THE BLOG
07/27/2010 11:59 am ET | Updated May 25, 2011

Solving the Privacy Dilemma

Data and tech companies are focused on the Senate Commerce Committee this week, as the latest battle in the long-inside-the Beltway privacy war continues to play out. Washington insiders have been following the maneuvering between competing privacy proposals on the House side and this week were presented with the latest policy statements from the FTC and FTC chairs who shared their views at a Senate hearing on Tuesday. All year long, businesses have struggled to defend revenue models like behavioral advertising that are primarily based on using the history of user's web activity to show them ads. For nearly a decade, kicked off by DoubleClick's plans to link catalogue purchases to online web surfing profiles, these practices and related data uses have been the subject of withering criticism from advocates, regulators and often the media. Recent privacy missteps such as Google's collection of personal data through its Street View software and the flap over Facebook's privacy changes have put privacy issues under an even more intense spotlight.

The industry claim is that the use of online marketing data supports free content and provides users with a more relevant online experience. Privacy advocates insist that such data use should be barred unless users expressly opt-in to targeting or tracking. The proposed bills seek to bridge the debate by allowing limited types of data to be used on an "opt-out" basis, while requiring an express choice for more extensive data sharing or for uses of more sensitive online data. Neither side is pleased with the product of this Washington equivalent of sausage making and the brickbats continue to fly.

How can businesses turn the corner in this ongoing struggle? Adopting the restrictive data use perspective would end the ad network model as it exists today. Fully locking down Facebook privacy settings would put an end to the unexpected but invaluable social opportunities that continue to spring forward. For example, following this weekend's storm that took out power in the Washington area, residents were able to learn from the Facebook pages of their neighbors where and when power would be restored. But accepting the status quo where users are uneasy about behavioral targeting or uncertain about their social media settings is also not an option.

A surprising solution might be found if businesses used more, instead of less data. Today, most users don't find their online experience noticeably enhanced by the passive tracking that is widespread across Web sites. But they do value the personalization provided by the likes of Netflix and Amazon. The key difference is that these companies have made data use and personalization a key part of the consumer experience. You don't have to read Amazon's privacy policy to learn that you will be offered books based on your purchases and that of others - it is a key feature of the Amazon experience. By "featurizing" data use, businesses can avoid the claim that they are hiding information in their privacy policy or terms of use. By shouting it from the home page - we are using your information to help you find things you may want to buy - businesses may find that they solve privacy concerns while meeting business needs. Consumers may even be willing to provide more data to ensure that their experience is as they desire and so that the site will "get them right".

In fact, such is already the experience for companies that have started providing users with access to their online clickstream profiles. Rather than leading to users opting out, as marketers initially feared, many are actually tweaking and editing the profiles they are shown.

It is true that every Web site can't be Amazon and the reliance on ad networks and data exchanges and third party providers can make it very difficult for any web site to explain or offer users control of data use. But, the use of ad labels and icons, such as the one the Future of Privacy Forum has consumer tested and leading industry groups have adopted, is a serious step in this direction. Apple's use of an arrow to indicate when location is being shared on the iPhone is another. Industry needs to ask the lawyers who write privacy policies to take a seat while user design teams take a crack at positively and meaningfully engaging users about the ways data is used for them.

Solving the privacy dilemma online may be as simple as companies simply fessing up the truth to consumers. We are here to help connect you to other people and to help sell you things you may like. Whether online or in the mall, a little honesty and transparency can go a long way.