A number of digital media firms use personal data tracking to help personalize their services and target their desired audience more effectively. Advances in targeted online advertising resulting from this sort of behavioral tracking have across allowed boutique political advertising agencies to proliferate across the country. However, in response to privacy concerns, the Federal Trade Commission is considering offering Web surfers the option of a “do not track” setting that would prohibit firms from collecting data on which sites they visit as well as from serving them targeted ads.

In a December 1 press release, the FTC lamented that “current privacy policies force consumers to bear too much burden in protecting their privacy.” As a means of reducing this burden, the FTC endorsed a plan that would force advertisers that use tracking technology to be more forthright with users about how they collect data and how it is disseminated.

Most troubling for the industry is the FTC’s recommendation that the most practical means of preventing tracking abuses would be to create a browser setting, “similar to a cookie,” that would prevent advertisers from collecting data on a given user. If enough Internet users activated this setting, it could undermine the current Internet business model and set online advertising back years.

In a January 3 USA Today opinion piece, FTC Chairman Jon Liebowitz explained his concerns regarding potentially improper uses of data retrieved via tracking: “[What if a data-tracker] sells information about my shopping behavior to my health insurer, who raises my rates based on my purchase of a deep-fat fryer? Or to my bank, which turns down my refinancing application after I buy the book The Winner's Guide to Casino Gambling?”

In a response published in USA Today on the same day, Michael Zaneis, senior vice president of the Interactive Advertising Bureau, argues that the proposed regulations would destroy the advertising model that makes the Internet profitable—and allows many websites to provide material to the public for free. “You cannot simply turn off the data exchanges between parties that allow you to, for example, navigate from one website to another,” says Zaneis. “Stop that sharing and you put a stop to the Internet as we know it.”

There have, however, been a number of widely reported recent online privacy breaches, such as an instance in which the data-gathering firm RapLeaf Inc. allegedly sold unique Facebook user ID numbers obtained through its app. Reps. Edward Markey (D-MA) and Joe Barton (R-TX) attempted to address problems with online privacy via committee hearings, including a June 2009 hearing on “Behavioral Advertising:  Industry Practices and Consumers' Expectations.” In a House Energy and Commerce Committee press release, Markey and Barton wrote that "in the next Congress, the Energy and Commerce Committee and our subcommittees are going to put Internet privacy policies in the crosshairs." With the start of the new Congress, many are awaiting what position the new Committee Chairman, Rep. Fred Upton (R-MI), will take on the matter of privacy and data tracking.

In response to the concerns about data tracking, Microsoft, Mozilla and Google have already begun work on a setting that would prevent advertisers from collecting data or serving targeted ads to users of their Web browsers.

ClizkZ News Senior Editor Kate Kaye, whose digital media column is among the most informative in the industry, highlights the FTC’s plan in a profile of what to look for in this year’s legislative initiatives regarding online privacy rights. The FTC also requested that ClickZ compile a list of comments from its readers on the proposal, which will be submitted to the commission at the end of the month. If you want to weigh in on the discussion, feel free to submit your opinion of the FTC’s proposal there. 

Noah Rothman is the online editor at C&E. Email him at nrothman@campaignsandelections.com