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On-Line Profiling WorkshopNovember 8, 1999Washington, DC1111 14th Street, NW, Suite 400800-FOR-DEPOWashington, DC 20005Alderson Reporting CompanyPage 1
1234 UNITED STATES OF AMERICA5 DEPARTMENT OF COMMERCE6 AND7 FEDERAL TRADE COMMISSION8 - - -9 PUBLIC WORKSHOP ON ONLINE PROFILING10 - - -11 Auditorium12 Department of Commerce13 Building14 1401 Constitution Ave., N.W.15 Washington, D.C.16 Monday, November 8, 1999171819202122 The workshop was convened, pursuant23to notice, at 8:48 a.m.2425
 
On-Line Profiling WorkshopNovember 8, 1999Washington, DC1111 14th Street, NW, Suite 400800-FOR-DEPOWashington, DC 20005Alderson Reporting Company2 (Pages 2 to 5)
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1 P R O C E E D I N G S2 (8:48 a.m.)3 INTRODUCTORY REMARKS4 MS. BURR: Welcome, everyone, to the5Department of Commerce. Thank you very much.6Good morning. It is a pleasure to be here this7morning to welcome you all to the Department of 8Commerce for a joint workshop sponsored by the9Department of Commerce and the Federal Trade10Commission on online profiling.11 To start out this morning's program,12we will hear some words from Secretary Daley and13Chairman Pitofsky. As you all know, Secretary14Daley and Chairman Pitofsky have been very15involved in the privacy issue for a number of 16years, for a number of years now, and it's an17issue that for both of them, I know from personal18experience, is very important to them.19 So with no further ado, I will bring20you Commerce Secretary William Daley and Federal21Trade Commission Chairman Robert Pitofsky.22 (Applause.)23 REMARKS OF HON. WILLIAM D. DALEY,24 SECRETARY, U.S. DEPARTMENT OF COMMERCE25 SECRETARY DALEY: Good morning to all of 
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1you and welcome to the Department of Commerce2or, as some of us hope it will be called in the3next century, the Department of e-Commerce.4 Vice President Gore asked the5Chairman and I to look into the issue of 6profiling for our government. The reason is, as7we all know, in this e-world of ours every time8there is a new technology, along with all the9good it may bring, consumers also want to know10how it may affect their privacy. We saw that11once again last week. RealNetworks apologized12and changed its practices after the New York 13Times reported it was gathering users' listening14habits without notifying them.15 Obviously, Americans want to know16what is happening online behind their screens17when all these targeted ads pop up in front of 18them. The ads themselves obviously can be good.19As a consumer, if I'm online and one site has20figured out that I like golf courses, possibly in21or around Chicago, and I get this banner ad about22a great golf weekend, that is good.23 But if someone has been sneaking24around me, following every click I make at every25site, and they share this information behind my back 
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1without my knowing it, then I, I believe2like most consumers, would be rather unhappy.3 The reason people have the gut4reaction they do to profiling is that they don't5know what is being collected about them, they6don't have choices, and this is not good for7developing consumer confidence.8 As Commerce Secretary, I can tell you9that we are holding this workshop to find the10facts, to see the great things that profiling can11do to help consumers and companies, and companies12target their online advertising and their13marketing.14 We very much appreciate the efforts15of all of you to be here to help educate all of 16us. Obviously, we will all be wrestling with17some extremely difficult issues. I see this as18an opportunity to learn about the technology that19is behind profiling. I see this as an20opportunity for privacy advocates to help raise21awareness about these issues which are so22important to the consumers. And I see this as a23chance to show us why industry leadership will be24better off than Washington intervention.25 In 1997, when the Internet had about one-
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1third as many people as are connected today,2the President and Vice President put forward our3government's first policy and just about any4government in the world's policy on e-commerce.5They wanted the privacy sector to lead and6government not to do anything that would mess up7the Internet.8 In our opinion, this has worked. The9Chairman and I have challenged the industry to10lead on privacy, and we were taken very11seriously. The number of web sites with privacy12policies has greatly increased. Many of the13largest advertisers only place ads on web sites14that contain privacy policies. And the number of 15companies that are signing up for seal programs,16like TRUSTe and BBB Online, continues to grow17quickly. Obviously, we all hope the same happens18here.19 I know some of you have been working20on a new initiative and from what we all hear you21are definitely on the right track, and you may22have some announcements later on today. We all23look forward to hearing them.24 The fact is, as clever as industry25has been to create profiling technology, it has to be as
 
On-Line Profiling WorkshopNovember 8, 1999Washington, DC1111 14th Street, NW, Suite 400800-FOR-DEPOWashington, DC 20005Alderson Reporting Company3 (Pages 6 to 9)
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1clever in figuring out how to respect2consumers' choices. This morning Al Westin will3show in a survey the majority of Americans are4happy about receiving tailored ads. That5obviously will come as no surprise to any of us.6Americans are the greatest shoppers the world has7ever seen, and if someone has a bargain these8shoppers definitely want to hear about it.9 But consumers also want to know what10is going on inside their computers. It is not11Big Brother that the consumers fear any more and12it is not even big businesses that they fear.13They fear businesses that they have never heard14of having information about them and using it for15purposes that they don't even understand.16 If a web firm fails to protect17consumers' privacy, if they fail to disclose, if 18they fail to give consumers choice, I guarantee19you that governments will be forced to react.20Because this technology knows no borders, it is21far better for the market to respond than for22governments, not only in this country but around23the world, to be taking unilateral action.24 Let me draw a picture about how25concerned the American people are about privacy. This
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1month we will launch an ad campaign for the22000 census. By mandate of the Constitution, we3have conducted a census every ten years since4George Washington was President. But for the5very first time, we need to run paid ads because6fewer and fewer people are willing to fill out7the survey. If they do not mail it in, we8literally have to hire an army to knock on every9home, every residence in America, to get the10information required by the Constitution.11 The big reason people are hesitant12about the census is confidentiality and it is13privacy. Americans are afraid that we will do14something with the information, even though by15law we cannot share this information that is16personally identifiable with any government17agency.18 The point is -- and I will end on19this -- privacy is a very big deal for the20American public. We see it as essential for our21freedom. But the benefits of the Internet and22profiling are enormous benefits for companies.23They can do a better job of offering the right24products to the right customers. They can do it25faster and they can do it cheaper.
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1 No question, knowing their customer2is extremely important to every company in3America, but so is listening to your customers.4And if they are telling you that they want more5information about profiling and more choices, you6need to meet those needs. If you do, we will7have the trillion dollar e-economy that will keep8America the envy of the world.9 So I hope and I know that positive10things will come out of this workshop, and then11we can report to the American people that their12privacy will be protected. Once again, I thank 13you for joining us at this workshop, and good14luck to all of you today.15 Now it is my pleasure to introduce a16real leader on privacy issues. Robert Pitofsky17was appointed Chairman of the FTC in April of 181995 by President Clinton. Previously he had19been a professor at Georgetown University and20counsel to the Washington firm of Arnold and21Porter. Someone who has spent a tremendous22amount of time in his entire life, not only as23Chairman, on the issues of privacy and protecting24the American people, it's an honor for me to25introduce Chairman Pitofsky.
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1 (Applause.)2 REMARKS OF HON. ROBERT PITOFSKY, CHAIRMAN,3 FEDERAL TRADE COMMISSION4 CHAIRMAN PITOFSKY: Good morning,5everyone. I am delighted to be here with6Secretary Daley to jointly sponsor this workshop7examining online profiling. Senator Daley8continues to be a leader in advocating United9States interests and U.S. consumer interests in10electronic commerce.11 The FTC has been involved in this12area for a long time. Starting four years ago,13we began to hold some workshops like this and14forums and seminars to try to find out the ways15in which electronic commerce was working and16where it was going. Our concerns were to find17out what information was being gathered in online18commerce, how it was used, what kind of notice19was given about use to consumers, and what were20their choices in controlling that kind of 21information.22 This is a promising new medium -- I23needn't tell this crowd about that -- perhaps one24of the most revolutionary new developments in the25marketplace in a hundred years. And yet one must be
of 00

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