AFTER reading about how Internet companies like Google, Microsoft and
Yahoo collect information about people online and use it for targeted
advertising, one New York assemblyman said there ought to be a
So he drafted a bill, now gathering support in Albany, that would make
it a crime - punishable by a fine to be determined - for certain
Web companies to use personal information about consumers for
advertising without their consent.
And because it would be extraordinarily difficult for the companies
that collect such data to adhere to stricter rules for people in New
York alone, these companies would probably have to adjust their rules
everywhere, effectively turning the New York legislation into national
"Should these companies be able to sell or use what's essentially
private data without permission? The easy answer is absolutely not,"
said the assemblyman who sponsored the bill, Richard L. Brodsky, a
Democrat who has represented part of Westchester County since
Mr. Brodsky is not the only lawmaker with this idea. In Connecticut,
the General Law Committee of the state assembly has introduced a bill
that focuses on data collection rules for ad networks, the companies
that serve ads on sites they do not own.
The New York bill, still a work in progress, is shaping up as much
broader. Although it is likely to see some tinkering before it comes
to a vote - which Mr. Brodsky hopes will happen this spring - it
aims to force Web sites to give consumers obvious ways to opt out of
advertising based on their browsing history and Web actions.
If it passed, computer users could request that companies like Google,
Yahoo, AOL and Microsoft, which routinely keep track of searches and
surfing conducted on their own properties, not follow them around.
Users would also have to give explicit permission before these
companies could link the anonymous searching and surfing data from
around the Web to information like their name, address or phone
Because there is no federal legislation on these subjects, Mr.
Brodsky's bill - and, to a lesser extent, the one in Connecticut -
could set interesting precedents.
"A law like this essentially takes some of the gold away from
marketers," said Joseph Turow, a professor at the Annenberg School
for Communication at the University of Pennsylvania. "But it's the
right thing to do. Consumers have no idea how much information is
being collected about them, and the advertising industry should have
to deal with that."
Web companies in the advertising business, which have spent the last
few years busily courting advertising agencies to persuade them to
shift their clients' ad dollars to the Internet, are now lavishing
their attention on Albany. In recent weeks, Microsoft and Yahoo have
sent lobbyists to meet with Mr. Brodsky, and AOL, a unit of Time
Warner, is planning a meeting. Unlike most Web companies, Microsoft
favors legislation about online privacy and advertising practices and
has lobbied federal lawmakers to establish regulations, said Michael
Hintze, associate general counsel for Microsoft.
Microsoft asked Mr. Brodsky to broaden his bill to include all sorts
of companies that serve ads around the Web, not just those that show
ads based on users' behavior. Such a change would create a bill that
more clearly includes Microsoft's chief competitor, Google.
Mr. Brodsky says he has asked the Web companies point-blank if they
would support legislation similar to what he has proposed. Microsoft
gave him a firm "yes," but Yahoo, he said, seemed to be opposed to
any sort of regulation. Yahoo declined to comment on its meeting with
Targeted advertising, the kind based on consumer data, is one reason
that big brands like Coca-Cola and General Motors
have been shifting
their ad budgets to the Web. The largest Web companies collect data
about Web-surfing consumers hundreds of times a month and use the
information to help clients show different ads to different people,
based on their demographics and interests.
It is unclear how much consumer data is really needed for effective
online advertising. The attitude among Web companies is that more is
always better, but Mr. Brodsky said there might be a compromise
position that enables many ad practices but enhances consumer
"What we have with this new technology is a conflict between the
economic model of the Internet and consumers' reasonable
expectations of privacy," Mr. Brodsky said.
He has sponsored three recently passed laws that relate to Internet
security, but the pending bill is his first involving online
advertising. Mr. Brodsky said he became concerned with advertising
practices last spring when privacy activists contacted him about
Google's plan to buy DoubleClick, a company that delivers ads to Web
sites. That deal, now worth about $3.2 billion, drew antitrust
scrutiny but has recently cleared all regulatory hurdles; it was one
of many that have helped consolidate consumer data in the hands of a
few Internet companies.
Not surprisingly, executives in the advertising industry say that
concerns like Mr. Brodsky's are unwarranted.
"There has really been no harm shown by behavioral targeting or
third-party advertising, so this rush to regulate the Internet is
really unnecessary," said Mike Zaneis, vice president for public
policy for the Interactive Advertising Bureau, an industry group that
represents companies like Google and Yahoo.
Moreover, Mr. Zaneis said, the New York bill threatens to undercut the
business model that supports the Web. "If you take the fuel out of
this engine, you begin to see the free services and content dry up,"
Another view is that the genie is already out of the bottle. Data
collection by online ad companies is already widespread. Advertisers
have come to expect Web companies to sell them ads based on copious
consumer data, and it might be difficult to beat back that
Furthermore, some Web executives say the Internet is changing far too
fast for lawmakers to keep up. "Taking a snapshot of what should be
the standard today probably will not be a lasting and durable
solution," said J. Trevor Hughes, executive director of the Network
Advertising Initiative, a group of online advertising networks that
voluntarily produced and agreed to a set of privacy standards.
The Federal Trade Commission, which regulates advertising on the
national level, has proposed voluntary privacy guidelines and is
receiving comments about those rules until April 11. A spokeswoman for
the commission declined to comment on the bills pending in New York
Mr. Brodsky said he
welcomed input about his bill and was working to modify it. "In the
end, I don't have a philosophical objection to targeting, if it's
done with permission," he said. "But it is absolutely clear that
people right now do not understand what they're actually giving
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