If a new privacy proposal set forth by the European Union (EU) becomes law, it could potentially reach all the way across the Atlantic to have a chilling effect on US online marketing practices. In a nutshell, the proposed regulation would prohibit the use of 'cookies' unless users move to specifically allow them.
The proposal is part of a larger piece of proposed legislation aimed at telecom providers, which requires users opt in for data mining being done by search engines or through other behavioral targeting practices. The European Parliament is expected to vote on the proposal by the end of 2009.
Historically, search engines and other online companies that reach consumers across borders have been able to segment their activities to comply with different regulations in different countries. These tactics have, most notably, taken into account regulations that are stricter in the EU and Canada than they are in the US. However, both increasing regulation and the need for online companies to achieve better economies of scale may be tipping the balance in favor of homogenous regulation that errs on the most conservative side.
Worrisome on Several Fronts
Though EU law does not apply to US practices, this proposal is worrisome to the search industry for several reasons:
- Governments Take Harder Stand: Non-US governments appear to be taking a harder stand on social media in general and advertising in particular - requiring changes that in both theory and practice could impact US activities. Canada's insistence that Facebook retool its privacy policies is an example of this.
- Companies Make Changes Wholesale to Save Time and Effort: The Facebook privacy-policy example also illustrates the fact that social networks are seeking to streamline operations and to avoid rolling new programs out piecemeal. When Canada's Office of the Privacy Commissioner pushed Facebook to tighten up what it felt was the "over-sharing" of personal information with third-party developers of Facebook apps, Facebook - though not obliged to introduce these changes to US users - rolled out a new global privacy policy anyway because of the significant technological changes involved and speculation that the EU might soon follow suit.
- US Congress May Push for Similar Rules: Another concern is that US regulators may try to adopt rules similar to those being proposed in the EU. A strong EU regulation might be enough kindling to propel such legislation across the finish line. One recent proposal from Rick Boucher, the Democratic chairman of the House of Representatives' Energy and Commerce Subcommittee on Communications, Technology and the Internet, aims to introduce privacy legislation to regulate behavioral targeting of consumers.
Marketers React
Companies on the American side of the Atlantic do not appear to be waiting for regulation to arrive and are instead implementing measures that do not give consumers easy opt-in options - but do provide more transparency or make it easier to opt out. Google, for instance, introduced a Dashboard last week that gives consumes insight into the what type of information the search giant collects.
Moreover, the Network Advertising Initiative has unveiled a beta version of Opt‐Out Protector, an add-on that protects consumers' opt-out requests from being accidentally deleted.
Some marketers, though, are pushing their online policies past these industry measures to ones that are even more favorably viewed by privacy advocates. Procter & Gamble's privacy policy, for example, is based on opt in.
