• by Gavin O'Malley  @mp_gavin, March 16, 2007

The Interactive Advertising Bureau and other trade industry groups on Thursday urged Congress to reconsider "spyware" legislation that they believe would hinder e-commerce and consumers' free exchange of information.

Dave Morgan, founder and chairman of behavioral targeting company Tacoda, and chairman of the IAB Public Policy Council, told House members that the proposed "Spyware" legislation could curtail consumer choice and hinder a key economic engine to Web growth.

Morgan, along with many IAB members, has historically opposed legislation prohibiting the use of cookies that track user behavior online, on the theory that tracking cookies is vital to online analytics and some ad campaigns.

"Spyware is both bad for consumers and the industry," said Morgan. "Not only can it infect consumer's machines with malicious software and potentially remove consumers' ability to exercise choice on their computers, but equally as concerning is its ability to erode consumer confidence and undermine valid online advertising models."

Late last month, the IAB opened a Washington, D.C. office and hired Mike Zaneis as its first in-house lobbyist.

"The problem with the legislation is Congress is not very adept at defining good technology from bad technology," said Mike Zaneis, the IAB's vice president of public policy.

The IAB was among several organizations testifying today at the U.S. House of Representatives' Subcommittee on Commerce, Trade, and Consumer Protection's legislative hearing on H.R. 964, the Securely Protect Yourself Against Cyber Trespass Act--SPY Act.

Earlier versions of the Spy Act overwhelmingly passed the House in 2004 and in 2005, but were subsequently ignored by the Senate. The proposal, whose chief sponsors include Reps. Edolphus Towns (D-N.Y.) and Mary Bono (R-Calif.), would make it illegal to engage in various means of "taking control" of users' computers, collecting personally identifiable information through keystroke loggers, and modifying a users' Web settings.

The bill would also prohibit collection of information about users or their behavior without notice and consent. Exemptions from the regulations would go to Web cookies, law enforcement and national security activities, and software intended to prevent fraud.

Although the distinction between adware and spyware is still largely disputed, a general consensus holds that "adware" should be considered "spyware" if it is installed without users' informed consent.

Adware consultant Ben Edelman argues that the Spy Act does nothing to strengthen existing anti-spyware laws, aside from a Good Samaritan provision, which prevents anti-spyware makers who install software on users' computers with their permission from being sued.

"Aside from the Good Samaritan provision, the act basically prohibits tougher state legislation like they already have in Alaska," said Edelman. "I think it's a waste of time."

While lauding Congress's desire to protect Americans' privacy and choice, Morgan warned Congress that "there is always a risk that legislation that governs complicated technology could result in limiting and/or stifling innovation." He continued: "We want to ensure that the availability of free content online continues to grow and that consumers receive the richest, most relevant Internet experience, without unduly burdening the advertising engine that makes these websites run."

Also on Thursday, the Anti-Spyware Coalition finalized its "best practices" for the anti-spyware community, along with a finalized version of its Conflict Identification and Resolution Process, which attempts to establish a routine methodology for resolving software conflict between anti-spyware tools.

"This document will serve as a vital tool for anti-spyware companies, consumers and software publishers," said Ari Schwartz, deputy director of the Center for Democracy & Technology and coordinator of the ASC.

The Center for Democracy & Technology as a whole credits Congress for their efforts, but is pushing for more sweeping consumer privacy legislation.

"We basically noted some minor concerns with the Spy Act, but we're not exactly opposed to it," explained David McGuire, director of communications at the CDT. "But our overall position remains that the way to address these issues at the federal level is broad consumer privacy legislation, not legislation specific to technology."

The IAB on Thursday attempted to strike a conciliatory note.

"This legislation, while well intended, deserves a fresh look by this new Congress," said Randall Rothenberg, President and CEO of IAB. "As digital media consumption grows, the industry is increasingly responsive to consumers, and devoted to protecting their privacy."

Added Rothenberg: "The online advertising industry is a primary means of support for cost-free, rich Internet content, as well as free access to unparalleled products and services."