike it. Skim a recent study finding that most Americans are opposed to targeted advertising.
You can probably think of many other concerns on your own. What about identity theft? Consumer expectations? Others?
Many of our previous discussions regarding the feasibility and desirability of regulation could be repeated here. For the purposes of our class discussion, please assume that legislated regulation will be created, and come to class prepared to discuss what shape this legislation should take.
The FTC has been actively involved in proposing legislation, conducting roundtables and workshops, and advising the advertising industry regarding self-regulation. However, the agency’s enforcement power is limited to matters regarding unfair or deceptive practices or acts. 15 U.S.C. § 45(a)(1). Thus, it cannot mandate policies regarding online privacy but can pursue remedies against companies who fail to comply with their self-imposed policies. For a discussion of the FTC’s role, read Part I of their comments on proposed legislation. Is this an adequate means of addressing online profiling?
Many plaintiffs have attempted to challenge cookies and other tracking mechanisms through existing legislation, including the Electronic Communications Privacy Act, the Stored Communications Act, and the Computer Fraud and Abuse Act. Read In re Doubleclick Inc. Privacy Litigation, a leading case analyzing claims brought under these statutes. 154 F.Supp.2d 497 (S.D.N.Y. 2001). Do you agree with the court’s interpretation of these statutes? If not, could the court have interpreted these existing statutes in a way that might have reached a more satisfactory result? Would it be better to start with new legislation?
Various forms of legislation specific to on-line profiling have been proposed. Carefully read and compare New York’s Bill No. A01393, HR 5777, and a draft by Representatives Boucher and Stearns. Several parties have provided feedback on the latter two. Read:
Which elements do you feel are successful and which are not? What would you add or take away? With what powers, if any, would you endow new or existing agencies? What role do you envision for the state, federal and/or administrative courts?
How to regulate online privacy is very much a live question. It is very possible that the FTC and or the Commerce Department will release a new privacy proposal between now and November 29. Therefore, please check this assignment on Sunday to see if there are any updates.
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