User Empowerment, Not Regulation, Is The Answer to Privacy Concerns About Targeted Ads

BlueKai CEO Omar Tawakol -- founder of the BlueKai Registry, which enables consumers to see what marketers know about them and edit their online preferences -- recently met with Berin Szoka, Senior Fellow and Director, Center for Internet Freedom at The Progress & Freedom Foundation. Berin is a co-author of a paper released last week (link to PDF)  calling for greater user empowerment and warning against the impact of looming federal regulation on the online advertising industry, content publishers and content consumers. Here is part of their exchange:

Q: What is the Progress & Freedom Foundation?
PFF is a market-oriented 501(c)(3) think tank founded in 1993 and based in Washington, D.C. that studies the digital revolution and its implications for public policy.

Q: Why do you favor user empowerment over regulatory solutions to concerns about online privacy?
We argue for user empowerment over restrictive defaults (like "opt-in") for data use and collection because, as the Supreme Court held in 2000: "Technology expands the capacity to choose; and it denies the potential of this revolution if we assume the Government is best positioned to make these choices for us."

We promote tools that let users make their own decisions about privacy, not only because those decisions are fundamentally subjective, but because regulatory mandates could stifle the development of online content and commerce.

Q: In areas other than privacy, where has your education of the regulators and industry resulted in less restrictivealternatives than legislation in favor of user empowerment?
Since 1997, the Supreme Court has struck down multiple legislative attempts to censor online and offline content because there were "less restrictive alternatives" that would not so heavily burden free speech rights. In a 2000 cable-related decision, the Court held that "targeted blocking [by users] is less restrictive than banning, and the Government cannot ban speech if targeted blocking is a feasible and effective means of furthering its compelling interests."

Courts have struck down other federal and state speech controls because parents had the tools to filter their kids' access to information online, in video games, etc., as described in my PFF colleague Adam Thierer's ongoing catalog of these tools.

Q: Are there "less restrictive alternatives to legislation" for the privacy debate? How can industry do more to empower users?
Our ongoing Privacy Solutions Series describes the many tools currently available to users to manage their privacy online-starting with the cookie controls in all browsers. If anything, these tools work better than parental control tools because "targeted blocking" of tracking cookies, etc., is simpler than filtering content parents might find objectionable.

The advertising industry can and should do more to disclose their data use and collection practices to users, especially by using machine readable disclosures to make "targeted blocking" easier for users. But under the current "No-Cost Opt-Out," such empowerment simply makes it easier for a minority of privacy-sensitive users to free-ride off the enormous economic value created by users who don't opt-out.

Ultimately, it may be necessary to make explicit today's implicit quid pro quo of free content for services: If users actually faced a trade-off between not being tracked and getting more free content (e.g., seeing fewer, but better-targeted ads), privacy-sensitive users would have an incentive to engage in "targeted blocking." We'd probably see that most users probably just aren't as bothered by being "tracked" as privacy elitists insist they should be.

Q: What showing of harm has been used to justify regulating online data use and collection for advertising, and is that showing strong enough?
Regulations that burden speech must address "real, not merely conjectural" harm. No such showing has been made to justify the "techno-panic" about online privacy. The discomfort some "privacy advocates" feel about "online tracking" doesn't give them the right to impose their preferences on everyone else.

Q: Is advertising a form of free speech and what precedent does that set?
Absolutely. In 1980, the Supreme Court recognized that the First Amendment protects advertising that is not truthful or misleading. Unfortunately, the Court invented a double standard: The government can more easily justify regulations of "commercial speech" (which does "no more than propose a commercial transaction") than of "non-commercial speech" (political and non-profit messages).

Even as the Court has moved away from this distinction in theory, it has become unworkable in practice: Non-commercial speech is increasingly carried by commercial speech platforms like ad networks and social networks, so the approach of past laws (simply exempting non-commercial websites) won't work in an era of technological and platform convergence. Regulations on data use and collection that burden all speech carried by ad networks must yield to "less restrictive means" like opt-out, user empowerment, and FTC enforcement of privacy policies and self-regulation.

Q: What is privacy elitism and what are its parallels in the free speech debate?
Many who oppose industry self-regulation are not really "consumer advocates" because they don't recognize that consumers have many, competing values. Those regulatory advocates are more interested in their preferred one-size-fits-all mandates than in empowering users to determine their own privacy preferences.

Like advocates of censorship, privacy zealots assert great dangers to which citizens are supposedly oblivious but which urgently require government intervention-dismissing arguments to the contrary as either uninformed or irresponsible.

Q : Privacy elitists typically claim the high ground in terms of motives: privacy elitists holy, advertising bad. What are the implications of this?
Privacy elitists suffer from what philosopher Thomas Sowell has called the "Vision of the Anointed." For them, Privacy (with a capital-P) is essentially the same for everyone and there are no trade-offs. They want to impose their preferences on the rest of us, regardless of the consequences.

Q: This type of debate has raged on before in other industries. What is the closest analogy?
Increased liability threatens the advertising industry on many fronts. But the most striking parallel to the fight over targeted online advertising is the effort by several states to restrict or ban targeted advertising of pharmaceuticals to doctors ("detailing").

We've joined the fight against those laws and hope the Supreme Court will soon recognize that all regulations on targeted advertising must yield to "less restrictive means."

6 comments about "User Empowerment, Not Regulation, Is The Answer to Privacy Concerns About Targeted Ads ".
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  1. Jeffrey Chester from CDD, August 25, 2009 at 8:52 a.m.

    Given that Mr. Tawakol is in the behavioral data gathering and targeting business, with the "the largest source of shopping data across the Internet," it's not surprising how journalistically flawed his interview is. First, Mr. Tawakol should have done some homework on his interviewees and their group. Readers should know that this group is funded by the leading online ad companies, including Google and Microsoft. Both phone and cable giants are also funders of Progress and Freedom Foundation, whom plan to get into the deep packet inspection side of the behavioral targeting business:

    Mr. Tawakol is understandable defensive, since the leading U.S. consumer and privacy groups want Congress to ensure that online consumers have rights when it comes to data collection. This would effect his business, no doubt. Perhaps that's why he resorts to the very lame--and self-serving--suggestion that consumer groups are "privacy elitists." There is nothing elitist about ensuring that consumers are empowered to make their own decisions about what data can be collected from them and how it's used.

  2. John Smith, August 25, 2009 at 9:25 a.m.

    Doesn't Jeff Chester profit by continuing this masquerade of fear tactics? Kind of funny to hear a guy that is raking in a 6-digit salary by misrepresenting facts and engaging with the media to deliver a biased slant for his own gain. Wouldn't this be considered hypocritical?

    If you would like to make a donation to Mr. Chester's "non-profit" organization so that he is ensured another large salary in 2009, you can click on this link and send him some money:

  3. Berin Szoka from The Progress & Freedom Foundation, August 25, 2009 at 12:10 p.m.

    Despite our profound "Conflict of Visions," I must rush to Mr. Chester's defense to point out that his salary has only reached "six figured" in one of the three years for which Chester's group, the Center for Digital Democracy, has filed their Form 990 returns with the IRS: $101,500 in 2005, but a mere $97,925 in 2006 and $96,750 in 2007 (including benefits). Given CDD's declining donations, Chester's salary has grown from 35% of CDD's income in 2005 ($288,807) to 56% ($172,852) in 2007. As a result of deficit-spending to maintain Chester's salary, CDD's 2007 assets were just half what they were in 2005 ($203,508 / $411,174). These returns are available on

    I might take the same approach Chester takes in attempting to dodge our arguments: question his motives and suggest that the hysteria level of his arguments has grown in close correlation with his increased need to boost CDD's donations, which have sagged even as his salary has remained constant. But unlike Chester and others who suffer from the "Vision of the Anointed," I am not in the business of—as Thomas Sowell put it—"disdainfully dismissing" arguments contrary to my own "as either uninformed, irresponsible, or motivated by unworthy purposes."

    I truly take Chester at his word: I think he genuinely believes the fantastical claims he makes about the evils of "targeted" advertising and that advertising is manipulative, creating what Neo-Marxists would call "false consciousness" (making people think they want things they don't). I don't think he's merely trying to drum up donations (although that may be a happy coincidence of his Chicken-Little-ism).

    I ask only that Chester grant us the same respect by recognizing that our arguments are deeply rooted in a principled belief that online advertising creates enormous value for consumers, and that better targeting should be celebrated as a way of sustaining media in the 21st century, not an evil conspiracy by a shadowy cabal of advertisers.

    I take no pleasure in noting that Chester makes more money than I do (assuming his salary has not finally started to decline since 2007 along with the apparent downward trend in CDD's donations). Moreover, since my market value as a recently-practicing lawyer is probably considerably higher than this, I gave up quite a lot to fight the battle of ideas when I joined The Progress & Freedom Foundation last year. Chester may not agree with my arguments, but for him to dismiss me as a corporate whore is simply laughable. If I really wanted to sell out, I would go back to a law firm at an annual salary greater than the donations his Center for Digital Democracy received in 2007.

    I would not have chosen a career as a consumer advocate at considerable personal cost if I were not utterly sincere in my convictions. So, please, Jeff, spare us all your sanctimony and engage our arguments on substance. Your dismissal of Omar Tawakol is also grossly unfair, since BlueKai has been an industry leader in empowering users with its consumer preference registry:

    On substance, I find it equally amusing that Chester has embraced the rhetoric of "consumer empowerment" in support of an agenda that is about just the opposite: making choices for users. Our argument is that we should to do everything we can to empower users to make their own choices about privacy preferences through tools like the BlueKai Registry, Google's Ad Preference Manager and other more radical innovations. But Chester's argument is that government should mandate restrictive default settings (e.g., opt-in). This is not empowerment but arrogant presumption: Chester is an elitist not only because he presumes that consumers are as paranoid about "being tracked" as he is, but also because he would impose a default (no tracking) that would destroy the economic value created by targeted advertising. That default has enormous costs for users as an "Industrial Policy for the Internet," reducing revenues for publishers whose "free" content and services Chester takes for granted, but which benefit Internet users around the world.

  4. John Smith, August 25, 2009 at 1:51 p.m.

    Good of you to defend Mr. Chester, but you are splitting hairs here b/c $97k is essentially a six-digit salary.

    Given Chester's resume on LinkedIn shows no educational background in business or marketing and he appears to have no practical experience in doing marketing either, shouldn't we be asking him for the same full disclosure such as he is asking from the PFF?

    Why is a debate occurring with an individual whose posted personal resume on LinkedIn states he has limited to no experience on business matters?

  5. Berin Szoka from The Progress & Freedom Foundation, August 25, 2009 at 6:21 p.m.

    John, I was trying to give Chester the benefit of the doubt as to why he believes what he does—a courtesy he seems unwilling to extend to those who disagree with him because he just can't seem to accept that there could be an honest disagreement as to whether targeted advertising can be a good thing for consumers. But you're right: Chester, like most regulatory advocates, has little business experience and shows even less willingness to understand the practical technical or economic concerns of those who produce all the wonderful goods and services on which consumers rely. I've made this point in response to Chester, who repeated his ad hominem attacks on the group blog I write for, the (ironically-themed) Technology Liberation Front:

  6. Jeffrey Chester from CDD, August 30, 2009 at 1:34 p.m.

    Just for the record. Progress and Freedom Foundation's 2007 tax return to the IRS shows $1.965 million in revenues. This largely comes, we assume, from the online marketing related corporate giants that make up the majority of the group's supporters. This is a huge conflict of interest for the group, which it rarely acknowledges. The IRS records show that Mr. Szoka's co-author and colleague Adam Thierer made $146,234 in salary (with an additional $5,754 contributed for benefits) that year.

    As for the substance, as I have said-- Our FTC filings and other writings, including scholarly work, explains the issues.

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