Will State Measures Be the Path to Online Privacy?

As the federal government and advertisers debate amongst themselves over how to regulate the online advertising industry, one California state senator and one prominent consumer advocacy group are taking the matter into their own hands.

As the federal government and advertisers debate amongst themselves over how to regulate the online advertising industry, one California state senator and one prominent consumer advocacy group are taking the matter into their own hands.

The non-profit group Consumer Watchdog is sponsoring a new “do not track” bill, based on the one earlier this year, in the California state legislature that would require any companies doing business in the State of California to provide consumers with an option to ‘opt-out’ of having their information tracked on the Web sites they visit.  The bill was introduced by California State Sen. Alan Lowenthal (D- Long Beach) this week.

Lowenthal’s bill, SB 761, is modeled on the ‘do-not-track’ bill introduced earlier this year by Rep. Jackie Speier (D-Calif.).  But Speier’s bill is just one of seven pieces of legislation currently floating in Congress related to online privacy.

It also comes on top of the Obama administration’s appeal to Congress to pass a broader “privacy bill of rights,” and the Federal Trade Commission’s proposed plan to require online companies to follow consumers’ requests and build a ‘Do Not Call’ registry.

With those options all on the table, but not much action, will it be up to the states to lead the way?

If history is any indication, particularly when it comes to California, that may well be.

The “Do Not Call Registry” regulating the telemarketing industry, and now proposed by the FTC as the chosen model for regulating online advertising, for example, was passed in California before a federal law was enacted.

Action in any state could also put pressure on federal regulators to catch up, while California, for one, plays an exaggerated role as home base for the majority of Internet and online advertising companies that would be most impacted by the new rules.

John Simpson and Jamie Court of Consumer Watchdog, the privacy group most prominently behind Lowenthal’s bill, are putting pressure on California-based online giant Google, in particular, to support the new bill.

The duo welcomed the company’s new chief executive Larry Page on his first day on the job Monday with a sharply worded letter that said, in part:

“As you are aware, online commerce relies on consumer trust. Sadly, much of the current Internet business model is based on invasive and pervasive tracking of consumers’ online activities without their knowledge or control.  This should not be the business model of a company whose motto is ‘Don’t Be Evil.’ Do Not Track legislation would give consumers meaningful protection and control. It would build their confidence in the Internet – a win, win situation for business and consumer.”

“We call upon you to support SB 761 as a sign of Google’s commitment to the privacy of consumers and to set a gold standard for the Internet.”

Court, president of Consumer Watchdog, and Simpson, director of the group’s Privacy Project, also dug into Google’s former chief executive Eric Schmidt, who is staying on at the company in a different role.

“Eric Schmidt’s tenure as CEO was marked by a series of privacy gaffes. We hope yours will begin with a landmark endorsement of a new privacy right for consumers online that shows freedom of information and personal privacy are not incompatible,” they wrote.

The watchdog group has previously taken a more flamboyant route when criticizing Schmidt, airing a series of cartoon videos that depicted him as a creepy predator on a 540 square-foot billboard in New York City’s Times Square.

Other groups backing the proposal include Privacy Rights Clearing House, Common Sense Media and the California Consumer Federation.

The aim of implementing a “do not track” mechanism on a website is to allow users of the site to communicate with advertisers that they do not want their online activity monitored. SB 761 would give the California Attorney General and the California Office of Privacy Protection the authority to develop and enforce statewide ‘do not track’ regulations.

The most recent online companies to move forward with a self-regulation model for ‘do not track,’ are search engines Microsoft and Mozilla who, in March, each released updated versions of their Internet browsers that provided an ‘opt-out’ option allowing users to tell websites they did not want to be tracked.