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DIALOGUE BETWEEN A SKEPTIC AND A TRUE BELIEVER Skeptic: "Just this past week the Federal Trade Commission has started a skirmish in the larger war over the future of privacy on the internet. It is reported to have called for legislation because industry self-regulation is failing to protect peoples' privacy adequately. 'Calling self-regulation efforts by the e-commerce industry inadequate, the Federal Trade Commission is recommending Congress enact new legislation to protect consumer online privacy,' I read in a May 30 CMP Media story. As anyone could guess, the self-regulation protagonists have gone to up walls of the fort to roll out the canons so to bring down any threatening Big-Government Regulators. But, in fact, this is a skirmish in a larger war, in which the government actions are basically a side show." True Believer: "What do you mean? Isn't it the government's job to protect citizens when the market will not do so?" Skeptic: "Let me give you story that points to the larger war and who is waging it. As I walked from my computer store last Wednesday, software purchase in hand, I noticed a guy outside looking intently at me and taking notes on a pad. I didn't think anything of it, until as I window-shopped and walked into other stores I noticed he seemed to be following me and still taking notes. Well, I had to go to the john, so I used the one at the shopping mall, and as I walked out the corridor in which the johns are located I bumped into this guy! So I screwed up my courage and said, "what are you doing, you seem to be following me?" True Believer: "I hope he had a good excuse!" Skeptic: "Well, he said his job is to help take targeted marketing to a new level of sophistication. Marketers need to know watch the behavior of people buying software, to see what other things seem to interest them. That way, they can approach consumers with offers that are relevant to the consumers' lives. If marketing becomes better targeted, the economy will be more efficient, productivity will increase, we will have more prosperity, and more people will be happy because of their increased prosperity. And, he continued that in his note pad I was just Mr. Anonymous Softwware Buyer. That seemed alright until I asked him what company he represented." True Believer: "Great Marketing Corp., I suppose -- the guys who are on the leading edge of marketing innovations." Skeptic: "How did you know? Great Marketing is the guy who just took over Great Catalog Shopper, which has names and addresses of a zillion catalog shoppers. 'How do I know Great Marketing Corp. isn't going to look for me in the Great Catalog Shopper files when you get back to the office,' I asked the guy who was virtually stalking me and taking notes, "so that ALL the data for me are in one record on one file?' " True Believer: "Surely they would know better than to do that!" Skeptic: "They might know better; but they have little choice. They NEED that data matching in order to make targeted marketing truly efficient". True Believer: "Shouldn't you write to your Congress Person about this new kind of snooping going on?" Skeptic: "That may not help IF the Congress Person is deeply religious about The DFM" True Believer: "Deeply religious! How did religion get into this discussion of such an unfriendly behavior as snooping?" Skeptic: "This is a special kind of religion, my friend. IF my Congress Person is deeply religious in this special way, it will be seen in her/his worship of The DFM" True Believer: "DFM? Who the heck is The DFM?" Skeptic: "Why The Divine Free Market, of course, worshipped in solemn reverence by billions of people around the world. Where have you been? In any case, Congress would not have any way of taking sides in the larger war. The larger war, my friend, is between organized citizen groups around the world and the E-commerce Army. A number of surveys and polls indicate that American consumers are in the mood to see strong actions taken on this issue. If and when it becomes clear that government
regulation will by itself achieve little, we can expect Civil
Society to go to bat on this one. And they have two powerful
weapons. First, people can 'vote with their wallets' against
companies widely publicized as being careless or deliberately
deceptive about their privacy (watch for Privacy Report Cards
on companies to start appearing, at least on web sites, when
failure of government action is perceived widely). Second, they
can teach each other how to use software sold in the market to
frustrate secret snooping of personal web surfing."
As regards the consumer mood, an April 18 Business Wire story is typical. It states as follows: "Research from Odyssey reveals that online users overwhelmingly support government intervention to set standards for how companies may use personal information gathered through the Internet and World Wide Web. " It goes on to say that the Odyssey survey found 47% of online households strongly wanting government regulation, and another 35% also supporting but less strongly. This is not one of those 'new' online surveys where people are invited to 'opt in and vote' -- these are fraught with serious potential to yield badly biased results. "This data is based on random national telephone surveys conducted by Odyssey as part of its annual effort to generate a comprehensive map of the home media landscape," the Business Wire story states. The story goes on to state that: "Despite these concerns, usage and penetration of online services has increased steadily since 1994 when Odyssey first began tracking such data" -- 41% of households online in 1999 versus 6% in 1994, and 191 million online purchases in the last half of 1999, a ten-fold growth over the level of three years earlier. One person quoted states that this means consumers rate the benefits of online shopping higher than the risks. What the article did not point out is that (a) the extent and personal-level implications of secret internet snooping may still be not very widely known, and (2) the distribution of software tools to frustrate that snooping is in its infancy. What can we expect when these tools are widely known, bought by millions, and adequately user-friendly? One reasonable scenario is that the levels of online shopping will not fall (though the growth-rate curve is bound to flatten contrary to the current hype); but the marketers relying upon docile reaction to internet snooping will find their plans dashed by widespread software-based blockage of that snooping. This blockage would be done by individuals in their homes, using software purchased in the market. NO TRUCE AHEAD Thus an epic struggle has begun, and do not expect any truce before a winner is declared; because the e-commercers have very deep pockets and they absolutely need tightly targeted marketing if e-commerce is to fulfill its promise of becoming the dominant force in the New Economy. In a February 8th story entitled "Privacy: Outrage on the Web", Business Week provides a graphic example of the importance to big marketers of the enhanced consumer profiling made possible by the internet. The story states that a company had sued a leading internet directory service, "seeking damages of up to $4 billion for allegedly not living up to a contract to provide data, including customer e-mail information, that [had been obtained] from surfers who downloaded video from its Web site." At the same time, a powerful force is beginning to deliver some potent weapons into the hands of the people who feel that this internet snooping thing has taken the quality of their lives to a new low. The powerful force is NOT Big Givernment. It's not the government at all. Most interestingly, it's the MARKET! Clever opportunists are developing increasingly effective software tools that people can put in their computers to halt, confuse or otherwise frustrate the electronic snoopers. That these software tools will be effective, when used properly, seems to be admitted implicitly by one major player who is reportedly the custodian of computer files holding over 100 million profiles of consumers' web surfing treks. This company feeds banner advertisements to thousands of web sites, but it allows you to visit its web site and click on some buttons to "opt out" of having its marketing-oriented cookies placed on your computer. This is done, it seems, by having on your computer a specific cookie which contains the message that you have "opted out". As soon as you clear all cookies from your machine you will no longer be protected by having that message available, however. Since regular cookie-clearing is likely to become a widespread practice, millions of consumers are still likely to opt to buy programs that aggressively frustrate net snooping. HOW ABOUT AN OPT-IN STRATEGY BY CLEVER MARKETERS? Seeing all the furor that is breaking out over this matter, a business-services firm could now swiftly be 'moved to the head of the class' by announcing and implementing an OPT-IN policy on cookies associated with advertising banners projected on peoples' computer screens. That is, instead of dumping their cookies into your machine unless you take time to go to their web site and opt out, they will avoid any such dumping until you send them a message saying you will accept their cookies. "But browsers already have a button you can use to accept or reject cookies", you say. Correct; but this idea is different. The clever marketer would have NO cookie waiting at your computer's gate until you the computer owner send a message saying 'okay I will accept your cookies'. (The website you are visiting would simply have a text invitation and a button on which you click to send that message.) Imagine the advertising coup and the consumer goodwill this marketing company would achieve by announcing that its computers never force people to decide whether or not to reject their cookies. What a friendly message! If the company decided that it need not be fantastically rich (not unreasonable since most of the fantastically rich folk work day and night like you and I do, and will die before spending as much as 1% of their riches), this plan could be effective for them. They would have to be satisfied with using scientific sampling methods to build profiles of various GROUPINGS of consumers, and at no time would it be helpful to get down to the personal level on any person opting in (to receive their cookies), because their group samples would be too small. Now this is exactly what people fussy about their privacy want to see -- companies NOT messing around with clients' information down at the personal level. Hence this now mythical marketing company could get several million dollars worth of free good-guy publicity. In fact, it may have trouble keeping up with demand from potential company clients who want to assure their own consumers that they are using a well-known good-guy marketing company to supply banners and other advertising at their web server. Of course, a well-known good-guy success will promptly attract lots of copy cats. And, in the end, the bad guys may find their client base seriously eroded. So many companies will have fled their stables to go and be associated with good-guy marketers. A BACKLASH COULD INTENSIFY AS PEOPLE GET BETTER KNOWLEDGE If you watch public affairs programming or read the serious press you will have realized by now that this battle over the 'internet privacy thing' could well be THE BIG STORY of the first decade of the millenium. Already there are so many articles written, so many web sites devoted, and so many organizations weighing in with their views, that there's not much point trying to write anything new and educational on the matter. The educational stuff is already out there. But it is not well organized, as a body of knowledge, and it's arguable that there is still a low level of general public awareness of exactly what the "New Internet Marketers" are doing, and the implications for their assumed and valued privacy. And even among those with good basic knowledge of what's going on, there may be many without the computer sophistication needed to use the software tools available in the market to aggressively shut the doors on the snoopers into their web behaviour. Thus what the public climate will be when there is far more general knowledge of what's unfolding here, at a personal level for individuals, only time can tell. But the possibility of a profound change in public sentiment and attitudes about web browsing and on-line shopping must not be ruled out. This is already indicated in a recent survey, reported in a May 30 CMP Media story. "Consumers are becoming increasingly cautious about disclosing personal information online, according to a survey released on Tuesday by Chicago-based consulting firm Arthur Andersen LLP. The survey of 365 Internet users, conducted by Syracuse, N.Y.-based market research firm Knowledge Systems and Research Inc., showed that 94 percent of users are at least somewhat concerned about privacy while shopping or browsing online." It goes on to report that 20% said that their concerns had increased in the past six months. Consider this graphic example of the bases of future increases of public concern. For at least two years we have read stories about how the owners of 'adult' sites have been 'cleaning up the dollars' in e-comerce-land, and indeed were the only industry consistently making money in e-commerce-land. This result is, according to analysts, largely based on the idea that people have been buying the sexy stuff "in the privacy of their own homes". Now, what if a growing percentage of these buyers begin to think that web snooping has produced personal results that make it MORE PRIVATE for them to put on a trench coat and go buy the stuff in a brown paper bag at a small Mom and Pop XXX-rated store? At first blush this looks like silly question; but just consider the permanent trail you may leave behind in computerized databases you when you make certain purchases on the internet. The potential for a negative turn in consumer attitudes and sentiment is also flagged in a May 4th item from PR Newswire. Here is the opening text: "STAMFORD, Conn., May 3 /PRNewswire/ -- Results from the latest @plan.inc Internet Poll(TM) (Nasdaq: APLN - news) reveal that online users have systemic and deep-rooted concerns regarding personal privacy on the Internet that may hinder future e-commerce growth. . . . 62 percent are "very concerned" that someone could connect a user's online activity to their name, address, phone number or other personal information." And once again, this is not one of those flaky "we invite you to opt in and vote" surveys. "The @plan Internet Poll(TM) randomly sampled 1,000 U.S. adult Internet active users 18 years of age and older that have visited a web site, beyond e-mail, in the last 30 days. Respondents were contacted by telephone March 24th through April 2nd, 2000. This edition of the poll has an error of margin of +/-3 percentage points." PUBLIC CONCERN GOES DEEPER THAN FEAR OF HARM FROM PRIVACY INVASION Also the e-commercers have a few hills to climb when they start going around the world and meeting more groups of people who will feel that what they lose in highly valued privacy from secret snooping upon their net movements is not worth any possible improvement of prosperity they may experience. Anecdotal evidence says that this sort backlash is already building in various places. These groups will drive home a point that tends to be buried in the literature coming out of America. Much of the current writing about consumer attitudes emphasizes the 'worry factor' -- people being worried about being harmed by invasions of their privacy. For example, a May 30th Reuters news story states that: "In opinion polls, most consumers say they don't want data compiled on them without their knowledge. But the surveys also show that being watched isn't consumers' biggest worry -- at least it doesn't rank with the fear of being ripped off. Identity theft appears to be the biggest concern, according to an Arthur Anderson survey released this week." What needs to be understood is that people may VALUE a perceived level of privacy as something that needs strong protection because it's part of what they feel is integral to their way of life and the quality of their lives, irrespective of whether they feel any worry about harm coming from privacy invasions. Privacy protection as a deeply held CULTURAL VALUE needs to confronted, especially when the growth curve on North American net usage flattens and marketers start to focus on trying to make money from explosive net-usage growth in other countries with value systems substantially different what we take for granted here in North America. A glimpse of how people can jump to protect something they hold dear, even if no perceived threat is involved has come from the recent revelation that a Canadian federal government social services department had accumulated a file with records on a very high percentage of the country's relatively small population (30+ million). The file grew from services rendered to citizens or insurance-related reports about citizens. The subject quickly became a hot one in call-in shows and letters to the editor. The media commentary did not suggest fear of harm coming to people from government use of this file. Yet one provincial government promptly called for the destruction of the file and threatened to halt cooperation in data exchanges with the federal government. Just this week, the fed's announced that the file would be destroyed. Why this swift response? Well, no one knows; but it is a reasonable speculation that no politician wants to have this issue hung around her/his neck in an election campaign. And it would be conservative right-wingers leading the charge on hanging this issue around the government's neck! A TWO-MINUTE COURSE ON INTERNET SNOOPING -- HOW IT IS DONE Just in case any reader has missed explanations of what is going on, we quote from a February 21 USA Today article: Suppose you surfed at a site that uses Company X's banner advertisements. "To tie . . . 'anonymous' records of your surfing habits to [a] database [where you may be positively identified with just a bit of additional information], [Company X] needs only the cooperation of another site that can identify you positively. [That cooperation in gets instantly if it is contracted to deliver banner adds to both sites.] Futuristic though that sounds, positive identification is actually simple. [Company X] need only tie your cookie to another one placed by a site that ships you something through the mail, or one which requires registration. To do that: [it] sends a cookie to your browser and gives it a unique ID number. [It then] sends the same ID number on to the site that knows who you are. That company then sends back the data that [Company X] needs to look you up in the [person-oriented] database. And voila -- [Company X] knows who you are, too." If you would like to get a life-like and scary
simulation of the process go to the following URL: http://privacy.net/track/.
After visiting this site and walking through the 15-30 minute
demo., the editor of MacHome's Hot Tips eNews Weekly, in a May
28 message, stated this: "I know I was [afraid] after visiting
this site. It will give you a full, step by step
Arawak Net plans to try to do three things in the information/education end of these unfolding developments over the coming weeks. First, we will try to be one of the places where people can go to get news and pointers to related discussion of the latest developments in the war over privacy on the internet. Second, we will develop extensive pointers to sources of relevant software, and regularly either carry in-depth reviews of various software offerings or tell you where to find them. Third, we will specifically identify outstanding privacy company statements that seem to be backed by determined company efforts to keep personal consumer information 100% within the company 'walls'. We invite readers to send us nominations of
companies to receive our Good Business Citizen salute for the
aggressive protection of their clients' privacy, despite collecting
information about clients at their web sites. Send your nominations
to lestone@eudoramail.com.
Nominees will be contacted and some effort will be made to 'test
their sincerity' before they are named in public. Persons nominating
companies that we judge to have better than average privacy statements
and policies will be entered into our sweepstakes for a free
week at Riviera Villa (go to our Home page for information about
the villa). Finally, credits for sources for this article are also due to Individual.com news service (www.individual.com). A serious effort has been made here to respect peoples' copyrights. Any lingering violation will be corrected promptly, as soon as someone points out where the violation takes place. Contact lestone@arawak.net. © 2000 Arawak Enterprises. All rights reserved. |