Tue, Sep 11, 2001 page24

• Net privacy subject to hazy politics

  BUSINESS VS. PUBLIC As George W. Bush's administration begins working on reducing government interference concerning privacy issues, many public groups are advocating that the government pay more attention to privacy infractions by businesses

  • NY TIMES NEWS SERVICE
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  Mozelle W. Thompson took a stroll last summer through the Silicon Alley Street Fair, a celebration of New York City's dotcoms back when they had something to celebrate. His T-shirt and shorts belied his high office as a member of the Federal Trade Commission, the federal agency that has taken the lead in consumer privacy protection online. He met the chief executive of a high-technology company that gathers personal data on Internet users, a man who was, Thompson said, "treating people as data instead of treating people as people."

  Thompson asked the executive whether he worried that regulators might someday crack down on his business practices. Thompson's eyes go wide as he recalls the man's answer: "I'm going to do as much as I can, as fast as I can -- until somebody stops me." As for the FTC, Thompson said, "He didn't know me, and he didn't know us. But I assured him he would."

  

  Marc Rotenberg of the Electronic Privacy Information Center in Washington says the nation needs a legal framework on how cookies and other such technologies are used. Recently, momentum has dissipated in Washington for new laws that might restrict the use of cookies and other high-technology tools by businesses to monitor Internet users' activities.

  PHOTO: NY TIMES

  Politics of privacy

  Since then, the world has changed, and not just for the dot-coms. Momentum has dissipated in Washington for new laws and regulations that might restrict the use of cookies and other high-technology tools by businesses to monitor Internet users' activities. Some lawmakers say the politics of privacy is so sensitive and complex that a deliberate approach is best -- but there is growing agreement that some kind of government action will eventually have to emerge.

  Thompson still serves on the FTC, but Robert Pitofsky, the chairman who led many of the commission's privacy initiatives, has been replaced by Timothy J. Muris, a former trade official in the Reagan administration who has said he is still studying the privacy issue. President Bill Clinton, who appointed Pitofsky and Thompson, has been replaced by George W. Bush, whose executive branch team has been less than enthusiastic about expanding regulatory authority over businesses.

  Legislation

  Movement toward legislation restricting invasions of privacy by business has slowed in Congress as well: although the chairman of the Senate Commerce, Science and Transportation Committee, Ernest F. Hollings, has a strong interest in privacy, the Senate is currently bogged down in the appropriations process and other issues. Leadership of the House of Representatives has called for the debate to be refocused on the misdeeds by Uncle Sam rather than private companies.

  "Let's see to it that the government is handling privacy mandates properly before we start mandating privacy rules for the private sector," House Majority Leader Dick Armey said in an interview, citing such examples as government Web sites that store personal information, the controversial FBI Internet wiretap system known as Carnivore and cameras that photograph motorists who run red lights.

  Some in Congress say the loss of momentum to regulate technologies such as cookies can be attributed to a more subtle understanding of the interplay between privacy and technology. Sen. Patrick Leahy who has long been concerned about privacy issues, said he and other lawmakers have realized that simplistic responses to privacy fears, such as sharply restricting the use of cookies, would do more harm than good.

  Thorny issues

  "Cookies have gotten bad press as a surveillance tool, but they also make Web site visits faster and online transactions more hassle-free," Leahy said. "These are important functions for Internet users, and any regulation of the use of cookies must be sufficiently nuanced to ensure that we do not throw the proverbial baby out with the bath."

  Little wonder that privacy has emerged as one of the thorniest issues for policymakers, said Peter Swire, the former privacy counselor to Clinton. The issues are complex, and they pit passionate public opinion against equally powerful business interests. "The strongest impetus for action and the strongest resistance to action have come together on the Internet privacy debate," he said.

  Federal efforts to regulate privacy took off within the FTC in 1995, recalled a former staff member, David Medine, when "we realized the Internet collects a lot of information about people cheaply, efficiently and sometimes in unprecedented ways -- like what you looked at as opposed to what you bought, which in a store would never be collected." After working on with industry to develop self-regulation efforts, the FTC asked Congress last year to expand its legal authority to regulate privacy efforts when self-regulation fails.

  That call for congressional action has gone unheeded. But several laws have already been passed in recent years in the areas of highest concern to voters. Financial institutions must now send out notices describing their privacy policies under the terms of the Gramm-Leach-Bliley Act of 1999, and new health care privacy regulations are coming into effect because of the Health Insurance Portability and Accountability Act of 1996. Privacy of children has been shored up because of restrictions on data collection under the Children's Online Privacy Protection Act of 1998.

  These laws, however, leave some elements of privacy protected and others utterly exposed. Privacy advocates see the job of filling in the holes as their challenge; business sees it as a threat.

  At least 50 privacy-related bills are awaiting consideration this year, many of them new versions of bills introduced in the last session of Congress. No matter how varied the legislation, proposals generally come down to a few crucial requirements and distinctions. Most require that consumers get notice of the ways that companies collect data and the use that the companies will put that information to, and they require that companies give consumers the ability to say no to such collection.

  Laws will emerge

  Marc Rotenberg, the executive director of the Electronic Privacy Information Center in Washington, said that one way or another, new privacy laws will emerge. "I don't think that Armey and the Republicans and the army of lobbyists that surround our president can make this issue go away," he said. Rotenberg suggested that the crisis-to-crisis collage of laws should be reshaped into "a legal framework that sets out how these technologies are used."

  The FTC's Thompson, sensing the troubles to come, issued a warning earlier this year to executives at a high-technology conference in New York City: without the legal protection that comes with regulatory structure, he said, horror stories will accumulate and damage will be done and "your stock valuation will continue to sink into the sunset." The companies, he said, will have to prove to consumers that giving up privacy is a trade -- something companies can prove will repay them in convenience and services, without the nasty surprises of seeing the information leak out into the broader world.
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