There's a growing disconnect
between American consumers and business on privacy and data
protection. Consumers want Congress to step in and pass strong laws
to protect information privacy, both online and off-line. A recent
BusinessWeek/Harris poll found that 57% of Americans believe that
"the government should pass laws now for how personal information
can be collected and used on the Internet," while only 15% believe
that voluntary privacy standards are the way to go.
Businesses, on the other hand, argue that the current voluntary
standards are working quite well, thank you very much. What's more,
say businesses, any regulation would be premature: We're still in
the early days of the Internet boom, and any fiddling with the Net's
magic formula of pervasive surveillance and unbridled personal data
collection might irreparably harm the engine that has been creating
so much of the country's new wealth.
But if information really is the oil of the 21st-century economy,
then it's unlikely that privacy will remain unregulated for long.
Regulation, after all, plays many important roles in our society. By
setting rules for business, regulation increases consumer confidence
while creating a level playing field for all businesses.
Consider the biggest online privacy gaffes since early last year:
DoubleClick, Amazon.com, Microsoft and RealNetworks were all caught
off guard when details of their privacy-invading technologies and
policies found their way onto the pages of Web sites, newspapers and
magazines. The source of these companies' confusion was obvious:
Nothing they were doing was illegal! Nevertheless, DoubleClick's
cookies, Amazon.com's Purchase Circles, Microsoft's registration
wizard and RealNetwork's surveillance jukebox all generated public
outcry and hostility. Why? Because there's a yawning gap between the
privacy rights most Americans think they're entitled to and what
they're actually afforded under U.S. law.
This is an unstable situation, one not only unfair to consumers,
but also unsettling to business. Innovative services for the
information economy will depend on the judicious use of personal
information, but companies that develop these services risk being
branded as "privacy pirates," even when those services pose no
privacy risk to the public. Meanwhile, companies that aren't
building massive data banks still suffer the consequences when the
public's fear of online privacy violations throws a monkey wrench
into the continued growth of e-commerce. According to the
BusinessWeek/Harris poll, 63% of those who don't shop online say
they're "very concerned" that their personal information would be
misused if they did.
Instead of fighting privacy legislation, industry should take the
lead in developing a workable set of privacy regulations and
practices that can work both on and off the Internet. These
practices should take into account both the European Union's
directive on personal information and the 1980 Organization for
Economic Cooperation and Development privacy guidelines. After all,
U.S. companies doing business in other countries already must follow
local privacy laws based on these principles. The lack of defensible
privacy legislation within the U.S. is fast becoming a stumbling
block to international e-commerce, since many countries have laws
that prohibit the transfer of personally identifiable information to
laggard jurisdictions where privacy rights are not legally respected
-- like the U.S.
Like it or not, it's unreasonable to think that U.S. businesses
will be able to stave off meaningful privacy regulation when the
subject has such widespread appeal. The only question that's really
open is: When will the regulation come?
Surprisingly, the answer is simple: the sooner, the better.
Privacy protection will be a "must have" for worldwide e-commerce.
The longer it takes for the U.S. to catch up, the further behind our
companies will fall in privacy-protection practices and
technologies. Likewise, the longer our companies spend harvesting
ill-gotten gains from violating consumer privacy, the harder and
costlier it will be for us to break that habit.
