Online Self-regulation May Not Satisfy Obama Administration

As Bipartisan Push for Legislation Takes Shape, Industry Players May Cloud Picture With Independent Attempts

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Industry attempts to stay two steps ahead of online privacy regulation may only be confusing the matter.

Some key players in the advertising industry were befuddled by the Obama administration's call last week for an online privacy law, even though the president's recommendation included few specific requirements.

President Obama is pushing for an online privacy law.
President Obama is pushing for an online privacy law. Credit: Joshua Roberts/Bloomberg

"Why are they doing that? We're already doing it," remarked Bob Liodice, CEO of the Association of National Advertisers. Mr. Liodice was referring to the industry's self-regulatory program, About Ads, which launched late last year. "What we've done is already done. Why are Kerry, McCain and the Obama administration trying to gain headlines for things we're already doing?"

The industry has been battling a contentious campaign with consumer-interest groups and Washington over how people's data is collected and used online. While the self-regulatory program has achieved a fair amount of recognition in government circles, key political figures, namely Sens. John Kerry and John McCain, as well as President Barack Obama, have made the issue ripe for legislation. A privacy law is sure to take shape in the coming months, but it's not entirely clear where advertising will land in the legislation.

The intricacies around the art of political jockeying and leveraging public sentiment have created a few hurdles for advertising's part in the game. It is a period of wrangling, both within the ad industry and among Washington's policy wonks.

The Wall Street Journal reported just before the Obama administration's call to Congress for the legislation that despite the self-regulatory program's wide adoption, about 30 companies are "preparing to break with most of the industry and support a proposal for a single do-not-track tool."

It appeared to be a blow to an ambitious program put into place by a coalition of ad groups, including the ANA, 4A's, Interactive Advertising Bureau and the Network Advertising Initiative. But according to interviews, many of the companies mentioned in the Journal report are, in fact, implementing the industry's self-regulation program, not parting ways with the broad industry effort.

"Yeah, the context is that we're breaking off, but that's not accurate," said Joe Casale, CEO of Casale Media, one of the companies mentioned in the report.

Mr. Casale said that while he believes in the self-regulatory program, he is also working with a loosely organized consortium of ad companies on another option that includes browser-maker Mozilla. Some ad executives are worried that self-regulation may not be enough to satisfy government agencies, namely the FTC, as well as the requirements of any forthcoming law. If other data-privacy tools become the preferred option in such an environment, that could hurt the bottom line -- as in the case of Microsoft's latest version of Internet Explorer, which allows consumers to prevent ad companies from tracking them to the point where it strips advertising out altogether, Mr. Casale said.

The consortium turned to Mozilla for a more mediated privacy solution where advertising would still be delivered to users even if they choose to not be tracked, making them blind ad placements.

That's the kind of move that underscores the difficulty the industry faces monitoring itself amidst government scrutiny. Mike Zaneis, a senior VP and general counsel for the IAB, said such maneuvering is unneeded.

"It's amateur hour in D.C.," he said. "Everybody's playing political prognosticator and trying to jump into the political scene, and not everybody understands the wrinkles of politics. It just complicates the effort."

Mr. Zaneis went on to say that the self-regulatory program has already been exploring the possibility of incorporating browser-based privacy flags into its own system. "The thing to remember is that the browser is offering a technological tool to consumers," he said. "But these tools have not put any definition or context around what this means. The self-regulation program builds context."

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