• by Wendy Davis , Staff Writer @wendyndavis, August 5, 2009

As talk heats up about potential new laws for behavioral targeting, warnings of doomsday scenarios also are increasing.

Some Web company executives are saying that free content will disappear from the Internet because privacy regulations could have the effect of destroying online advertising. Or at least the companies say that laws requiring opt-in consent to targeting could kill online advertising, because consumers aren't likely to change their default settings.

But is that really the case? Even if opt-in consent was required for behavioral targeting, such targeting currently accounts for only a small portion of online ad revenue -- at least if you define behavioral targeting as sending ads to people based on sites they've visited in the past.

In other words, even if new laws were to require companies to seek consumers' opt-in consent to behavioral targeting, publishers could still serve ads that weren't targeted based on users' Web-surfing history. Some ad executives say that even those untargeted ads would be less efficient because, they speculate, companies would no longer be able to use strategies like frequency capping without opt-in consent. But it's not clear that new legislation would cover frequency capping or other optimization strategies.

Consumer advocates have been critical of online ad companies for collecting data without adequately notifying users about the practice, but some privacy advocates are also expressing concerns that legislation could have unintended consequences. Last week at the OMMA Behavioral conference, Chris Hoofnagle, director of the Berkeley Center for Law & Technology's information privacy program, predicted that companies might respond to laws requiring opt-in consent for targeting by requiring consent as a condition to accessing the site.

While that's theoretically possible, it's not clear that Web sites will have the leverage to do so, or that they're willing to risk the potential PR fallout. Already browsers are enabling users to control cookies more easily than in the past; a new report issued today by the Center for Democracy & Technology compares some of the privacy features of Chrome, IE8, Firefox, Safari and Opera 10. So far, most sites don't seem to be refusing to let people access content, even when they've set their browsers to reject cookies.

For Web publishers, requiring people to consent to data collection as a condition of access could also result in legal fallout. The Federal Trade Commission's head of the Bureau of Consumer Protection, David Vladeck, tells New York Times reporter Stephanie Clifford that the agency would have to consider whether such a policy would amount to an unfair business practice.

Meanwhile, Rep. Rick Boucher (D-Va.) is expected to introduce legislation before the end of next month, according to recent news reports.