Members of a Senate panel tangled on Wednesday over whether consumers are being so harmed by online tracking and data collection that federal legislation to address the problem is warranted.
The dispute between Sens. John Kerry, D-Mass., and Pat Toomey, R-Pa., highlighted an issue critics of privacy legislation often raise: that supporters have yet to show what harm needs to be fixed by federal intervention.
During a Senate Commerce Committee hearing on consumer privacy, Toomey said he is still skeptical about the need for federal privacy legislation. He worried it could hamper Internet innovation and stifle the availability of free content, which is often supported by advertising.
“Proponents of privacy legislation and of granting the [Federal Trade Commission] authority to regulate online activity really should clearly demonstrate the market failure and consumer harm they they seek to address,” Toomey said. “The benefits of online tracking and data collection are very clear. Facebook is free. Gmail is free.”
He said he believed companies have begun competing on privacy and that the marketplace will encourage companies to attract customers by offering robust privacy protections.
Kerry, chairman of the Communications, Technology, and the Internet Subcommittee, disagreed. “A lot of the questions you’ve raised have been addressed in [prior] hearings, and I think it’s been a powerful showing with respect to both the ability to have a privacy standard as well as a need for privacy standard without affecting those applications and free access and all the other things you talked about,” he responded.
Kerry introduced legislation last year with Sen. John McCain, R-Ariz., that would provide consumers with basic privacy protections and give them more control and choice over their personal data.
Kerry got an assist on the need for legislation from his own brother, Commerce Department General Counsel Cam Kerry. He argued that privacy legislation would address two market failures dealing with the inability of consumers to control what data is collected about them and the bad actors who do not respect consumer privacy. Consumers’ lack of control over their personal data “allows outliers and outlaws that are not good stewards of information to take advantage of consumers trust and lack of information,” Cam Kerry said.
The Obama administration has called on Congress to pass legislation implementing its proposed “Privacy Bill of Rights,” unveiled in February. It would give consumers basic privacy protections such as having the right to know and to control what data is being collected about them. Cam Kerry said that the administration is working on putting its privacy bill of rights proposal into legislative language that can be sent to Congress.
John Kerry said he is open to further negotiation on his privacy legislation. “I think we ought to compromise in this effort, but we need to get down to that discussion,” he said. “We cannot afford another year of delay.”
Senate Commerce Chairman Jay Rockefeller, D-W.Va., acknowledged that there is a lack of consensus needed to move privacy legislation this year but pledged to continue pushing the issue. He didn’t rule out a markup of his own legislation requiring companies to respect consumers’ requests not to be tracked online.
FTC Chairman Jon Leibowitz said he expects that consumers will have a choice on whether they want companies to track and collect data about them for advertising by the end of the year, either through the voluntary actions of companies or legislation.
Leibowitz noted a majority of the FTC members believe that a true do-not-track choice involves not collecting data about consumers with a few narrow exceptions, such as for fraud protection. Rockefeller voiced concerns that some of the exceptions favored by online advertisers are too broad.
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