Internet privacy: Cookies as a weapon

How will European cookie and other Internet privacy rules impact US companies?

In November 2009 the European Parliament approved a directive on Internet privacy that, among other things, required user opt-in before websites could install cookies on the user's computer.

In theory, any U.S. company running a website that may be used by any citizen of any European Union country would have to follow the rules or risk being brought up on charges by an EU country.

BACKGROUND: EU orders member states to implement cookie law, or else

Over the past two years many European Union member states have passed legislation implementing the directive, but the specific requirement for cookie opt-in has remained confusing. The Justice Department of the European Commission has been trying to figure out just what might constitute opt-in in the context of the directive. The primary group working on the issue has been the Article 29 Working Party.

That group's members recently met with European advertisers who would like to use more of an opt-out approach by maintaining that users who agree to visit a website are, by their action, opting in to the website's practices. The Working Party seems to disagree and wants instead a clear opt-in process.

This could be more than a little disruptive if implemented: Imagine a pop-up window asking if it is OK to store a cookie for each of the sites that wanted to put a cookie on your machine when you went to one website. For example, nine different companies store cookies on your computer when you connect to The New York Times homepage, the same number as do for the Network World homepage.

The U.S. has mostly met the requirements of the EU privacy rules by implementing the Safe Harbor framework. U.S. companies can self-certify that they meet the EU rules when dealing with EU customers (but do not need to provide similar protections for U.S. customers). Some 3,000 companies have self-certified, but many have not kept up-to-date on the certification. The frameworks will need to be updated when the cookie rules have been finalized.

In any case, the Safe Harbor is a good way to cover your butt if you are doing business in Europe or with European customers.

One thing that the Safe Harbor makes clear is that the U.S. does not have any meaningful privacy protection laws when it comes to the data that Internet companies collect about all of us. The Federal Trade Commission has been looking into the issue and has asked for responses to a bunch of questions in this field.

They are collecting comments here.

Congress, as one might expect, is looking at the issue as one of personal freedom for advertisers rather than anything to do with the privacy of Internet users.

The Subcommittee on Commerce, Manufacturing and Trade of the House Energy and Commerce Committee recently held a hearing on "Internet Privacy: The Impact and Burden of EU Regulation." The hearing was just a bit one-sided.

One of the committee members, Rep. Pete Olson (R-Texas), said he wanted to "use today's hearings to look at how the EU's overly burdensome privacy laws have negatively affected the European Union economy. Only one of the witnesses (Peter Swire of Ohio State University) had anything even neutral to say about the EU rules.

The tone was set by Rep. Cliff Stearns (R-Fla.), who asked the witnesses, "Is there a demonstrated harm to consumers for being tracked online for behavioral advertising?" I guess all must be OK unless someone can prove they have been hurt by their personal data wandering all over the country. As you might predict, the witness representing the Consumer Data Industry Association invoked protecting against terrorists and child abusers as rational for the ad industry being able to collect any information they can.

The subcommittee seemed to be operating on the premise that complaining about the EU rules will make them go away. That does not seem to be all that likely to me. I suggest that anyone dealing in Internet commerce take a look at the Safe Harbor framework and keep an eye the work of the Article 29 Working Party.

Disclaimer: Wishing things away by complaining may be a common reaction of students to pending exams but Harvard has provided no opinion on the current or pending EU rules, so the above observation (and lament) is mine alone.

Learn more about this topic

Web paths are personal data says consumer group

The price of free Internet: A piece of your soul

European data concerns cloud outlook for US vendors

Insider Shootout: Best security tools for small business
Join the discussion
Be the first to comment on this article. Our Commenting Policies