Hill presentation on "Privacy and the Internet" by Adam Thierer (Mercatus Center at George Mason University) made on Capitol Hill, May 19, 2011.

1. Privacy & The Internet:
An Overview of Key Issues
Adam Thierer
Senior Research Fellow
Mercatus Center at George Mason University
May 19, 2011

2. 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”
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3. 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)
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4. Privacy’s Fuzzy Concepts
• “Harm”
– How do we define and measure “harm”?
– Is “creepiness” a harm?
– Should “emotional harms” (feelings) be actionable?
• “Ownership”
– Who owns shared data?
– What is personally identifying information?
• “Informed Consent”
– Are strict contracts possible?
• “Sensitive Data”
– Health, financial, what else?
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5. 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
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6. How to Enforce / Protect Privacy?
(U.S. vs. E.U. Visions)
United States
• 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
European Union
• 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
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7. 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)
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8. 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
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9. 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
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10. 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.
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11. 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
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12. 10 Factors That Complicate
Information Control Efforts
Drivers Results
Digitization Convergence
Intangibility Decentralized, Distributed
Networking
Moore’s Law Scale & Scope
Falling Storage Costs Volume
Ubiquitous High-Speed
Networks
User-Generation of Content
and Self-Revelation of Data
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13. 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
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14. “The Privacy Paradox”
• “People value their privacy, but then go out of
their way to give it up.” – Larry Downes, Laws of
Disruption
• “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
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15. 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
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16. Policy Responses
(and their problems)

17. “Do Not Track” – The Theory
• 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.
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18. “Do Not Track” – Potential Downsides
• 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?
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19. 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
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20. 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!
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21. 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? Back-door
to fraud / abuse?
• Principled Problem: Conflicts mightily with
freedom of speech & press freedoms
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22. A Different Vision
for Privacy Protection

23. 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”
2. Resiliency
– Experimentation is prime value
– Focus on Learning / Coping
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24. 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
Resiliency Approach
• 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”
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25. 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.
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26. 26
The “3-E Solution”

27. #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
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28. #2: Empowerment Solutions
• = Helping users help themselves
• User “self-help” tools are multiplying
– AdBlockPlus, NoScript, other browser tools
• Industry self-regulation
– 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
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29. #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
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30. 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.
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31. Further Readings
• 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.
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