• by Diane Mermigas , July 9, 2008

The sparse legal precedent that exists for the Internet is being set piecemeal in the form of a recent federal court order for Google to turnover YouTube user data to Viacom -- an act that could have unintended consequences in compromising individual privacy.

Such slapdash attempts to reign in Internet purveyors will continue to trickle out of the courts and legislative bodies, to little or no avail. The Internet is like water. You can't tie a rope around it. Its all-pervasive, boundless nature makes it difficult to restrict globally, although countries like China are doing their best, having closed a number of YouTube clone sites.

The primary perpetrators are big public content companies, seeking full retribution against Internet gatekeepers denying them a full crack at interactive capitalism. So it is with Viacom's $1 billion copyright suit against Google, which will soon result in revealing the video viewing habits of millions of YouTube users. Privacy advocate concerns about Viacom's access to and use of YouTube's users database are a day late and dollar short. Their concerns are as disingenuous as Google's promise to secure users' personal data.

The fact is, Google cannot empirically make good on that promise. The loss of privacy is a sad, dangerous, byproduct of interactivity that has been embraced by many consumers with a surprising level of concession. Outcries over the loss of privacy in the Internet age are more staged than sincere, which surely will be evident in today's Senate hearing on online privacy issues.

While it can be an urgent point of discussion, Internet privacy is something individuals can do little about and companies quickly learn to use to their advantage. Viacom will have records for every video watched by YouTube viewers (including their log in names and IP addresses). Viacom was denied YouTube's source codes that control search functions, which would have been more problematic. Clearly, powerful, litigious entertainment content companies such as Viacom mean to chip away at Google's seemingly impenetrable Internet grip.

Viacom and other content providers need to wring every dollar they can from filtering their copyrighted content -- but what are the economics in the process? In fact, there is more money to be made by trafficking interactive consumers and their data than by restricting them. Google and YouTube lead the pack in mining ways for turning user-generated video into what will increasingly be ad-supported profits. However, it has been the private and more sophomoric Facebook that has more treacherously dabbled in the use of user data, most dramatically with its short-lived Beacon ad-based data exporting system to third-party sites. It's evidence how Internet players can get themselves into trouble over the mishandling of personal user data without the help of content providers or other outside parties.

The problem with Web privacy is it's a fallacy. Consumers appear willing to compromise their privacy if they get value in return. Despite Google recently adding a "privacy" link to the bottom of its thinly embellished home page, little has changed. Google always has tread on delicate territory, retaining and mining users' online search and purchasing history to improve search results and ad targeting sales. Indeed, Viacom's amended legal complaint against Google is what some call a potentially destructive Trojan horse for the entire industry, claiming that YouTube knowingly engages in the direct distribution of copyrighted materials -- as in facilitates and hosts such illegal activities. The prevailing wisdom is that YouTube and other similar user-generated online services are not responsible for users' distribution of fairly abundant copyrighted materials, which are taken down from sites upon request.

One of the problems: is there are few economics identified as being significant with the privacy issue. Gartner has identified nearly 33 million consumers who have ceased conducting online banking for fear of compromising their personal data, which Bernstein Research estimates as nearly $2 billion in lost business revenues. More numbers like that would make privacy an economic issue.

Pew Internet and American Life studies last year found that 60% of Internet users are not concerned about their information online and only 38% have taken steps to limit access to their personal data online. A mere 17% of adult Internet users are concerned about the digital footprint they leave behind. Perhaps Google is right when it claims Viacom "threatens the way hundreds of millions of people legitimately [choose to] exchange information, news, entertainment, and political and artistic expression."

For now, it is content producers wanting to hunt down consumers who illegally download their movies, recorded music and other intellectual property without paying for it. Viacom will have access to the personal data it needs to make its case against Google; it swears it will exercise the protection that databases never seem to receive. (Can you say hackers and lost loaded laptops?) If it plays out, Google will be no less potent a market broker of personal data, described in a recent New York Times's story as the "economic equivalent of what in foreign affairs is called 'soft power' to co-op rather than to coerce." Soon Google will make personal medical records part of cloud computing, a security debacle waiting to happen.

As a result -- or perhaps conceding there is little it can do -- the government has been slow to even attempt legislation, preferring to let the viral, global marketplace work out its own issues. There is a Video Privacy Protection Act on the books and the California Online Privacy Protection Act of 2003. But are they useful? Google is on the record as supporting a federal privacy law that would provide consumer trust and protections, which has gone through some iterations in Congress. An intellectual-property czar would monitor and punish those who illegally copy and distribute music, movies and other content.

The interactive world has a mind of its own, no one-- not Google, advertisers, Viacom and consumers--can have everything they want.