Keys for a consumer-centric approach to online privacy
Informed consumers who have the freedom to choose among a robust array of goods and services are the bedrock of a free market economy. This assumes a marketplace in which there is full information, ease of market entry and exit, and minimal regulatory distortion. In recent years, many have come to question competition in online markets and its role in privacy. For years, I have noted that online advertising markets are concentrated and suffer from lack of market entry and diversification in information-driven business models. I have also described how misguided regulation gave reigning Silicon Valley firms unfair advantages and removed incentives to compete on privacy enhancing technologies. The Obama administration preferred to empower the Federal Communications Commission to carve up the internet and hobble some firms with regulation while others got free rein, even removing the privacy protections and jurisdiction ensured by the Federal Trade Commission (FTC). The Obama Consumer Privacy Bill of Rights failed as Silicon Valley didn’t believe it should apply to them.
But former adversaries across the political spectrum of the technology industry, trade associations, think tanks, advocacy groups, and political parties have now come to a consensus on the need for a comprehensive approach to protecting consumer privacy online. This reflects a simple idea that is intuitive to ordinary Americans: When going online, one should have the same standard of competition, consumer protection, transparency, and choice, regardless of the product, service, or application one chooses. The Trump administration is positioned to succeed where the previous one failed because its baseline is that the same rules should count for all players. This common sense approach has allowed public and private actors to engage collaboratively and drive a win-win outcome. Among the key components of any consumer-centric approach to online privacy will be education and innovation.
Education and innovation
Educating consumers is the single most important thing we can do to empower consumers when it comes to privacy. This is because regulations for notice and consent are meaningless to consumers if they don’t understand the nature of the transactions in which they engage, how platforms work, and the associated costs, benefits, and alternatives. I describe the history of consumer education and models of online privacy education beginning on page 13 of this filing to the FTC.
It speaks volumes that the recent European and Californian data regulations don’t mention education. That’s because their policy goals are not to empower consumers, but rather to strengthen their regulatory bureaucracies and (in the case of California) the power of state attorneys general to engage in rent-seeking from private firms. Advocates for these misguided policies rarely discuss education because informed and empowered consumers don’t need bureaucrats to tell them what technologies or services to use and how to use them.
An important proof point from the EU’s General Data Protection Regulation (GDPR) is that in a decade of increasing regulation there is no commensurate increase in consumer trust online. This point was not lost in yesterday’s online privacy debate at the Information Technology and Innovation Foundation; among the 4 opposing organizations, none agreed that the GDPR should be imported to the US.
GDPR-style regulation does not protect consumers or privacy. Instead it invites government surveillance and discourages firms from improving their services. Privacy enhancing innovation, on the other hand, recognizes the dynamic process in which products, services, and systems continually improve to provide better means to protect consumer privacy — including the ability to offer ever more services with a decreasing amount of data.
The road ahead
Today the Senate Commerce Committee holds a hearing on Examining Safeguards for Consumer Data Privacy. As chairman John Thune (R-SD) explained: “Consumers deserve clear answers and standards on data privacy protection. This hearing will provide leading technology companies and internet service providers an opportunity to explain their approaches to privacy… and what Congress can do to promote clear privacy expectations without hurting innovation.”
This hearing is an important step to help American consumers use information-enabled goods and services and enjoy greater competition and choice and to ensure the continued prosperity of the American information economy. It represents an important bipartisan tech policy opportunity in an election year. Congress can enable the continued prosperity of the information economy by ensuring that consumers can access privacy education to make informed choices, that safe harbors for privacy enhancing innovation protect the testing and learning for new technologies, and that common standards for competition and consumer protection online are equally guaranteed for all Americans by the FTC, preempting the efforts of self-interested states.