Online Privacy: the us get her Act together?

Roger L. Woolen Mountain/UPI/Landov

By Sara Forden

On May 10, executives from Google (GOOG) and Apple (AAPL) competed at the time-tested Washington ritual of a Congressional grilling. Alarmed by the revelations that smartphones store data on users ' locations, lawmakers demanded details on the companies privacy policy. "Consumers have a fundamental right to know what information is collected about them," said Minnesota Democrat Al Franken, who called the hearing. "They have the right to decide whether they want to share that information, with whom they want to share it, and when."

Alan Davidson, Google's Director of public policy, and Apple's vice President for software technology, Bud Tribble, defended their employers processing of location information and said the companies do not track individual customers.

Lawmakers try to determine what new rules are needed in the era of 24/7 connectivity. "The flash point is the mobile device," says Jeff Chester, Executive Director of the Washington-based Center for digital democracy. "The ability to combine the behavior with the location is about creating a political firestorm."

A series of violations of the high-profile data security have raised concerns about privacy. Sony (SNE) closed its PlayStation Network last month after his online entertainment and game systems were hacked, compromising some personal accounts of 100 million. JPMorgan Chase (JPM), Best Buy (BBY) and purpose (TGT), along with 17 other companies, disclosed last month that customers e-mail addresses after cyber-thieves in databases on Alliance data of the system (ads hacked) were exposed Epsilon Data Management. "The recent wave of security breaches is off the charts," says Marc Rotenberg, Executive Director of the Electronic Privacy Information Center (EPIC).

A consensus has formed in Washington that the patchwork of federal and state privacy laws not keeping pace with the development of the Internet. The US lags Europe, where broad guarantees of personal digital information already since 1995.

A proposal of Senator Jay Rockefeller (D-w. VA.) a "do not track" mechanism, similar to the "do not call" list that u.s. households from the tyranny of telemarketers would be freed. Under the Rockefeller bill, allows consumers to choose whether their browsing data is gathered.

Such proposals may indicate that the era of freewheeling Web is. "The original policy was to treat the Internet as a hothouse flower that had to be protected, says" Cameron f. Kerry, general counsel to the Commerce Dept. the Agency calls now for a consumer Bill of Rights that would set baseline privacy practices and the us more to Europe. Current European enterprises can not send personal information to countries which do not ensure equivalent levels of protection.

With the Federal Trade Commission, Chairman Jon Leibowitz has made privacy a priority. The Agency issued a report in December calling for a "do not track" mechanism. The report print companies to easily make their data policy for the consumer to understand. "Privacy policy do not translate well to smartphones," says David Vladeck, head of the FTC Bureau of consumer protection. "They are already difficult to read on the Internet, but you're in the car in the middle of Nebraska Avenue, it can be even more difficult."

In the aftermath of the FTC report, Microsoft (MSFT), Mozilla and Google processes all tracking features in the latest versions of their browser. The digital advertising Alliance, a coalition of professional associations, in October introduced an opt-out button that allows consumers to indicate that they don't want their online behaviour collected. Google in March unveiled a tool that allows users to block unwanted websites.

Although some technology companies have undertaken in the hope of additional regulation, it is unlikely that the industry is on its own to agree on adequate policies that balance between privacy and profits. Expenditure on online advertising is expected to nearly double to $ 44 billion in 2016, of 26 billion dollars last year, according to Alex Feldman, manager of global projections at MagnaGlobal (IPG), a media researcher. Mobile advertising revenue is expected to grow more than quadrupled, to 1.8 billion dollars by 2016, while the value of online video advertising would almost triple, to $ 3.7 billion in the same period, according to Feldman.

In several cases, the FTC has acted to curb what it considers unfair and deceptive practices. The Agency reached an agreement with Google in March related to privacy violations associated with the introduction of the Buzz social networking service last year. The 20-year-old agreement, hailed as a milestone by industry watchers, bars Google from misrepresenting how it handles data, required the company to transfer data from the consumer to protect in new products, and requires periodic government guest reviews. Also in March, the Agency forged a similar arrangement with Twitter after hackers obtained control of the Internet Messaging service.

As a whole, a new federal privacy law must come down to a simple objective, EPIC Rotenberg says: "If you cannot protect, you must not collect."

The bottom line: A large number of high-profile data breaches of security may finally force Washington to draw up a comprehensive privacy policy.

With Eric Engleman, Adam Satariano and Stephanie Bodoni. Forden is a reporter for Bloomberg News.