• by Wendy Davis  @wendyndavis, April 10, 2008

Web companies are stepping up lobbying efforts against a pending bill in New York that would regulate behavioral targeting.

A consortium of 12 companies complained in a letter to the bill's sponsor that the act "would have profound implications for the future of Internet advertising and the availability of free content on the Internet." The bill "would subject advertising networks to an extremely detailed, unprecedented array of notice, consent, and access obligations," according to the letter, which was dated Monday and sent on behalf of the State Privacy and Security Coalition.

The group argues that the bill isn't necessary, because many big ad networks voluntarily allow users to opt-out of behavioral targeting. Members of the coalition include portals AOL and Yahoo, search company Google, social networking site Facebook, Internet service provider Comcast and e-commerce site eBay.

The sponsor of the bill, New York State Assemblyman Richard Brodsky, said the measure is needed to protect people's privacy. "They're taking the position that a corporation can exploit, control and manipulate the activities of private citizens." he said of the coalition. "They're going to lose this fight."

The proposed law, Third Party Internet Advertising Consumers' Bill of Rights (A. 9275), imposes a host of requirements on companies that monitor Web-surfing activity for marketing purposes. The most significant include the mandate that companies that use cookies to track people across the Web tell users about the practice and give them an opportunity to opt-out.

The bill is largely patterned on the 7-year-old voluntary standards created by the Network Advertising Initiative, a group that includes some of online advertising's biggest players like AOL's Advertising.com, Microsoft's Atlas, Google's DoubleClick and Yahoo.

The Network Advertising Initiative today will propose new behavioral targeting guidelines. Among other changes, the new standards call for companies to obtain people's affirmative consent before using people's Web-surfing history to target them based on "sensitive" matters, such as certain medical conditions, psychiatric conditions or sexual behavior. The new proposal also prohibits companies from using behavioral targeting strategies to market to children under age 13.

The coalition lobbying against the bill argues that ad networks that belong to the NAI already promise to adhere to the law's key portions, and can theoretically be sued by the Federal Trade Commission or New York Attorney General's office if they don't follow those agreements. The coalition also argues that a state-by-state approach to behavioral targeting would create huge implementation problems for online ad companies because it's not always possible to know what state Web users are in when they log on.

"The better course of action is to bring deceptive and unfair trade practices actions against companies who promise to do something and fail to do it," said Jim Halpert, the coalition's lawyer.

But privacy advocates say that consumers shouldn't have to rely on companies' voluntary agreements to adhere to principles. "Consumers need a privacy rule on the books," said Jeff Chester, founder and executive director of the Center for Digital Democracy. "Brodsky's trying to create a level playing field for consumers, and these companies should be supporting this mild privacy proposal instead of trying to fight it."