Privacy regs won’t kill innovation so stop whining

Consumer privacy protection debated at Silicon Valley conference

The founder of the Reputation.com Web site criticized Internet industry giants who claim that any regulation to try to protect the privacy of consumers online would stifle innovation. A Microsoft executive at the Privacy Identity Innovation Conference 2011 agreed, but only up to a point, warning that at this early stage in the digital age, the wrong regulation can have “a chilling effect.”

With all due respect, the innovation killer (often of a pair with “jobs killer”) argument has been the go-to argument against regulation for years. Privacy advocates, Internet companies, entrepreneurs and others debated the privacy risks to consumers and the right approach to protecting them at the two-day conference last week in Santa Clara, Calif. The PII Conference name is kind of a play on words because within the privacy crowd, PII also stands for personally identifiable information, which companies desparately want to protect.

Reputation.com is a Web site that monitors the Internet for information about its clients and seeks to intervene in the event negative publicity is posted about them. CEO and founder Michael Fertik said on a panel that privacy advocates like his group are “outgunned” on Capitol Hill by advocates for big Internet companies like Microsoft, Google, Facebook and others fighting proposed legislation to protect the privacy of consumers online.

“It is a false premise that is put forward by lobbyists today in D.C. that any change in the law today will stifle innovation. In fact, intelligent, incremental legislation can unleash huge innovation,” Fertik said.

Fertik was joined on the panel by, among others, Marc Davis, a partner architect in Microsoft’s Online Services Division. He said on the panel and in an interview with me later that he agrees with Fertik that privacy protection and regulation aren’t mutually exclusive, but he added a caveat: “Regulation can perform a very important role in kind of levelling the playing field and clarifying for people what rights they actually have. The problem is that we’re so early in the process that the wrong regulation can have a real chilling effect."

Microsoft, in public comments filed about the Federal Trade Commission’s proposed “Privacy Bill of Rights,” called for a regulatory light touch so as not to stifle innovation. But weak regulation carries its own set of risks, said Beth Givens, founder and director of the Privacy Rights Clearinghouse. Givens is worried that weak federal legislation, watered-down by Internet industry lobbyists, would preempt stronger state legislation.

“What we have to be careful about is legislation on the federal level that wipes out decades of good state protection laws. As a Californian, I think broadly preemptive federal legislation could be a disaster and a tragedy,” she said.

Givens, whose group is based in San Diego, points to California being the first state to, in 2003, pass legislation to require businesses to notify customers if personal information about them has been compromised by a data breach. Now 40 states have similar laws. The California Legislature is currently considering a bill to impose privacy protection requirements on social networking companies. And privacy protection has been enshrined in the state’s constitution since the early 1970s.

Sure, companies have privacy policies and to Microsoft’s credit, it explains its policies on saving location data from smartphones in a plain English Q&A format. Location tracking became an issue when Sen. Al Franken brought officials of Google and Apple before a subcommittee he chairs on May 10 when their policies came under scrutiny. But for the most part, privacy policies are written to be obtuse and hard to understand and may even disguise the fact that your privacy is not protected.

I find it difficult to take companies at their word that they are committed to protecting the privacy of users’ data when their business model is based on their doing everything they can to monetize that data.

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Copyright © 2011 IDG Communications, Inc.

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