"Privacy Online - Protecting the Consumer, or Enabling Government"

Sydney M. Williams

Thought of the Day

“Privacy Online – Protecting the Consumer, or Enabling Government?”

December 20, 2010

“We shall meet in a place where there is no darkness.” So says O’Brien to Winston Smith early on in George Orwell’s 1949 novel, Nineteen Eighty-Four. In the decades immediately following World War II, the concern among many was an omniscient and ubiquitous state – the Soviet Union largely reflected those fears. Today it is the internet and specifically sites like Facebook. In making Mark Zuckerberg Time’s man of the year, its editor was quoted: “Facebook is now the third largest country on earth and surely has more information about its citizens than any government does.”

“In the world of mobile, there is no anonymity. A cell phone is always with us. It’s always on,” said Michael Becker of the Mobile Marketing Association to Scott Thurm and Yukari Iwatani Kane of the Wall Street Journal, in an article published Saturday. On Thursday, the Obama administration’s Commerce Department issued a major report, following a similar report from the Federal Trade Commission, calling for new rules regulating the protection of consumers online. Tomorrow the F.C.C. will issue a ruling regarding its power to regulate broadband access. Internet regulation, as Robert McDowell writes in today’s Wall Street Journal, “became embedded into a 2008 campaign presidential campaign promise by then Senator Barack Obama.” Saturday’s New York Times ran an editorial urging that the broadband be termed a telecommunications service rather than its “current definition as an information service,” thereby giving the Commission clearer powers to regulate – a difficult argument, in my opinion. While certainly the internet is a communication device, it is also a repository for billions (if not trillions) of bytes of information, both useful and personal, but harmful in the wrong hands.

The excitement surrounding the tech bubble of the late 1990s provided a taste of what was to come – an explosion in the usage of the internet for everything from business commerce to retail sales to social networking to research. Online retail sales, according to Forrester Research, in the U.S. today approximate $175 billion, represent about 7% of total retail sales and are growing annually at about 10%, four times faster than overall retail sales. Facebook has 550 million members. Twitter now has around 17 million users in the U.S. and usage is growing at triple digit rates. According to one report, 25% of tweets on Twitter are about emotions. Groupon, which launched two years ago, has $50 million in advertising revenues, growing at 50% per month, has been valued at $6 billion. Six years ago Google introduced Google Book Service and they have now digitized 15 million books, almost half the number of the books in the Library of Congress.

The issues facing consumers are unlike anything we have ever known. Conflicts of interest loom. Privacy, as a right, has been swept away with the broom of the internet. On the other hand, the internet has brought value to consumers and jobs for workers. CNN Money, in a report on December 16, wrote: “The Commerce Department was quick to point out in its report that global online transactions (business to business, business to consumer and consumer to consumer) globally generate roughly $10 trillion of sales every year, and technology jobs are growing at a pace that’s four times faster than all other domestic jobs.” Facebook and G-Mail, for example, are free to the consumer; free because their businesses are based on advertising revenues – relevant personal data gets sold, which means a loss of personal privacy. But, as Doug Aamoth writing in “techland.time.com” put it, “you can have free or you can have not free, but both cost something.”

The issue for regulators is far from simple and needs to be debated. Electronic theft is real; Craigslist has been cited as the means of introducing women to men who then raped them; introducing “worms” into computer programs risk havoc with everything from banking transactions to terrorism. Despite a study from the University of Southern California reported in Saturday’s New York Post, controlling access to the internet is difficult for parents. Young teenagers have little comprehension as to how tweets written or videos produced can come back to haunt them in future years. Forty years from now, finding a Presidential candidate who has not been exposed in a compromising position on a YouTube video will be virtually impossible.

Of course the consumer does have a choice. She/he can risk being ostracized by friends and refuse to join a social network. Personal information provided can be limited. But those judgments are far easier for an adult than a young person.

There is no escaping the juggernaut of a pervasive internet. It sees us. It tracks us. It knows, as the Christmas song goes, “when we’ve been bad or good.” There are thousands of companies gathering as much personal information as they can; hundreds of new such businesses start up each day. And while there are giant companies out there that have access to reams of data on all of us, their interest is commercial – they use that data for purposes of generating revenue, selling ads. Joseph Menn, writing in the weekend edition of the Financial Times, questions the lack of regulation. He writes, “The explosion of information collected by internet businesses has called that laissez-faire approach into question.” However, should the government gain access to that same data under the guise of regulation or consumer protection will their purposes be benign? We all assume so and that assumption is probably correct, but the skeptic in all of us should make us wary. As for me, I fear less the pesky advertiser and more an intrusive government.

As a contrast, it was a pleasure to read an altogether different piece in the same weekend edition of the Journal, “Can Tolstoy Save Your Marriage?” by Alain de Botton. Mr. de Botton comes from a Sephardic Jewish family who was raised in Switzerland, moved to England with his banker father and is the founder of the School of Life in London. The school reads the same classics as do students in traditional schools, but as he says, “we teach this material with a view to illuminating students’ lives rather than merely prodding them toward academic goals.” Young people face a difficult problem: deciding what is critical and what is not, at a time when digital information is doubling every eighteen months (according to IDC – the International Data Corporation). At that rate, in just over ten years there will be 128 times more digital information than there is today. In this fast paced world, where by necessity people will have to become specialists in some narrow field, learning and understanding the classics serves the purpose of aiding the process of thinking and adds wisdom to the decision process.

But that is not where most people are. Big Brother, the nebulous character for whom O’Brien worked in Oceania, represents an omniscient government that took the information gathered on people and perverted it for evil purposes. It is this that I fear far more than aggressive advertisers. Allowing government, via over regulation, to maintain a data base of personal information risks – as far fetched as it might now seem – of being used for nefarious purposes. Caveat emptor.