It’s never been much of a secret that commercial websites collect as much information about visitors as they dare, using it as a marketing tool themselves or selling it to others. But the depth and breadth of the effort, revealed last month by The Wall Street Journal, was daunting. Many large U.S. websites install consumer tracking tools that in some cases enable firms to know your identity as well as your tastes and shopping habits.
That’s not all bad. Most people welcome (within reason) ads for stuff they really want, and the primary goal of the Web trackers is to figure out what that might be. If you’ve been comparing hotels in Paris, you’d probably like to know that Air France is running a sale on business class seats. By the same token, if you’re a 30-year-old male, you’d probably prefer just not to hear about the latest developments in tampons. On the other side of the ledger, though, there’s plenty of information that everybody wants to keep private – for example, the medications they buy.
There are ways to address this problem (see paper by Hahn and Layne-Farrar [Download Here]), though none seems completely satisfactory. One is to set up a formal “opt-in” procedure that requires snoopers to get permission before they snoop. Ideally, this would involve a standard-form agreement that spelled out the sorts of information that were off-limits.
But make no mistake: There would be a price to regulation. First, it might not work well – when was the last time you read the contract that pops up whenever you download software? Second, whatever rules were adopted, there would surely be ambiguities that kept an army of lawyers well fed. Third, the biggest potential abusers of consumer privacy could evade the regulations by moving offshore. And last but not least, in the process of policing the snoopers, the regulators would become snoopers themselves.
One potential alternative: Use the threat of government regulation as an incentive for self-regulation. Our guess is that Google, Yahoo!, Microsoft, et al. could do a better job at setting industry standards both consumers and advertisers could live with. Anyway, it would be worth a shot.
