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Senior Research Fellow Mercatus Center at George Mason University May 19, 2011
Outline of Presentation
1) What do we mean by privacy? 2) Different approaches to defining / protecting it 3) Trade-offs associated with privacy regulation 4) The challenge of information control 5) Specific regulatory proposals 6) An alternative vision / the 3-E Solution
What is Privacy?
Privacy is a remarkably vague concept Means different things to different people Varies by cultures An ever-changing concept Reacts to evolving social norms & technological change If it is a right, we must determine how it plays alongside other, well-established rights (ex: freedom of speech & press freedoms)
Privacy s Fuzzy Concepts
± How do we define and measure harm ? ± Is creepiness a harm? ± Should emotional harms (feelings) be actionable?
± Who owns shared data? ± What is personally identifying information?
± Are strict contracts possible?
± Health, financial, what else?
Alan Westin s 3 Visions / Paradigms
1. Privacy Fundamentalists : Absolutists about privacy being a right & one that trumps most other values / considerations 2. Privacy Pragmatists : Values privacy to some extent but also sees benefits of information sharing 3. Privacy Unconcerned : Have little concern about who knows what about them
How to Enforce / Protect Privacy?
(U.S. vs. E.U. Visions)
Privacy not viewed as a fundamental right Issue-specific / Sectoral approach Bottom-up case law / torts States have role; often more stringent than fed law More focus on opt-out Big Brother generally = govt = a reactive regime
Privacy viewed as a fundamental dignity right Broad-based approach Top-down directives More focus on opt-in Big Brother = private sector as much as govt = a preemptive regime
The U.S. Sectoral / Issue-Specific Approach to Privacy Law
Privacy Act (1974) = govt data collection FERPA (1974) = fed-funded education institutions Cable Comm. Policy Act (1984) = cable data Video Privacy Prot. Act (1988) = video rental records Driver s Privacy Prot. Act (1994) = DMV records HIPPA (1996) = health records Gramm-Leach-Bliley (1999) = financial records COPPA (1998) = kids (under 13) online privacy CAN-SPAM Act (1993) Do Not Call registry (2003)
The Battle over Online Privacy
Policy battle has been raging since late 1990s FTC & Congress appeared poised to act around 2000, but...
± Industry self-regulation was given a chance ± 9/11 preempted this debate to some extent
Framework for past decade:
± Focus on Notice / Choice / Access / Security ± Rise of self-regulatory bodies & mechanisms ± Targeted FTC & state enforcement
New Fault Lines in the Online Privacy Wars (and the legislative response)
New activity driven by:
± Fears of targeting & tracking = creepy factor ± General unease with ubiquity of data access & availability
Proposals: Baseline legislation / FIPPS (Kerry-McCain, Rush, Stearns) Do Not Track mechanism + regulation (Speier & Rockefeller bills) Do Not Track Kids / COPPA expansion (Markey-Barton) Internet Eraser Button (Markey-Barton) Geolocation restrictions (Markey-Barton) Data breach disclosure (Kerry-McCain) Data minimization requirements (Kerry-McCain, Rush) ECPA vs. Data retention laws
Privacy Trade-Offs & Opportunity Costs
Internet feels like the ultimate free lunch; most sites, services & content are free of charge. But, in reality, there is no free lunch. The implicit quid pro quo of online life: you gotta give a little to get a little (or a lot!). And most people like this deal. The Net is powered by advertising & data collection. Information is lifeblood of Digital Economy. Info may be collected to facilitate a better browsing experience or to help the site or service remain viable. In essence, information used in lieu of payment. Regulation could break this system & have other unintended consequences.
The Problem of Information Control
Even if we agree privacy is important and worth protecting, it will be very hard. Information wants to be free - Stewart Brand
± and that includes personal information
The Net interprets censorship as damage and routes around it. - John Gilmore
± and privacy regulation is, at root, a form of data flow censorship
10 Factors That Complicate Information Control Efforts
Digitization Intangibility Moore s Law Falling Storage Costs Ubiquitous High-Speed Networks
Convergence Decentralized, Distributed Networking Scale & Scope Volume User-Generation of Content and Self-Revelation of Data
Some Facts (or Why Putting Genies Back in Bottles is So Hard )
Facebook: users submit @ 650,000 comments on the 100 million pieces of content served up every minute on its site. YouTube: over 35 hours of video uploaded every minute. Twitter: 300 million users produce 140 million Tweets / day, = a billion Tweets every 8 days. (@ 1,600 per second) Apple: more than three billion apps have been downloaded from its App Store by customers in over 77 countries. Humankind shared 65 exabytes of information in 2007, the equivalent of every person in the world sending out the contents of six newspapers every day. - Hilbert and Lopez
The Privacy Paradox
People value their privacy, but then go out of their way to give it up. Larry Downes, Laws of
We give away information about ourselves voluntarily leave visible footprints of our daily lives because we judge, perhaps without thinking about it very much, that the benefits outweigh the costs. To be sure, the benefits are many. Abelson, Ledeen & Lewis, Blown to Bits
What We Must Learn to Accept
Once information is out there, it is very hard to keep track of who has it and what he has done with it. -David Friedman, Future Imperfect
Privacy is not dead as some have claimed, but it is different than it was in past
± New realities of info dissemination, accessibility, searchability
Rushed, heavy-handed solutions will be costly and perhaps not effective anyway
Policy Responses (and their problems)
Do Not Track
Could be voluntary, but might be mandated. Would demand that websites honor a machine-readable header indicating that the user did not want to be tracked. In theory, this will allow privacy-sensitive web surfers to signal to websites they would like to opt-out of any targeted advertising, or not have any information about them collected when visiting sites.
Do Not Track
Costs: If law breaks the quid pro quo something must give
± Paywalls and higher prices? ± less relevant or more intrusive advertising? ± Fewer services? Less media content?
Int l Competitiveness: Goldfarb & Tucker - after the [EU s] Privacy Directive was passed [in 2002], advertising effectiveness decreased on average by around 65 % in Europe. Because regulation decreases ad effectiveness, this may change the number and types of businesses sustained by the advertising-supporting Internet. Practical? Does DNT scale? Apply internationally? To other devices? Regulatory creep: Will it serve as a template for other forms of Net regulation?
COPPA Expansion Background
Special concerns about youth & online marketing COPPA ( 98) was first attempt to deal with it Requires verifiable parental consent for sites directed at children that collect info FTC defines rules (safe harbors) and enforces Never constitutionally challenged
COPPA Expansion Potential Problems
What works for under 13 not likely to work for teens Would basically require mandatory age verification of all web surfers COPPA becomes COPA? = unconstitutional Serious free speech issues Irony = in name of protecting privacy, more info about users would need to be collected!
Internet Eraser Button Concept
Goal: Make it easier for people (esp. kids) to delete posted comments or content they later regret Practical Problem: Where is this button? Who controls it? What if info is shared content? Backdoor to fraud / abuse? Principled Problem: Conflicts mightily with freedom of speech & press freedoms
A Different Vision for Privacy Protection
The Conflict of Visions: Anticipatory Regulation vs. Resiliency
Long-standing conflict of visions about how to best manage risks: 1. Anticipation
± ± ± ± Prevention is prime value Focus on the Precautionary Principle Experimentation is prime value Focus on Learning / Coping
Anticipatory vs. Resiliency-Based Solutions
Anticipatory Reg Approach
Mandatory Do Not Track Mandatory Opt-In for all data collection Bans on apps / functionality Restrictions on sharing / all defaults to private Eraser Button mandates / demands for data deletion
Voluntary Do Not Track Offer opt-outs (encourages experimentation & innovation) No preemptive bans on tech No restrictions on sharing, but education about downsides Voluntary data purges & data hygiene
Constructive Alternatives to Regulation
1. Be careful @ how harm & market failure defined. (ex: Creepiness not a likely harm; data breech likely a harm) 2. Focus on a 3-E Solution to problems: Education, Empowerment, & (Targeted) Enforcement 3. Encourage corporate and personal responsibility 4. Think of privacy as an evolving set of norms, interactions & experiments 5. Don t Panic! We can learn to cope with technological change.
The 3-E Solution
#1: Educational Solutions
Education at all levels Awareness campaigns from privacy advocates, govt, industry, educators, etc. Encouraging better online netiquette and data hygiene Push for better transparency across the board
± Better notice & labeling ± Need more watch-dogging of privacy promises made by companies
#2: Empowerment Solutions
= Helping users help themselves User self-help tools are multiplying
± AdBlockPlus, NoScript, other browser tools
± More cross-industry collaboration on privacy programs ± More education efforts (better notice) ± Best practices & better defaults ± More and better tools to respond to new developments and needs
#3: Enforcement Solutions
Holding companies to the promises they make
± stepped-up FTC Sec. 5 enforcement
Demand better notice & transparency Mandatory disclosure of data breaches Targeted regulation of sensitive data, but with flexibility
Conclusion / Key Takeaways
Privacy is incredibly complicated & contentious Privacy can conflict with other values / rights All regulation entails costs & trade-offs There is no free lunch Information control is very, very hard Silver-bullet solutions rarely work The more education & transparency the better Resiliency is generally a smarter strategy compared to anticipatory, top-down regulation And, once more don t panic! We ll get through and adjust.
Adam Thierer, Filing to Federal Trade Commission in Do Not Track Proceeding, February 18, 2011. Adam Thierer, Birth of the Privacy Tax, Forbes, April 4, 2011. Adam Thierer, Online Privacy Regulation: Likely More Complicated (And Costly) Than Imagined, Mercatus on Policy, Mercatus Center at George Mason University, December 6, 2010 . Adam Thierer, Erasing Our Past on the Internet, Forbes, April 17, 2011. Adam Thierer, Unappreciated Benefits of Advertising and Commercial Speech, Mercatus on Point 86, Mercatus Center, January 2011. Berin Szoka and Adam Thierer, COPPA 2.0: The New Battle over Privacy, Age Verification, Online Safety & Free Speech, Progress on Point 16, no.11, The Progress & Freedom Foundation, May 21, 2009.