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<nettime> High-tech titans put the squeeze on privacy regs
Henk on 13 Mar 2001 18:18:29 -0000

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<nettime> High-tech titans put the squeeze on privacy regs


"An industry group headed by the usual suspects (Microsoft, AOL, Sun,
AT&T, etc), just released four industry-funded studies that claim privacy
is just too darn expensive, so why bother? They seem to want to kill any
privacy legislation before it can get off the ground. Interestingly enough
(though not surprising), they also seem to be working with the Direct
Marketing Association on this."


High-tech titans put the squeeze on privacy regs
By Ted Bridis, WSJ Interactive Edition
March 13, 2001 5:15 AM PT

WASHINGTON -- A group of companies and industry organizations have quietly
undertaken a campaign to nip Internet-privacy legislation in the bud.

Aiming to halt the advance of dozens of privacy bills in Congress and in
state legislatures across the country, the group Monday went public with
four industry-funded studies asserting that privacy legislation would cost
consumers billions of dollars annually.

Led by the Online Privacy Alliance in Washington, the loosely organized
campaign is attacking legislative proposals on three fronts: identifying
expensive regulatory burdens, raising questions about how any U.S.
Internet law would apply to non-Internet industries, and assuring
lawmakers that privacy is best guarded by new technology, not new laws.

Members of the Online Privacy Alliance include Microsoft, AOL Time Warner,
IBM, AT&T, BellSouth and Sun Microsystems . These companies also have been
working with the Direct Marketing Association and others. The DMA, based
here, is the largest trade association for direct-mail and marketing

"I fundamentally object to carving out the Internet. Let's not single out
and attack the medium," said Richard Purcell, director of privacy at
Microsoft, who last week showed some lawmakers the company's privacy tools
in its new Internet-browser software.

Participants concede the campaign is largely pre-emptive, since none of
the privacy bills pending in Congress have made significant headway. But
they candidly express fears that any major privacy breach on the Internet
could jump-start legislation. And the group members are increasingly
concerned about the patchwork of state privacy laws passed amid broad
public support for online-privacy protections.

"There is a real fear that some politician riding his horse is going to
say, 'I'm going to tell my constituents that I'm protecting their
privacy,' " said Michael Turner of the Information Services Executive
Council, which wrote one of the studies, which was published for the
Direct Marketing Association.

"These horror stories, these anecdotes, are really driving the issue."

Support for protection, too
Supporters of privacy-protection measures, however, contend lawmakers face
enormous public pressure to move ahead, noting that some high-tech companies
-- including Intel, Hewlett Packard and AOL--now favor modest protections
and believe new laws may be inevitable.

"This is not an issue on the radar screen. It is the radar screen," said
Marc Rotenberg of the Electronic Privacy Information Center in Washington.
"It's hard to imagine that Congress is not going to act on the privacy
issue ... [but] I don't think anyone expected a bill to be flying to the
floor at this point."

The studies published Monday conclude that proposals to limit companies
from sharing or selling customer information without permission would cost
90 of the largest financial institutions $17 billion a year of added
expenses, and would result in a $1 billion "information tax" on consumers
through costs tacked onto products from catalogs and Internet retailers.
The studies also said tougher privacy rules would boost the risk of fraud
and identity theft and restrict available consumer credit. Their argument:
If an Internet retailer can't verify address information with a credit
company, fraud becomes harder to police.

Fred H. Cate, head of Indiana University's Information Law and Commerce
Institute and a critic of new privacy laws, said the overall financial
impact of privacy protections on all of the U.S. economy would be "in the
trillions." At a news conference Monday, Cate took the lead role in
introducing the reports' authors and fielding questions about their

The economists who wrote the reports said they didn't try to calculate any
possible revenue increases from Internet transactions tied to greater
consumer confidence. Public-opinion polls show many consumers are afraid
to buy products online because of privacy and fraud concerns.

The money spent to produce the four studies underscores the importance the
industry attaches to the issue. Turner said his study, which examined
catalog sales, cost $50,000. Another was funded with a $10,000 grant from
the World Bank. The two other studies, funded by Ernst & Young LLP and the
Tower Group consulting firm, each cost more than $50,000, but the firms
declined to say exactly how much they spent.

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