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FTC Issues ‘Warning’ to Internet Companies



Yesterday we looked at the SEC and its involvement in the world of social media. The impact of even the thought of raising a big ftc-logogovernment agency’s eyebrow in this environment is enough to send the most daring social media companies to the corner for a time out to think about what they are doing.

Yesterday, Reuters reported that another of the US government’s big boys, the FTC (Federal Trade Commission), fired a warning shot across the bow of Internet companies regarding proper collection and use of data for advertising.

FTC Chairman Jon Leibowitz said that

Companies that track consumer behavior on the Web for targeted advertising without proper consent are near their “last chance” to self-regulate.

Last chance? There were no apparent direct threats against any particular companies but privacy advocates were throwing around names such as AT&T and Google. When you talk in those circles things could get pretty interesting if the long arm of the government decides that the regulations are indeed too lax as claimed by these groups.

Earlier in the year the FTC issued some guidance to big data collectors that they need to make their techniques more known to their users and make it clear that they may opt out. While I am not a huge fan of too much government in anything business related (not exactly the best of times for people like myself these days) I have to think that there is some relevance to this particular area in question.

Personalization of search, for instance, gets more attention every so often and is heralded as the big ‘game changer’ for all search related activities. Once the industry coverage dies down, however, so does the attention paid to it over all. I have to think though that the average Google user has little to no idea of just how much data is being collected on their behaviors while doing searches logged in to a Google account. Google doesn’t go out of its way to remind folks that they can refuse to participate by logging out of their account when using the search engine.

So essentially the ball is in the court of these big players because it has not been said that regulation is imminent. In fact, it seems that some form of self-regulation is being urged by the government so they don’t have to jump in. Their patience may be running thin though. Liebowitz has said, “From my perspective, the industry is pretty close to its last clear chance to demonstrate” that it can police itself.”

If I were one of these big boys I certainly wouldn’t want regulation to be coming from a third party while there is still a chance to self-police. The final thought from the FTC chairman

If companies fail to do a better job of making their privacy policies understandable to the average person, momentum will keep building for greater regulation, Leibowitz said. “It’s really up to industry.”

The ball appears to be in the court of Google and the rest of the information age giants. Will they turn a blind eye and dare the government to regulate? With Eric Schmidt’s close ties to the current administration would there be enough capital there to keep this movement at bay? Time will always tell but the clock sounds like it may be ticking a little louder.