This example clearing illustrates the nature of the conflict between efficiency and privacy over data. This section was created in Mar 99 after asking the question on the first exam of Informational Society.
Currently (1999) a major trade war is brewing between the European Union, EU, and the US over privacy over the internet. The EU has enacted tough privacy legislation for data collected through internet browsing and has prohibited data on EU citizens from leaving the EU to countries that do not have privacy standards for internet data equal to those of the EU.
We need to first define the difference in the approach taken to internet privacy by the US and the EU. Then we need to consider their social implications, and finally, we need to look to how far the US is likely to go to accommodate the Europeans.
Because of Hitler and his Gestapo, the Russians and the KGB, and the East Germans and their secret police, Europeans are very sensitive about the collection of vast data files on individuals. Also Europeans more the Americans looks towards government to provide solutions. In 1995 the EU enacted an internet privacy act to take effect in Oct 1998. This act gives individuals privacy rights on their personal data. Basically:
The EU privacy standard place a great deal of emphasis on individual privacy. How much this might affect the development of e-commerce in Europe is hard to estimate. Certainly, it will develop along different lines than in the US. For example, in the EU an internet firm such as Amazon.com could not personalize the site for each customer without first asking for the express permission of each customer.
US privacy policy is not comprehensive as the US targets specific areas when considered needed. For example, there is no general privacy of medical records, but there is privacy about renting raunchy videos. ( I believe this came about because renting videos became an issue in the confirmation hearings of Lawyer Bork for the Supreme Court). Legislation has been enacted to deal with the following specific situations:
Although there are numerous bills become Congress and various state legislatures, currently (1999) the US internet privacy policy is market oriented. Firms can buy and sell data collected from cookies and recording mouse clicks to other firms. Privacy policy is a matter of each firm on the internet. One survey in Jun 98 reported that only 14% of 1400 firms surveyed even had a stated internet privacy policy.
It might seem that the market provides no mechanism promoting privacy. However, if the reader thinks about it firms who want repeat customers frequently need to be very discrete about personal information concerning their customers. So whether a firm will sell customer lists or be discrete varies greatly depending on the business in question. TRUSTe, an organization promoting privacy on the WEB, did a survey of potential E-commerce customers.
Let us look at the positive aspect of collecting information about customers online. Sites such as Amazon.com can personalize the site to the interests of the user. This is much more efficient in helping the customer to focus his or her search. Also, ads can be focused on the interests of the viewer. The Nirvana of advertisers to be able to present each individual with ads must likely to stir his or her interest. Why waste money giving a single adult a pampers ad; unless, of course, the single adult is taking care of an infant.
The negative aspect of collecting such data is that the individual has no control of such data and because firms buy and sell such data, interested parties can create giant databases filled with very extensive profiles on individuals. The potential for political and personal abuse is enormous.
The absolute worst case scenario is that the EU denies US firms the right to do business in Europe where there is any possible human data transfer back to the US. Some examples include:
Some firms have made individual efforts to comply with the new European privacy directive. Citibank in collaboration with the German National Railway made an agreement to collectively launch the largest German credit card offering. In order to get approval the two firms had to negotiate for six months to institute numerous privacy protections to satisfy the new privacy directive. Another example is that Anitha Bondestam, the Swedish privacy watchdog instructed American Airlines to delete all health and medical details on Swedish passengers after each flight unless 'explicit consent' was given.
The US will probably do the minimum to improve internet privacy in order to be able to do business in Europe. One US idea is the concept of safe harbors, or corporations that satisfy the European directives being able to do business in Europe.
US firms realize that to greatly expand business on the internet they must provide customers with better security about personal data and a data environment where the customer clearly knows the privacy policy of the firm. To avoid stricter government regulations, firms will move to adopting some form of privacy standards. Two standards being considered by the World Wide Web Consortium are:
My forecast (Mar 99) as to the evolution of privacy on the internet is as follows:
An interesting possible solution to internet privacy is the fact that since privacy is a service then entrepreneurs have incentives to create firms that provide customers privacy at a price. One such effort is anonymous surfing. The problem is whether such anonymous surfing is really anonymous. These firms do not solve the problem of firms selling your data to third parties. You might argue that if the individuals had better control over their data that they could care less. Zero-Knowledge Systems Inc. has taken an encryption approach to providing surfers complete privacy. This puts them at odds with the US government policy agencies who fear privacy promotes illegal activities. Zero-Knowledge Systems is based in Montreal to avoid the strict US encryption sales laws. They shut down their best service.
I have selected sites that will have stories on privacy and the internet. News stories will also cover the topic, but they have a short life on the internet.
Fred Norman
Fri: 9 Jan 09