As consumer groups turn up the volume in a bid for new government measures to guard privacy on the Internet, a high-tech lobby accustomed to getting its way in Washington has been playing aggressive defense. Techdom's familiar warning: Heavy-handed regulation could snuff out e-commerce just as it begins to sizzle.
But the industry's defenses may be cracking. On May 22, the Federal Trade Commission weighed in with a call for online privacy legislation. To make matters worse, the Great Silicon Hope techies are counting on--GOP nominee-in-waiting George W. Bush--may not be a future savior after all. In a May 11 interview with BUSINESS WEEK, the Texas governor made clear that when it comes to privacy protections, he's a hawk. "I'm a privacy-rights person," Bush insisted. "The marketplace can function without sacrificing the privacy of individuals." In practice, that means "customers should be allowed to opt in [to sharing information]. The company has got to ask permission."
POPULIST STREAK. Bush seems serious about this issue. His staff is drafting a menu of options for new privacy protections and may incorporate the material in a policy pronouncement down the road. One possibility: backing legislation for a national rule that requires all Web sites post privacy policies. It's an approach endorsed by Hewlett-Packard Co. but shunned by most other tech outfits.
Bush is also weighing rules that could require Web sites to obtain users' permission prior to collecting sensitive medical and financial data. Advisers say Bush's populist streak--and a fear of eroding individual rights--are the source of his concerns. While he deliberates, Bush is being advised by a cadre of Net experts, among them Richard Purcell, Microsoft's director of corporate privacy, and Fred H. Cate, an Indiana University law professor.
Bush aides know just how sensitive this issue is. The governor, whose office is just minutes from Austin's Silicon Hills, is a fan of all things techie--and has been rewarded with the lion's share of tech industry campaign contributions. And Bush knows that calls for more aggressive action could antagonize some industry types. Congressional conservatives will be steamed as well. A new Bush privacy initiative could cause some heartburn on Capitol Hill, concedes one adviser.
Still, the mere word that Bush is studying privacy safeguards is viewed as good news by consumer reps. "It sounds like Bush is listening to the public and not the lobbyists," says Marc Rotenberg, executive director of the nonpartisan Electronic Privacy Information Center. Privacy activists had been expecting Al Gore to step into the ring on their behalf, but a Gore spokesman says the cautious Veep continues to support self-regulation.
The FTC says self-policing will only take you so far. Its latest Web survey found that just 41% of sites disclosed the basics: clear and conspicuous notice of information-gathering practices and a choice about how personal data are used.
Industry's failing grade prompted Senator Ernest Hollings (D-S.C.) and nine of his Democratic colleagues to introduce a bill on May 22 that spells out national Internet privacy standards. Not to be outdone, Senator John Kerry (D-Mass.) will soon offer legislation that would require Web sites to carry privacy policies. Such moves, coupled with the FTC push and Bush's advocacy of privacy protections, could rock the stand-pat forces of the tech industry. Some tech lobbyists still think they can win the fight against regulation. But clearly, this war is getting a whole lot tougher.