Internet privacy controls challenge tech industry

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WASHINGTON (AP) - The federal government has put Google, Microsoft, Apple and other technology companies on notice: Give consumers a way prevent advertisers from tracking their movements across the Web _ or face regulation.

Yet for all its innovative know-how and entrepreneurial spirit, the technology industry has yet to agree on a simple, meaningful solution to protect consumer privacy on the Internet.

So privacy watchdogs and lawmakers are stepping up the pressure, calling for laws that would require companies to stop the digital surveillance of consumers who don’t want to be tracked. They argue that effective privacy tools are long overdue from an industry that typically moves at breakneck speed.

“I want ordinary consumers to know what is being done with their personal information, and I want to give them the power to do something about it,” Senate Commerce Committee Chairman John D. Rockefeller, D-W. Va., said at a recent hearing.

Washington’s call to arms is a response to growing concern that invasive Internet marketing practices are eroding privacy online as every consumer move is observed, analyzed and harvested for profit.

Online publishers, advertisers and ad networks use “cookies,” Web beacons and other sophisticated tracking tools to follow consumers around the Internet _ monitoring what sites they visit and what links they click, what they search for and what they buy. Then they mine that information to deliver what they hope will be relevant pitches _ a practice called behavioral advertising.

“Right now we have a lawful system for tracking all of our movements online,” says Christopher Calabrese, legislative counsel for the American Civil Liberties Union. “And not only is it legal. It’s the business model.”

Calls for online privacy protections began with the Federal Trade Commission, which has challenged the industry to offer a digital tracking off switch. The FTC envisions something akin to the government’s existing “Do Not Call” registry for telemarketers. Consumers who don’t want to receive telemarketing calls can add their numbers to the list online or over the phone.

Companies including Microsoft and Mozilla have responded with various “Do Not Track” technologies. But an industry-wide solution is not close at hand.

That’s because putting the Do Not Track concept into practice is much more complicated than simply adding phone numbers to a database. The challenge is in reaching industry consensus on what Do Not Track obligations should mean, designing standard technology tools that are easy for consumers to use and setting common rules that all Websites and advertisers will follow.

One big part of the problem is that the industry needs to find a way to let consumers halt intrusive online marketing practices without preventing tracking critical for the Internet to function. After all, Internet companies rely on tracking not just to target ads, but also to analyze website traffic patterns, store online passwords and deliver customized content like local news. Nobody wants to stop those things.

Also complicating efforts to reach broad agreement is the lucrative nature of behavioral advertising.

Industry leaders argue that many consumers like targeted ads since they deliver personalized pitches that people may want. And because these ads tend to be more effective, advertisers are willing to pay more for them, says David Hallerman, an analyst with eMarketer.

Research firm eMarketer projects U.S. spending on online behavioral advertising will hit $2.6 billion by 2014, up from $775 million in 2008.

That enables Internet companies to offer everything from online stock quotes to unlimited email storage for free, says Anne Toth, Yahoo’s chief trust officer. Without sophisticated advertising technology, more websites and services could wind up behind pay walls, companies warn.

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