• by Wendy Davis , Staff Writer @wendyndavis, June 26, 2007

New spyware safeguards underwhelm activists and industry pros

Since 2003, Congress has considered bills aimed at curbing spyware. And since 2003, these bills have stalled, despite overwhelming backing in the House of Representatives. Now, once again, legislators are mulling over new measures that specifically take aim at spyware, including ad-serving software installed on people's computers without their consent.

Two separate measures are currently under consideration: the i-SPY Act (H.R. 1525) and the SPY Act (H.R. 964), both of which passed in the House this spring.

The Interactive Advertising Bureau has thrown its support behind i-SPY, which broadly bans companies from taking control of people's computers without their permission. But the IAB opposes the spy Act, which has similar goals but, as written, potentially hinders online advertisers and publishers.

"The scope and impact of H.R. 964 on legitimate businesses goes far beyond regulating spyware and cuts to the heart of the information economy," states a consortium of organizations in written comments to Congress. Members of the consortium range from the American Association of Advertising Agencies and IAB to companies like digital ad agency aQuantive to magazine publisher Meredith Corporation.

"The primary concern about the bill is that the definition of 'computer software' and 'information collection program' would extend far beyond unwanted downloaded software and cover the entire Internet and all Web pages," they add.

The bill would regulate "information collection programs" by requiring companies to get consumers' consent before collecting any personal information. This requirement arguably hinders sites that, for instance, ask consumers for their e-mail addresses, says Mike Zaneis, vice president for public policy at the IAB.

In addition, critics say the bill includes language broad enough to regulate cookies. With many online publishers, advertisers and analytics companies relying on cookies, opponents say the measure could cripple Web advertising.

Dave Morgan, founder of behavioral targeting company Tacoda and chairman of the IAB's public policy council, testified against the law for that reason. "The threat is that if there is a new regime set for online advertising, which is an opt-in regime, which does not exist anywhere else, then what's at risk is the free Internet," he tells OMMA.

Some consumer advocates, including the Center for Democracy and Technology and the Electronic Frontier Foundation, also oppose the spy Act. "It is unlikely to do any good and could actually make things worse," the EFF states in its online critique of the bill. The EFF's major complaint is that the bill would prohibit consumers from suing spyware companies directly.

Despite widespread support in the House for four years, there's never been enough momentum for passage in the Senate. Some observers think that's not likely to change, especially given the considerable shifts in the adware landscape since 2003. Three of the largest players a few years ago are now under FTC scrutiny or out of adware. Claria, formerly known as Gator, shed its pop-up business. Direct Revenue, notorious for sketchy installations, was fined $1.5 million by the FTC, while Zango (previously 180solutions) agreed to pay a $3 million FTC fine.

While ad-serving spyware has not been eradicated, most experts say the scope of the problem isn't nearly as big as in the past. "It's still lurking out there," says spyware foe Ben Edelman, an assistant professor at Harvard Business School. "But they're not getting tens of millions of computers, like the good old days."