Senators are concerned about privacy of online advertising data, but aren’t ready to do something about it yet

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Several senators, led by North Dakota Democrat Byron Dorgan (pictured above), expressed concerns today about the increasing amount of data online advertisers are collecting about Web users. But things move slowly in what’s known as the ‘world’s greatest deliberative body.’ That’s particularly true when it involves grappling with complicated technology, and Dorgan admitted that more hearings are needed before he decides if new laws are warranted to guard the privacy of people’s online activities.

‘I don’t have the foggiest idea who’s tracking it, how they’re tracking it, how they might use it, whether that company has some scruples and might be very careful about how it handles it, or whether it’s somebody else who grabs a hold of it says, ‘You know what, Katie bar the door, I’ll sell it to anybody,’ ‘ Dorgan said. ‘There are so many unanswered questions about information on how people navigate this Web.’

Dorgan summoned representatives from some of the biggest names on the Internet -- Google, Microsoft and Facebook. He also brought in Bob Dykes, chief executive of NebuAd, the company that has been causing a lot of angst recently about the collection of data used to deliver online advertising (as we wrote about here and here).

Dykes defended his company, which helps Internet service providers target ads by tracking the Web-surfing habits of their customers. He disputed the contention by the Center for Democracy and Technology that NebuAd’s technology might violate federal and state wiretapping laws, and said the company strips the data it uses of information linking it to a specific person.

‘NebuAd’s systems are designed so that no one, not even the government, can determine the identity of our users,’’ Dykes said. ‘We do not collect or use personally identifiable information. … We do not store raw data linked to identifiable individuals. And we provide state-of-the-art security for the limited amount of information we do store.’

But Leslie Harris, president of the Center for Democracy and Technology, said the increasingly detailed profiles NebuAd and other companies keep could be linked to specific people. She noted...

...that although AOL also ‘anonymized’ its search data, an accidental release of some of that data in 2006 showed that it still could be used to identify a specific user.

Harris’ organization supports some sort of federal privacy legislation, as do Microsoft and Google. But there’s virtually no chance Congress would do anything this year. Dorgan promised to hold another hearing with representatives from Internet service providers, who were invited to today’s gathering but declined to attend.

In the short term, the Federal Trade Commission may take some action. It has been studying behavioral targeting in the online ad industry. The FTC staff released a set of proposed principles in December to help online advertisers regulate themselves.

Lydia Parnes, director of the commission’s consumer protection bureau, told the committee today that the FTC still was evaluating comments people filed about the proposed principles. The issue is complex, she noted, because while behavioral targeting may provide benefits, such as more relevant ads and helping to pay for a host of free online content and services, ‘many consumers express discomfort about the privacy and data-security implications of being tracked.’

But Parnes said the industry may be able to take care of the issue itself.

‘Although there clearly is more work to be done, the commission is cautiously optimistic that the privacy issues raised by online behavioral advertising can be effectively addressed through self-regulation,’’ she said.

Dorgan and other senators were quick to point out they understand the benefits of online advertising. Their worries are with the security of the data used to deliver those ads.

‘Everyone sort of has a love-hate relationship with advertising on the Internet. I love it when it’s something for a discount on clothes, and I hate it when my daughter sees the American Girl thing,’ said Sen. Amy Klobuchar (D-Minn.). ‘We’re not against advertising on the Internet, but the issue is, as it becomes more sophisticated, do we have a role here to play in making sure that consumers’ privacy is protected as companies develop more technology and are able to dig deeper into that information?’

-- Jim Puzzanghera

Puzzanghera, a Times staff writer, covers tech and media policy from Washington, D.C.